Offshore landlords are raking in billions in Australian property tax write-offs, and the Albanese government's recent changes to tax benefits for investors have done little to impact this. While the revelation may not "pass the pub test" with most Australians, the reality is that the undersupply of new home building means foreign landlords are a necessity as rental supply struggles to meet demand. The Australian Taxation Office's 2024 financial year data shows that more than 34,000 non-residents claimed net rent losses worth a combined $473 million, almost four times the number of Australians who signed up as rentvestors in the same year. Over the past decade, the total for rental losses claimed in tax returns by non-residents was $35 billion, with $68.6 billion in rent interest deductions, $10.5 billion in rent capital works deductions, and $65 billion in "other" rental deductions. This suggests that foreign investors are considering billions of dollars worth of deductions. The government's tax changes mean that Australian investors can now only negatively gear newly built properties, and the same is necessary for those wanting to access capital gains tax discounts of a flat 50% after owning a home for a year. International investors' benefits remained unchanged, with their options already limited to new builds and their access to the CGT change stamped out more than a decade ago. The Tax Institute's tax counsel, John Storey, said the federal budget's changes to CGT benefits and negative gearing in May would have no impact on wealthy foreign investors, despite major changes for smaller-scale Aussie investors. Personally, I think this is a missed opportunity for the government to address the growing inequality in the housing market. While the numbers may not pass the "pub test" with many Aussies, I believe they are necessary to maintain the status quo. The Real Estate Institute of Australia's president, Jacob Caine, agrees, stating that decades of policy and delivery failure across all levels of government have left the nation little choice but to accept tax benefits for foreign investors. However, Property Investment Professionals of Australia's chair, Cate Bakos, believes that the information would be "salt in the wound" for many young Australians, emphasizing the reduced opportunity for young Aussies to build a better financial future for themselves. In my opinion, the government needs to take a step back and think about the broader implications of these tax benefits. While foreign investment may be necessary to support the housing ecosystem, it is important to ensure that the benefits are not disproportionately favoring the super-wealthy. The government should consider implementing a more equitable system of tax benefits for both domestic and foreign investors, while also addressing the undersupply of new home building to ensure a more sustainable and inclusive housing market.
