The cost to the federal budget of  negatively geared rental property deductions has fallen 12.5 per cent to $10.9 billion, the lowest level in four years because of record low interest rates.

A the start of a federal election campaign in which negative gearing will be a key issue, the latest Tax Office statistics show the country’s two million landlords claimed interest deductions of $21 billion, a decline of 9 per cent, while earnings from rents were flat at $38 billion.

The figures, published on Friday and based on taxpayer’s 2013-14 tax returns, show 62 per cent of landlords are returning net losses, down from 64 per cent the year before.

A record 776,672 taxpayers earned a net profit from their investment property in fiscal 2014, an increase of 44,322 people compared with the year before.

 

Capital gains jump $4b

The Tax Office statistics show net capital gains being reported by taxpayers jumped 37 per cent to $14.4 billion, far faster than the rise in the property or stock markets.

The big rise was because losses from the global financial crisis have now washed through the system, inflating the level of gains.