Shocking investor tax figures revealed

By Kay Rivera | 15 May 2019

An average mum-and-dad investor adds hundreds of thousands of dollars to the public wealth over the lifetime of a single investment property, according to a new analysis by the Property Investors Council of Australia (PICA).

“The amount of federal taxes property investors pay is extraordinary and will surprise many – and that’s before state-based stamp duty and land tax costs are included, adding tens of thousands of dollars more to the bill,” said PICA Chairman Ben Kingsley. “It is clear that property investors do pay well above their fair share in taxes, and our concern is that impost on investors is set to blow out even further if Labor’s policies see the light of day.”

PICA modelled their investor-tax figures based on current negative gearing and capital gains tax (CGT) rules assuming assets were held over a standard 30-year loan term.

The results showed that while a typical Australian investor will benefit from negative gearing initially, they will be taxed nearly $167,000 in subsequent years over the full 30 years of modelling.

Following the train of thought, their net tax payable from rental income over the life of the investment will be over $138,000 under current negative gearing rules, according to Kingsley.

“The initial tax benefit in this scenario is around $30,000, before paying the $167,000 over the journey,” he said. “If you think about what first home buyers get in grants, stamp duty concessions and the like, it’s very comparable to what investors receive, but investors have to pay a lot more additional tax when homeowners pay nothing more.”  

 Kingsley said that under current rules, CGT also substantially contributed to the government’s tax take.

“Our data showed, for example, if the average investing couple sold their asset in the 30th year, under the current 50% exemption rule, they would be paying over $611,000 in CGT,” he said.

Property investors not “the big end of town”
The majority of the nation’s 2.2 million property investors earn less than $80,000 a year. Hence, the Labor Party’s claim about tax loopholes being for the big end of town is “insulting,” according to Kingsley.

“It’s totally deceptive to characterise landlords as ‘the big end of town’ in the lead-up to election day,” he said.

Kingsley said investors have been unfairly targeted throughout Labor’s and the Greens’ election campaigns.

“Mum-and-dads are tired of being branded as ‘greedy property investors buying their fifth or sixth property’, when almost 72% only own one,” he said. “We’re also fed up with being blamed for higher property prices, when historically investors make up just three of every 10 buyers in the market.”

The analysis showed that investors were already contributing plenty towards funding essential services through taxes, according to PICA.

Increased taxation on investors looking to self-fund their retirement would have far-reaching economic ramifications for all Australians, said Kingsley.

“We agree with research undertaken by the Property Council of Australia regarding Labor’s policy on negative gearing and CGT – that it will force the average mum-and-dad investor out of property, which will reduce demand and have a [negative] impact on prices,” he said. “In addition, the policies will also reduce construction over time, which will force up rents when rental supply tightens.”


Top Suburbs : berala , whyalla , artarmon , mt lawley , narara


Get help with your investment property

Do you need help finding the right loan for your investment?

When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.

Just fill in a few details below and we'll then arrange for a local mortgage broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus an appointment is free.

How soon would you like a mortgage?
What is your Annual Household Income i $
Do you currently own any Investment Properties?
Do you own your own residence?
How much equity do you have in all your current properties?
First Name
Last Name
Where do you live?
What number can we reach you on?
E-mail address
We value your privacy and treat all your information seriously - you can check out our privacy policy here