rache,
you said "It's almost like somebody buying lottery tickets with somebody else's money but not sharing any winnings"

Well cant the same be said with Union fees?, why are they a tax deduction? Us tax payers who are not members of a Union are subsiding you.

Why are the rich union bosses getting 47% tax deduction on their union fees and the workers who earn less, are only getting 30%, and the 82% of Australians who don't belong to a union are subsidising those who do?

Also, you said "It was introduced long ago to create more new housing stock but has turned into nothing but a tax rort and almost every other country seems to manage quite well without it"

Please tell me which Western country does not have neg gearing? Every western democracy allows losses to offset gains in the form of tax deductions.

NG is writing down a business loss against income from paid employment.
Most countries allow losses only to be carried forward for write-down against future profits, i.e. they do not allow mixing of income streams.

https://en.wikipedia.org/wiki/Negative_gearing

Life will go on without NG, but the facilitation of economic advancement it offers Ms&Ds to aid in achieving economic independence from gov't, will go with it. I see no problem with simply capping NG to maintain this positive aspect.

Leftist ideologues want the principle of NG sacked, but are too timid to go to the people with reasoned arguments for abolishing CGT concessions, introducing of inheritance/death taxes, and including the value of the family home in determining welfare payments.

These are the hard things to do, not confecting Mediscares and promising all things to all people.

This from the Australian sums it up nicely:

"It is difficult to find a government policy that has been less successful at meeting its objectives than negative gearing on residential property. But unfortunately that is the nature of housing policy in Australia, where sound policies are ignored in favour of policies that encourage speculation, reduce home ownership and redistribute wealth towards the already affluent.

Of all the short-sighted housing policies plaguing Australia, negative gearing receives the greatest criticism. Its original purpose was to boost the housing supply by encouraging greater investment into housing construction. By that metric, it has been an unmitigated disaster.

Based on the latest data, new construction accounted for just 7.1 per cent of the total value of investor loan approvals. The trend has ticked up modestly recently but the long-term trend could not be clearer: Australian investors have little interest in newly constructed properties.

Rather than supporting the housing supply and boosting construction-related employment, negative gearing has effectively encouraged speculation and boosted house prices. Statistics from the Australian Tax Office paint a clear picture: property investment is popular in Australia but few of those investments generate sufficient rental returns to cover their costs.

According to the ATO, Australia had 1.9 million property investors in the 2011-12 financial year. Most of those investors failed to cover their costs, suffering a collective $6.8 billion net rental loss. Losses of this magnitude have become exceedingly common in Australia over the past decade.

The only reasonable conclusion is that most Australian property investors don’t really care about rental yields. They are in it for the capital gains, which is the very definition of speculative activity."

"By comparison, most countries only allow losses made on assets, such as property, to be offset against profits generated by the same asset class.

The difference might appear minor but Australian property investors face very different incentives compared to investors in other countries. These incentives encourage speculation, elevated housing prices and increasing indebtedness."

http://www.theaustralian.com.au/business/business-spectator/why-negative-gearing-is-australias-biggest-policy-failure/news-story/41abb3daec3e46697ce52e8295912f2d

"The only reasonable conclusion is that most Australian property investors don’t really care about rental yields. They are in it for the capital gains, which is the very definition of speculative activity."

Ostriches asserting the rental market won't be affected will get their wish to find out if Labor wins tomorrow.

Implicit in the article seems the notion that NG and CGT treatment cause price rises, not supply and demand. Where is the evidence for that? Where was it even when there was no CGT in Australia?

Ok Poirot, you state that 6.8 billion was the losses and, given not all interest charged on all loans is fully deducted, I say this because once the income is taken in, its only he shortfall that is geared. So, taking this into account, if we want to find the real cost of Ng, we must put all on the table, therefore the tax paid by lenders on profits (interest collected) must also be credited.

We must also remember that many loans today are interest only, and many properties become positively geared, while the loan remains in place. This means the loss does not occur, but the tax is still paid on the profits made.

Its not a simple case of 1 + 1 = 2, it is far more complex than that.

Of cause the other side of the equation is how many jobs are created with those bank profits and, will they remain if we change Ng.

The whole point is our economy is very fragile and anything that risks hurting the building industry can not be taken lightly.

BTW, I allow people to live in one of my houses for Free. I do my bit.