{"id":656331,"date":"2026-05-07T21:38:17","date_gmt":"2026-05-07T21:38:17","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/656331\/"},"modified":"2026-05-07T21:38:17","modified_gmt":"2026-05-07T21:38:17","slug":"landlords-pay-almost-7-billion-a-year-more-in-tax-than-home-owners-pushing-rents-higher","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/656331\/","title":{"rendered":"Landlords pay almost $7\u00a0billion a year more in tax than home owners, pushing rents higher"},"content":{"rendered":"

In Tuesday\u2019s federal budget, the government is widely expected<\/a> to bring in changes to how investment properties are taxed, including negative gearing<\/a> and the capital gains tax discount. <\/p>\n

Ever since the Albanese government\u2019s re-election, there have been growing calls<\/a> to tax landlords more. <\/p>\n

In March, a Senate committee report<\/a> on the capital gains tax discount concluded:<\/p>\n

there is evidence that the concessions provided by the capital gains tax discount, in combination with negative gearing, have skewed the ownership of housing away from owner-occupiers and towards investors.<\/p>\n

That suggests rented housing is under-taxed, compared to owner-occupied housing. But is that actually true? <\/p>\n

What landlords pay that homeowners don\u2019t<\/p>\n

Some federal and state taxes apply only to rented housing, and not to owner-occupied housing. <\/p>\n

At a federal level, this includes personal income tax on net rental income and personal tax on capital gains from housing. At a state level, there are land taxes on investment properties. Owner-occupied homes are exempt.<\/p>\n

I\u2019ve gone back through a decade of data from the Australian Taxation Office and the Australian Bureau of Statistics to estimate how much revenue<\/a> these extra taxes on rented housing raised.<\/p>\n<\/p>\n

In 2022\u201323 (the most recent year we have complete tax statistics), I calculated landlords paid around A$500 million in personal income tax on their net rent income. However, their interest deductions were unusually low in 2022\u201323, because interest rates were unusually low.<\/p>\n

To get a clearer idea of what happens under more typical circumstances, with higher interest rates, I calculated annual averages of tax payments, using tax data from 2013\u201314 through to 2022\u201323.<\/p>\n

Over that decade, interest deductions were higher than in 2022\u201323, leading to net rent income being negative. As a result, instead of paying some tax on their net rent income as happened in 2022\u201323, landlords typically saved $400 million a year in tax from their net income.<\/p>\n

This reflects the negative gearing issue that the Senate report<\/a> raised concerns about.<\/p>\n

However, landlords also paid other taxes over the decade \u2013 and that\u2019s where the biggest difference with owner-occupiers emerged.<\/p>\n

An extra $69 billion over a decade<\/p>\n

From 2013\u201313 to 2022\u201323, I found landlords paid an average of $3.7 billion a year in capital gains tax, even after the 50% discount allowed for capital gains.<\/p>\n

They also paid around $3.6 billion in state government land tax, which I was able to estimate by obtaining unpublished Australian Bureau of Statistics land tax data.<\/p>\n

Allowing for all three taxes, landlords paid a total of $6.9 billion in a typical year from 2013\u201314 to 2022\u201323, as shown in the table above.<\/p>\n

While owner-occupiers do pay some other taxes, such as the goods and services tax on new housing and local government rates, landlords pay those other taxes as well.<\/p>\n

So the bottom line is that landlords have paid an extra $69 billion in taxes over the past decade, which owner-occupiers didn\u2019t have to pay.<\/p>\n

Renters end up paying higher rents<\/p>\n

Do landlords pass that extra tax burden through to renters? The authoritative 2010 Henry Tax Review<\/a> concluded it was likely they do:<\/p>\n

Since owner-occupied housing is exempt, land tax on residential investment properties is probably passed through to renters as higher rents. <\/p>\n

While the Henry Review was specifically referring to land tax, the same economic logic applies to the other extra taxes on rented housing.<\/p>\n

We can see how significant this extra tax burden is by comparing the annual amount of extra tax \u2013 around $6.9 billion a year \u2013 to the 10-year average for the value of actual rents<\/a>, $47.9 billion.<\/p>\n

If those costs were being passed on in full, that would mean around 14% of housing rents in the past decade would have been due to taxes that apply to rented housing, but not to owner-occupied housing.<\/p>\n

Tackling housing affordability in the right order<\/p>\n

Extra taxes being passed onto renters are regressive, because renters have lower average incomes than owner occupiers. <\/p>\n

The most recent Bureau of Statistics data we have, from 2019\u201320, showed average gross weekly income<\/a> for all households was $2,329. But for renter households, it was only $1,908.<\/p>\n

To help both renters and would-be owner-occupiers with housing affordability, far greater national reform is needed beyond how we tax property owners. <\/p>\n

As former prime minister John Howard has observed<\/a> since retiring, the planning policies of both local and state governments <\/p>\n

avoid policy decisions that might reduce the value of the existing housing stock in an area [\u2026] The interests of current home owners are always preferred to those of new entrants.<\/p>\n

While politically difficult, it\u2019s in the national interest for those planning policies to change to increase the space available for housing. That would increase national income and reduce inequality.<\/p>\n

In the meantime, the first priority for housing tax reform should be to better share the existing tax burden between renters and owner-occupiers. <\/p>\n

More than a decade ago, the Henry Tax Review recommended broadening the base for land tax to include owner-occupiers, similar to local government rates which are a more efficient tax. That could fund a substantial reduction in tax rates for land tax.<\/p>\n

It would also finally mean land tax was no longer an extra cost on renters compared to owner-occupiers.<\/p>\n

So first we should reduce rents by reforming land tax. Under lower rents, it would become reasonable to tighten up negative gearing in future federal budgets.<\/p>\n

Read more:
\n Negative gearing tax breaks could finally be tightened in the May budget. What options are on the table?<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"In Tuesday\u2019s federal budget, the government is widely expected to bring in changes to how investment properties are…\n","protected":false},"author":2,"featured_media":656332,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[43,44,41,39,42,40],"class_list":["post-656331","post","type-post","status-publish","format-standard","has-post-thumbnail","category-headlines","tag-headlines","tag-news","tag-top-news","tag-top-stories","tag-topnews","tag-topstories"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/656331","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=656331"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/656331\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/656332"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=656331"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=656331"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=656331"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}