So...the ATO has effectively forgone $3,880 dollars, in favour of the investment property owner, in order for that owner to subsidise the renters living standards to the tune of $10,487 per annum (net $6,606).
So who is the real winner here?
In the meantime, there has been additional tax take-up by the ATO of some $4,000 from profits made by many down-stream services (Estate Agents, Builders, Banking Profits, advertisers, etc)...not to mention interest the government earns on holding stamp-duty on the property...so the net result to the ATO is effectively zero!
So...the renter has just enjoyed living in a subsidised house for the last four years...at a net cost to the investment property owner.
In the above example, the respective property rose just 2.3% over 4 years (about right recently)...however it would need to increase by around 9.3% over this period for the investment property owner to break even. But, nobody would bother with such risks to achieve break-even, so growth of around 4% per annum is required to make it all worth while...remember, one needs to cover for non-rental periods as well.
This period is coming...but...the investment property owner will then have to pay tax on any captial gains...which interestingly results in a net credit on the transaction well in favour of the ATO.
More interestingly, if the house was sold by an owner occupier, there would have been no tax payable on any captial gains...and no additional tax-take for the ATO.
The ATO (and government) make a fortune from property turn-over...especially during growth periods.
Anyway, these additional taxes reduce the need for a generally higher taxed environment for the wider population, increases the quality and quantity of public services and improves roads, rail and public amenity...in the process generating jobs, from which further taxes are collected.
Australia is a shining star accross the world when it comes to stability in property ownership AND associated quality of housing, community services and public amenity.
