Negative gearing – the value of claimed rental losses are slowing. What do I need to know?
By | 21st Apr 16

Recent tax figures from the ATO has reflected a fall in claims for rental losses, showing that the amount of negative gearing losses has been halved over the last 2 years. This has started commentary on the effectiveness of changing the policy to make savings from a federal budget standpoint.

In 2011-2012, the figure for net rental losses was $7.9 billion, at the end of 2014 that number plummeted to $3.7 billion. Low interest rates attributed partially to this drop, with the low rate, investors have a lower repayment rate to lenders.

We are likely to see this figure drop further as the Reserve Bank of Australia (RBA) has cut the cash rate twice since the report was presented.

The recent announcement by the Labour government outlining their new policy states a limit to negative gearing benefits. The policy restricts negative gearing to new homes or developments which does not include established housing. Housing policy and negative gearing has been contentious for a while now and it seems to be continuing with current political debate.

Whatever changes may be implemented would not apply to current investment properties and only apply to properties purchased after these changes are implemented.

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