The Australian Tax Office (ATO) has released its taxation statistics for the 2016-17 financial year, which registered a small fall in the number of negatively geared property investors, with annual losses claimed also falling marginally.
According to the ATO, there were 2,166,755 people claiming net rent in 2015-16 (2,087,468 claiming gross rent), a 1.6% reduction from the previous financial year:
As you can see, 15.5% of taxpayers were a property investor in 2015-16, with 9.6% of taxpayers negatively geared.
1,291,389 people claimed net rental losses (were negatively geared), representing 61% of total property investors, down slightly from the 1,323,277 negatively geared investors the year before:
Total net rental losses were $3.56 billion in 2015-16, a decrease of 6.6% from the $3.81 billion in losses the year prior:
The average net rental loss per property investor was $1,680 in 2015-16:
However, those that were negatively geared claimed on average $8,785 in rental losses:
As shown in the third chart above, the main factor dragging down rental losses in recent years has been the ongoing decline in investor mortgage rates:
This decline in mortgage rates has more than offset weakness in rental growth:
However, with looming interest-only mortgage resets, along with further likely clamp downs in the wake of the banking royal commission, average investor mortgage rates will likely rise in the years ahead, increasing investor losses.
Moreover, with Labor promising to unwind negative gearing and the capital gains tax discount if it wins the upcoming federal election, the epic investor-led housing boom could easily turn to bust.
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