Property owners are not the only ones that are relying on negative gearing, with the tax offset seeing tradies called upon in greater numbers to provide maintenance and repairs of properties at levels unseen at any other federal election in Australia’s history.
“The most recent ATO Taxation data saw Other Rental Deductions soar to $18.376 billion for 2013-14 which via negative gearing drives repairs and maintenance activity in such a way that should see tradies taking more than a casual interest in the result of the July 2 election,” said Nicholas Proud, Principal, Property and Construction Analytics Australia.
“Outside of council rates, water charges , travel and insurances there are a lot of plumbers, sparkies, chippies and other asset maintenance workers such as cleaners, gardeners and handymen whose work makes up this Other Rental Deductions figure that can be claimed by property owners at tax time.
“Unlike any election before the value of this type of work assisted by negative gearing concessions is at record levels.
“In contrast to other elections, annual Other Rental Deductions in 1996 sat at $4.55 billion at the time of the election of the Howard Government, it has risen by $13.83 billion per annum since then. Even more recently, since the 2007 election of the Rudd Government the annual value of Other Rental Deductions declared has increased by $6.82 billion.
“There are untold numbers of tradespeople, repairs, maintenace and asset support workers that come to the aid of the tennant when things break or need repair and these trades rely on the concession and its driver of activity to keep the books turning over.
“What hasn’t been factored into account really is the impact on those smaller handy trades that comprise a significant part of the property and construction workforce if the negative gearing concession is changed or quarantined to new dwellings only.
“The existing homes are the properties that are more likely to require maintenance and repairs for two simple reasons; they are old and with over 2.5 million dwellings in the rental stocks there are plenty of them.
|
Taxable Income |
Other Rental Deductions |
Other Rental Deductions No. |
Average Deduction |
% |
|
Less than or equal to $18,200 |
$2,253,074,560 |
277,693 |
$8,114 |
14% |
|
$18,201 to $37,000 |
$2,325,522,579 |
314,028 |
$7,405 |
16% |
|
$37,001 to $80,000 |
$5,632,316,431 |
702,735 |
$8,015 |
35% |
|
$80,001 to $180,000 |
$5,686,914,423 |
575,554 |
$9,881 |
29% |
|
$180,000 or more |
$2,479,123,491 |
149,268 |
$16,609 |
7% |
|
Total |
$18,376,951,484 |
2,019,278.00 |
|
|
“By income, those on a taxable income under $180,000 are likely to declare an Other Rental Deduction under $10,000.
“Across the electorates, 126 out of the 150 lower house seats on average declared an Other Rental Deduction under $10,000.
“If negative gearing was quarantined to new homes only there would be no concession for the upkeep of existing homes, which are the homes that most need the reinvestment.
“With no offset it is likely that only those repairs and maintenance that are most fundamental to the upkeep of the property will be made which not only will reduce activity and also have the potential to reduce the quality of rental stocks in the lower yield suburbs which would be detrimental to tenants.
“Exactly how many entry-level handy jobs and low-level trades maintenance workers would go is difficult to say, but the growth in this deduction since 1995-96 shows a reasonable baseline to consider the scale of any such decline.
