This is my thoughts, I welcome your opinions and thoughts.
My letter.
Dear Mr Shorten.
I fear you have under estimated the possible fallout from your proposed changes to negative gearing.
Firstly, by forcing tax savvy investors into the new housing market, you will put additional pressure on first home buyers, in the form of increased competition, with the likelihood being increased prices, which may well put home ownership for FHB back on the wish list.
You then have the situation whereby those who buy new homes who are upgrading, may well back off due to a lack of potential buyers for their existing homes, simply because few investors will remain in this market given the removal of NG.
Of cause there is also the risk of banks tightening their lending criteria, due mainly to the lack of investors in the 'used market', as these investors currently pick up the bargains often resulting from forced sales.
You must remember, we are fast approaching 'D Day' for our car industries, and the closures, combined with a potential property deflation as a result of your policy, may well send our economy on an uncontrollable downward spiral, one I seriously doubt we can afford.
I feel you need to fully think this through before acting on this very sensitive issue.
While I agree NG needs to be looked at, you must not cut it off at the knees.

Well done Mr Shorten and Mr Morrison.

Tax breaks on investment properties and superannuation
are costing the budget nearly $40 billion a year with
none of the benefits going to younger home
buyers. It's the younger people are the ones who remain
locked out of the game according to new research.
It is overwhelmingly older, wealthy people who access
the breaks to buy and sell properties, and to park incomes
at discounted tax rates.

Level the
playing fields for younger people. Give them their first home
a chance.

Dear Foxy,

I agree with you regarding negative gearing, but your post might imply that being older is not right, that older people are bad. Older people need to be wealthier because they no longer have all the years ahead to save for the winter of their life, lest they then fall as financial burden on the young.

The government is also intending to make changes to negtive gearing. The idea of negative gearing seems to be that it takes some pressure off governments to provide public housing for low income renters. As far as I am concerned, landlords own and rent out houses to make money; they are not charities, so they should not be getting tax breaks. I'm with Shorten on this one.

TTBN, prior to NG, in the early 80's, properties would rent for 10% of their value annually, whereas now, due to NG, they usually rent for between 2 - 5 % of market value. If we remove NG one of two things will happen, either investors will stop providing affordable housing for renters, or rents will increase. Or perhaps both.

Foxy, if we remove NG from used housing, what effects do you think that will have on new house prices and, do you think this will make buying a first home easier, or harder?

Y, I have been a user of NG in the past, still am. I accept there needs to be changes, however my thoughts are that we should have laws that make investments having to be self funded within say ten years.
The abusers of NG are those who use the equity in one property/investment to fund the acquisition of another, another, then another, whereby they own ten properties, all with a L2V ratio of 80%
I doubt this was ever the intention for NG when it was introduced.

Having said this, my point is that can we afford to rock the boat with this issue because as it stands, public housing can not cope with demand, so investors fill the void. So if we limit the choices for investors, who by the way also upgrade, what effect will this have on rents and availability of rentals. Remembering that many investors buy older houses, rent them out, which provides cheaper housing, while obtaining DA's for the likes of multiple units which in turn provide multiple dwellings for renters. If we remove NG from this type of investment, as labor want to, who is going to buy the old house, await the often lengthy and very expensive approvals, then build the units.
There is far more at stake than just tax breaks here folks.

It seems both Liberal and Labor are intent on changing these laws.
I know several older couples who have an investment property they 'bought' by borrowing the whole sum of money from the bank and then only paying back the interest. None were well off, and indeed had not even finished paying off their first mortgage. Yes they had tax breaks, but it certainly wasn't making them rich!

Labor knocked off negative gearing in the mid '80's, but it wasn't successful apparently, and they reinstated the scheme in 1987. There were different outside circumstances then though, with huge interest rates for home loans, and stock market problems, so I don't know if things would be different if they tried it again?

What would worry me is that if this came in, would there still be enough private rentals of older, cheaper homes available for people who can't afford mortgages? The average person would not buy an older rental property without tax breaks, so the new housing market would flourish, but lower income people wouldn't be able to afford to rent these places.
Would the government build lots of state housing homes for these people to rent?
I doubt it.