Despite fears negative gearing is unfairly advantageous to wealthy investors, the Property Council has released figures showing most investors negatively gearing earn less than $80,000.
The Property Council supports negative gearing and has used Australian Taxation Office figures to show that almost half a million Victorians own a residential investment property.
Around 311,000 of those investors have their property negatively geared which means around one in ten taxpaying Victorians use the tax break.
Of those 311,000 investors, around 207,000 of them earn less than $80,000 and 24,000 of them are under the age of 30.
KPMG chief economist spoke to Fairfax Media and raised concerns about the risks for people who aren’t on huge salaries and are overly keen on investing in a negatively geared property.
“It seems that once you’re hooked on the drug of investing in property, you want more and more,” he said.
“Any increase in our historically low interest rates would cause serious problems given the growth of outstanding residential loans over the past decade.”
The Property Council’s Sally Capp however, says property investing is still the best asset class and the figures show negative gearing isn’t just for the super-rich.
“The fact that so many people in lower incomes brackets are doing things to try and create wealth, I think that’s a great sign,” she told Domain.
“Whether that type of wealth of creation is right for them at this time, that’s debatable, and maybe that’s what needs to be looked at further.
“We’re not seeing negative gearing used for wildly expensive properties with lots of ongoing costs. The amount of deductions seems very reasonable and affordable.”
The statistics show negative gearings are more likely to come from professions like teaching and policing than higher income professions like medicine.