Facts on Negative Gearing: Only affects 10% of tax payers, OK for middle incomes, Great for the rich.

Been looking at the debate going on about Negative Gearing of property in the media in response to Labors new policy to only apply negative gearing to new property (an idea that seems spookily familiar...see my posts from March last year :-)


A lot of stuff being thrown about, so wanted to get some facts out there. I downloaded the tax statistics from 2012-2013 and did some analysis. And here it is


People claiming negative gearing tax deductions: 1,260,000 (which is 9.8% of total tax payers)


Percentage of taxpayers with total income between $50,000 and $100,000 who Negative Gear Property : 12.2%
Percentage of taxpayers with total income $100,001 and over who Negative Gear Property :19.6%


Amount of tax forgone as a result of Negative Gearing of Property : $3.791 Billion


Percentage of tax forgone that goes to taxpayers with total income between $50,000 and $100,000 who Negative Gear Property : 38%
Percentage of tax forgone that goes to taxpayers with total income between $100,001 and over  : 46%


Average tax forgone per taxpayer with total income between $50,000 and $100,000 who Negative Gear Property: $3002
Average tax forgone per taxpayer with total income between $100,001 who Negative Gear Property: $5607


Of course those averages hide a lot. If you look at the tax forgone for each income segment, you get big increases at the high end.





Now there will be some losers out of the policy. At the end of the day, returns include the sale price of the assets at the end of the negative gearing schedule. And there is no doubt that the sale price of existing stock will reduce as a result of these changes.
But there is no doubt, most of the heavy lifting will fall on the rich who can afford it.