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The budget is reforming negative gearing. On the ATO’s own record, the share of landlords running a loss has swung from 70 per cent to 42 per cent.
The budget reforms negative gearing as though it were a fixed part of the furniture. From 1 July 2027 the deduction will be limited to new builds, on the reasoning, in the government’s own words, that letting rental losses reduce salary and wage income “encourages leveraged property investments”. The shorthand the whole debate runs on is just as fixed: a couple of million landlords, about half of them negatively geared, every year. The first number is roughly right. The second one moves. On the Tax Office’s own twenty-four-year record, the share of landlords who actually report a rental loss has been as high as 70 per cent and as low as 42 per cent, and in 2021-22, for the first time, most landlords made a profit.
The rules did not change over those years. Negative gearing has worked the same way since 1999. What changed was the cash rate. Interest on the loan is the largest cost a landlord deducts, so when the Reserve Bank cut rates to almost nothing, the losses shrank, and the count of landlords in the red shrank with them. When rates went back up in 2022-23, so did the losses. The figure the reform argues over is less a structural feature of the tax system than a barometer of monetary policy.
1. The line that will not sit still
ATO Taxation Statistics 2022-23, Individuals Table 27A. Share of individuals with a rental-property interest whose overall net rent for the year was a loss. The dashed line marks the half-way point: below it, most landlords reported a rental profit. Years are income years ending 30 June. Source: ATO, frozen 29 May 2026.
2. It moves with the cash rate
Put the same years next to the Reserve Bank’s cash rate and the shape rhymes. The negatively geared share sat near its top while rates were above 6 per cent before the financial crisis. It slid through the 2010s as rates were cut and cut again, and fell to its record low in 2021-22, the year the cash rate averaged 0.17 per cent. The one clean reversal is the most recent: rates rose sharply through 2022-23, and the loss-making share rose with them. The link is not magic. A rental loss is rent received minus the costs of holding the property, and for a geared investor loan interest is typically the largest of those costs. Cheaper money, smaller losses, fewer landlords in the red. That interest dominates a geared landlord’s costs is the established reason for the pattern, not something this table shows: it records only the net result.4
Reserve Bank of Australia, cash rate target (statistical table A2), financial-year time-weighted average computed for this finding. Shown on the same time axis as the chart above. Source: RBA, frozen 29 May 2026.
3. The cost moves too
The figure people reach for to argue negative gearing is expensive is the total of the losses claimed against other income. That total moves as much as the headcount does. The Tax Office reports it from 2018-19 onward. Put every year in today’s dollars and the rental losses written off ran to about 13.6 billion in 2018-19, more than halved to 6.4 billion by 2021-22, then jumped back to 10.4 billion in 2022-23. Inflation does not explain the swing. If anything it widens it.
| Income year | Real (2022-23 $bn) | Nominal ($bn) |
|---|---|---|
| 2018-19 | 13.6 | 11.83 |
| 2019-20 | 10.9 | 9.58 |
| 2020-21 | 8.2 | 7.34 |
| 2021-22 | 6.4 | 5.98 |
| 2022-23 | 10.4 | 10.35 |
Loss-making landlords only. Real figures deflated by the ABS All groups CPI (Australia, financial-year average). The 2021-22 low is highlighted. Source: ATO Individuals Table 27A; ABS CPI.3
There is a second way to see the turn. Add up the rental income and the rental losses of every landlord together, and for most of the record the sector ran at a net loss against other income. That flipped in 2020-21. Taken as a whole, Australia’s landlords reported a net rental profit of about 3.1 billion dollars that year and about 5.9 billion the next. Even in 2022-23, after the rate rises pulled the losses back up, the sector was still about 1.6 billion dollars in the black.2
The shape of it
Negative gearing is treated, in the budget and in the argument around it, as a fixed structural feature: so many landlords, so much cost, year after year. The Tax Office’s own numbers say otherwise. The rules have not changed since 1999, but the share of landlords actually running a loss has ranged from 70 per cent to 42 per cent, the count has risen and fallen by hundreds of thousands, and the losses written off have moved by billions, all of it tracking the cash rate, because for a geared investor interest is typically the biggest cost deducted. In 2021-22 most landlords made a rental profit. The figures the debate leans on are real. They are also a single frame of a moving picture, and they had just been near their lowest in two decades before rates pushed them back toward half.
What this finding does not establish
It does not prove the cash rate caused the swing. The relationship is a description of two series moving together, and it is loose in places: the loss-making share stayed high for several years after the 2009 rate cuts, when prices and gearing were still rising. Rents, property prices and how much investors borrow all move the number as well, and loan interest being the largest deductible cost is the established explanation for the co-movement, not a figure this table contains.4 The claim here is narrow: the loss-making share broadly follows the rate cycle, and it is not constant.
It does not measure the cost of negative gearing to the budget. The losses written off against other income are not the same thing as the revenue forgone, which depends on the marginal tax rates of the people claiming them and is estimated separately by Treasury. This finding reports the losses as the Tax Office records them, not a revenue cost.
It does not say who, by income, is negatively geared. The Tax Office’s income breakdown counts landlords by taxable income, which is measured after the rental loss has already been deducted, so a higher earner who gears heavily can appear in a lower band. The published table also does not split that income breakdown by profit or loss. For those two reasons this finding does not draw the popular “nurses and police officers” or “wealthy investors” income picture either way.
It does not forecast the reform. Nothing here predicts how many properties the new-builds limit will shift, or what it will do to prices, rents or revenue. The reform also changes capital gains tax, replacing the 50 per cent discount with indexation and a 30 per cent minimum rate; that half of the package is not examined here. And it does not turn on the schedule-level nature of the data: the Tax Office counts individuals once by their overall position, but a single property can have several owners and one person can hold several properties, so the property-interest counts are not a count of properties.1
Sources
- Australian Taxation Office, Taxation statistics 2022-23, Individuals Table 27A and Table 27B (individuals with an interest in a rental property, by overall net rent position and by taxable income range, 1999-00 to 2022-23 income years). data.gov.au dataset “Taxation Statistics 2022-23”, GUID 03326c3f-c0d3-4af4-afc7-c6ccc0a02223, Creative Commons Attribution 2.5 Australia. The negatively geared share is individuals with an overall net rent loss divided by all individuals with a rental interest, by income year. Table 27A and Table 27B totals both equal 2,261,080 for 2022-23, an internal cross-check. Retrieved and frozen 29 May 2026.
- Reserve Bank of Australia, Cash Rate Target, statistical table A2 (changes in monetary policy and administered rates). The financial-year figures are time-weighted averages of the cash rate target, computed for this finding from the dated target changes. Frozen 29 May 2026.
- Australian Bureau of Statistics, Consumer Price Index, Australia, dataflow CPI via the ABS Data API (All groups CPI, Australia, index numbers, original), Creative Commons Attribution 4.0 International. Used to convert rental-loss totals to 2022-23 dollars on a financial-year average basis. Frozen 29 May 2026.
- Australian Government, 2026-27 Budget, factsheet “Negative Gearing and Capital Gains Tax Reform”, 12 May 2026. Quoted for the design of the measure and the stated rationale. Frozen 29 May 2026.
Footnote (1): ATO Individuals Table 27A counts individuals with an interest in a rental property, each classified once by their overall net rent position (the sum of net rent across all their rental schedules for the year). A note to the table records that the data is compiled at the rental-schedule level, so the property-interest counts are not a count of properties: one property can have several owners and one person can hold several properties. The 2022-23 income year was compiled from schedules processed to 31 October 2024 and may be revised slightly upward as late-lodged returns are added; earlier years use the same processing rule.
Footnote (2): the aggregate net rent figures are the sum of net rental income across all landlords (profits and losses together) for the year, from the same Table 27A. They are available from 2018-19, the first year the table reports dollar amounts. 2018-19 was a net rental loss of about 3.1 billion dollars; the series turned positive in 2020-21.
Footnote (3): the rental-loss totals are the net rental income of loss-making landlords only. Nominal figures: 11.83 (2018-19), 9.58 (2019-20), 7.34 (2020-21), 5.98 (2021-22) and 10.35 (2022-23) billion dollars. Real figures are nominal deflated by the ABS All groups CPI (Australia), financial-year average, expressed in 2022-23 dollars. In real terms the 2018-19 total is about 13.6 billion, so inflation widens rather than explains the fall to 2021-22 and the rebound in 2022-23.
Footnote (4): that loan interest is the largest cost a geared landlord deducts is an external premise, not a figure from Table 27A, which records only each landlord’s net rent position. It is the well-documented reason the loss-making share moves with interest rates, and it is the assumption the rate reading rests on; it is disclosed here rather than asserted from this finding’s own data. The measured result of this finding is the co-movement and the volatility of the share, not the mechanism.
How this finding was built
The series
The rental figures come from the Australian Taxation Office’s Taxation Statistics 2022-23, Individuals Table 27, downloaded as an Excel workbook from data.gov.au and parsed directly. Table 27A gives, for each income year from 1999-00 to 2022-23, the number of individuals with a rental interest split by overall net rent position and, from 2018-19, the dollar amounts. The cash rate is the Reserve Bank’s published target history, and the price index is the ABS All groups CPI pulled from the ABS Data API.
What is measured, quoted, or computed
Measured: the negatively geared share each year, the number of landlords, the total rental losses, and the aggregate net rent, all read or summed directly from Table 27A. Quoted: the design and stated rationale of the reform, from the budget factsheet, and the cash rate target levels, from the Reserve Bank. Computed: the financial-year cash-rate averages (time-weighted from the dated target changes), the share percentages (losses divided by all landlords), and the conversion of rental losses to 2022-23 dollars using the ABS CPI. Assumed: one premise, disclosed. The reading that the loss-making share moves with the cash rate rests on the fact that loan interest is the largest cost a geared landlord deducts. That fact is external and well-documented; it is not contained in Table 27A, which records only net rent positions. The measured finding is the co-movement and the volatility; the mechanism is the disclosed assumption behind the interpretation. The reform’s future effect is not estimated; no figure here is a forecast.
What this finding does not bridge
The negatively geared share and the cash rate are shown on the same time axis but never combined into a single number, and no causal coefficient is fitted. “Negatively geared” means an overall net rent loss, as the Tax Office defines it; it is not stretched to mean a revenue cost to the budget, which is a different quantity that depends on marginal tax rates.
First published 29 May 2026. Rental figures are as at the ATO Taxation Statistics 2022-23 edition, the latest available, for income years to 30 June 2023. The 2022-23 income year may be revised slightly in later editions as late-lodged returns are processed; any material revision will be logged on this page.