Poirot, there are two unknowns in your theory with regards to your last post.
1. Once purchased, a new home becomes a used home and the next buyer can not get the same NG benefits as the first buyer, therefore unless the first buyer takes a huge hit, or rents go through the roof whereby returns are in the order of 8% instead of your typical 3% now, what incentives are there for the investor to buy the new home?

Furthermore, what assurance do the banks have that their share, usually 80%, or more, is going to hold its value? If it doesn't, are they going to continue lending at the same LVR? Now if they decide not to, where does that leave your wannabe first home buyer who was saving their original 20%, or less. Because they may now have to save 30% deposit and risk have fewer buyers to bail them out should the need arrive.

2. Once again, where is the land going to come from to build the new home if investors have to wear the holding costs during the DA's with after tax dollars. The end result will either be less land, or higher prices, or perhaps both.
3. If we reduce the turnover of existing housing, where do we find the void created in the public purse from reduced stamp duties and the likes.
4. If less money is loaned, less taxes are paid by the lenders due to reduced profits. Where does this void get filled from. Remember, we are going backwards, not forwards.

As for Mr Eslake, if someone of his stature voices an opinion on such a vital piece of proposed legislation, he should at least be prepared to debate the legit issues, as this is, when they are raised. Don't worry, I will find someone to bring on the debate, perhaps even Andrew Bolt.

Doog, renters already get subsidised, besides, if you increase the subsidies, the rents will increase. Then what!

The risks are simply too high and outweigh the potential gains.

rehctub,

".....what incentives are there for the investor to buy the new home?"

We've addressed that point.

"With this in mind, the main reason investors use negative gearing as a strategy is to reduce taxable income..."

There's yer incentive - straight from an investment chap.

"..Don't worry, I will find someone to bring on the debate, perhaps even Andrew Bolt."

So you'd replace the stature of Saul Eslake with a dingbat like Andrew Bolt (if you could)

Lol!...

In actual fact it is Saul Eslake's advice that is difficult to explain.

Because he is dismissive of far more significant influences on house prices such as the existing tax burden on property and homes in instead always homes in on 'negative gearing'. She is cocking his leg on a shrub and forgetting the forest behind. Also, negative gearing applies to other asset classes but Saul is not looking to curtail or ban it for shares and so on.

How does that figure? You'd think that an economist with 'stature' would not be backward in identifying and making recommendations for the main drivers of higher prices, especially where those drivers have government (policy and decisions) written all over them. What about that over-the-top immigration for a 'Big Australia' that has been setting ever higher records for decades? Who does that suit? Because it sure doesn't suit ordinary Australians and not just because of higher home prices either.

A professional who tells only part of the story is not a professional in my book.

My para should be,

"Because he is dismissive of far more significant influences on house prices such as the existing tax burden on property and always homes in on 'negative gearing'. He is cocking his leg on a shrub and forgetting the forest behind. Also, negative gearing applies to other asset classes, but Saul is not looking to curtail or ban it for shares and so on."

Why the obsession with 'negative gearing' when there are more worthy targets with greater impact?

Poirot: "The reason I always cite "higher authority" like Koukoulas and Eslake is because they are far more knowledgeable on this subject than the fellas on OLO. I cite scientists when I argue on climate for the same reason."

Claiming that understanding taxation and its effects is like understanding climate science as an excuse not to debate details is weaselly cop-out, Poirot. You prefer to cherry-pick opinion, for which there exists no consensus, rather than bone up on the subject of taxation and respond sensibly to questions I've posed.

If you want to discuss this topic seriously, rather than toe the Party line, then the questions were (refined),

Q1: Should a rental loss be able to be written off against income from paid work, or, should it only be able to written off against future earnings?

Q2: Should CGT at the investor's full marginal income tax rate apply to nominal gain on rental housing, or, the gain calculated after CPI indexation of the cost base of the asset?

Q3: (Refined) Should a concession on the CGT rate be applied, without indexation and, if so, at what percentage?

Q4:Should housing investment be treated differently to other investment classes?

The answers to these questions determines the property investment climate. In Butch's post, Point 1, he gives you a good insight into the mind of the experienced property investor, which seems to have been left out of the prognostications of your favourite analysts

All very well, Lucuferace.

<<If you can't afford what you want in your city, AJP, change your city.>>

But one still needs a job to pay off the house. Hobart is still nice and affordable, but good luck finding a job to pay for it. You're argument is invalid.

It also doesn't take into account foreign (and in Tasmania's case, interstate) investment.