Negative gearing fueling massive investment boom

The Australian Taxation Office (ATO) has revealed that one in seven taxpayers from FY2008 now owns an investment property. That equates to approximately 1.7 million landlords in Australia.

According to the ATO, those landlords claimed a total of $33 billion in deductions in 2008, up 20% on the previous financial year. Losses on investment properties increased by 35% to $8.6 billion, representing a tax saving of $4 billion. Almost 70% of all investment properties made a loss.

The number of taxpayers with more than one investment property has also been rising. In 2007 the figure was up 3.7% on the previous year. In 2008 it leapt a further 7.7% to 456,956.

Interest costs were an increasingly prominent factor in loss-making property investment. Deductions claimed for interest rose 14.1% in 2006, another 16.4% in 2007 and a further 25.6% in 2008.