Stats: 74% of Property Investores Are Low-Med Income Earners

[cloudyday]

hmm I thought people with lots of investment properties had higher paying jobs?

Seems like a whopping 74% of negatively geared property investors are on less than 80,000/year income. Seems really low... $80k/year is peanuts in this day and age if you live within 20km of the CBD. Even if this was "taxable income", it says the average loss/deduction is merely $9132, so 74% of these income earners GROSS income would be $89,000/year.

http://www.macrobusiness.com.au/2012/04/tax-stats-unmask-negative-gearing/

Other stats:
1 in 7 Australian taxpayers are a property investor.

Seems like property investing is the easiest way for the "poor/med" to increase their net worth through capital gains (via time). Pretty interesting how there's over 245,000 investors earning less than $35,000/year income.

The ATO stats shows property investing amongst the rich as very low, which seems about right. I have a friend who has net worth of over $10mill and he barely touches IPs because he said there are much better things to invest in with better yields than go and sort out rent issues (even with someone else managing them).

It is sorta satisfying to know that the government has created a vehicle for low/average income families to get ahead by "negative gearing" property.

 

[recruit2]

Yeah that's interesting.

I'm not surprised at all, that is a pretty accurate reflection of the people I see heavily investing in property in the real world.

Once you are a high income earner, its just easier to keep earning the dollars from your core income rather than stuffing around renovating and chasing rents just to maybe make a profit (particularly in the current market). Particularly when you see people busting a gut adding value to end up with a property that is cash flow positive by $20 per week after all that slog..

I do know some high income earners who are into property in a big way, but its a minority.

 

[Aaron_C]

Is that taxable income or assessable income? They are two very, very different metrics.

 

[buzzlightyear]

Is that taxable income or assessable income? They are two very, very different metrics.

Its taxable income Aaron

Page 16 for those who are interested

 

[Belbo]

Its taxable income Aaron

Page 16 for those who are interested

Woah! I reckon your home library is one scary weird place.

 

[Ace in the Hole]

Ah, der, of course everyone can use negative gearing in order to help create wealth if they want to. There are many many people out there who dont want to create wealth for themselves, for any number of reasons, and you wont find them amongst the ATO's statistics for property investors. Moving on, do you know of any other way for low income earners to become wealthy other than through property "investment" even if we arent making as much money yet as those of you who have been doing it for a longer time? If so, please let me know.
Business.
There are some posters on this forum who brag about earning very high incomes outside of their investing, and they are rather vocal about negative gearing and how those who use it to help with their cashflows are real losers. Thanks for all the encouragement, gentlemen. O yeah, this is Australia where people are judged by their incomes and not by their personal qualities. The lower classes dont like it when one of theirs tries to get a life, and the big boys in town dont like it when the plebs try to nudge in on all the fun.

So tell me again. If one is poor and wants to become rich, how do they do it?
Business
Business > Property investing
Business + property investing is better again
And is there a problem with that?

Answers shown in red.

 

[buzzlightyear]

Woah! I reckon your home library is one scary weird place.

No, my thirst for knowledge can be quenched at my local library......

 

[Tillie]

There are some posters on this forum who brag about earning very high incomes outside of their investing, and they are rather vocal about negative gearing and how those who use it to help with their cashflows are real losers.

Lately I have not noticed anyone to promote negative gearing here. Actually opposite my mind the most of the posts here lately has been warning about negative gearing in the current stagnant (no actually declining) market.

 

[House_Keeper]

Is that taxable income or assessable income? They are two very, very different metrics.

That is a key observation.

because somebody bring their TAXABLE income below 80k doesn't mean they are a med income earner.

some people are trying to read a bit too much into these stats. It's not all that easy to figure out ...

 

[Ideo]

Lately I have not noticed anyone to promote negative gearing here. Actually opposite my mind the most of the posts here lately has been warning about negative gearing in the current stagnant (no actually declining) market.

I'm not a fan of negative gearing, but that doesn't mean I look down on those that use it.

And I worry about those who over extend themselves in the current market.

 

[buster]

That is a key observation.

because somebody bring their TAXABLE income below 80k doesn't mean they are a med income earner.

some people are trying to read a bit too much into these stats. It's not all that easy to figure out ...

Agree, the stats are meaningless. Taxable income has nothing to do with being rich or poor, gross income or net income. Some of the wealthiest people pay little tax. Capital gains arent taxed until realized, but can be drawn against to get more appreciating assets or, future financial year income, but give current year tax deductions. The figures dont take into account defered income or advanced expenditure,entities used to distribute income to whom and how much. or other places money can be put and is not taxed until it is redeemed, or income averaging or many other legitimate ways of minimizing tax.

 

[Andrew_A]

Well the best description of negative gearing I have heard is that you might 'tolerate' it. It's just the price you pay to secure quality property, also it's commonly referred to as a strategy which it isn't, it's just a method or tool which can be used as a component of a property or investing related strategy.

 

[locko24]

No, my thirst for knowledge can be quenched at my local library......

Can we go back to this?

Where is your library again...?

 

[HiEquity]

Yes, it's a bit chicken before the egg.

We don't know from these stats whether people who have low-med incomes form the majority of property investors or whether the majority of property investors end up with low-med incomes as a result of their investing...

The answer isn't clear, which is a bit concerning!

 

[peastman]

do you know of any other way for low income earners to become wealthy other than through property "investment"

Unfortunately most low income earners I know have the strategy of winning Tattslotto, doesn't work for them most of the time.

 

[BayView]

There are some posters on this forum who brag about earning very high incomes outside of their investing, and they are rather vocal about negative gearing and how those who use it to help with their cashflows are real losers.

It is beyond me how anyone could class another person as a "loser" for having the get up and go to learn about the tax system (loopholes), then go out and take action to use it to their advantage to get rich in lieu of their lower income..

Good on 'em, I say. Most of the population simply accept their lot and look forward to a miserable life as a pensioner.

Nothing annoys me more than someone who is on a very high income who brags about their (property) investing results when to invest when on a high income is a piece of cake compared to yer single mum or yer starving Uni student.

Or, conversely; cry publicly to those who earn far less about how they have had an investment flop (but they still have the great salary to fall back on).

 

[Ideo]

I think people are perhaps getting over sensitive.

I can't recall anyone calling someone who uses negative gearing a loser.

I don't agree with it as an investment technique for me. But it is an option that is available.

 

[HotRod]

Well, in this market people who invest purely to NG are losers in both senses.

Why would any sane person buy a property that you have to put money into every fn (even after the tax benefits) and find that after 12 months your equity has decreased as well?

This might even keep on dragging on.

 

[Fifth]

I'm not a fan of NG, though I'm not naive enough to believe it hasn't paid off for a heap of pre-boom and mid-boom buyers.

In this climate, 'tis a helluva gamble.

High-income earners can afford to take that gamble. Low-income earners, not so much.

I can understand high-income earners saying 'you know what, if poop hits the fan, I can afford to hold long term and I'm not too fussed about rubbish yields and potential negative equity in the meantime'.

A low-income earner breaking their back to service negatively geared properties, well, they'd feel mightily disenfranchised to see their properties worth less than they paid for them.

I'm not criticising those who have a go, it's just the reality of the gamble.

 

[Aaron_C]

Well, in this market people who invest purely to NG are losers in both senses.

Why would any sane person buy a property that you have to put money into every fn (even after the tax benefits) and find that after 12 months your equity has decreased as well?

This might even keep on dragging on.

And what makes you so sure that is going to happen? Nothing is ever certain.