In the example above I omitted one house of the five because it wasn't suitable and no assessment was made.

Negative gearing provides some tax relief for investors in property who rent out their property, effectively subsidizing rents. Removing negative gearing removes investors from the market and pushes up rents. So the people that suffer the most is the 30% who rent.

It is basic economics, happened before and will happen again.

Dear Kirby483,

Look if I had incurred losses after the first couple of years of any of my small businesses I would rightly have had a please explain from the tax office. Yet people who 'invest' in housing will often claim a subsidy for 25 years. It is just insane.

As stated my main beef is against providing subsidies for existing houses. I recognise the argument that providing subsidies for new housing does have a social good in that it increases the housing stock and provides employment for the tradesmen and suppliers.

You made this point yourself; “There is no incentive to invest in residential housing, so less supply of rentals means rents go up. Less building being built means higher unemployment (carpenters, sparkies, bricklayers etc).”

But what Labour proposed was to wind up negative gearing for future purchases of existing homes. It seems quite a sensible policy. If you would like to explain why it isn't then I am all ears.

" If you would like to explain why it isn't then I am all ears."

Really? Let me have the umpteenth crack at it.

Initially, with the used house market nobbled by an absence of investors, new house investors will not know the resale value of their prospective asset. The business case therefore will fail to stack up.

As used houses sell, the market will find its level, confirming the decision of new house investors not to buy in.

Housing supply will fall. Rents will rise. At some point the rise will appeal to investors of used houses. At some higher point it will appeal to new house investors.

My question to Steele's glee club is why haven't house prices gone crackers in Hobart, or Perth? NG is the pimple on the CGT bum. Leave it alone and focus on fixing the CGT by taxing real gains fully, i.e. indexation of cost base and no concession.

As for all the money that abolishing of NG will provide for public expenditure, it's make-believe:
https://www.poets.org/poetsorg/poem/antigonish-i-met-man-who-wasnt-there

I said "Housing supply will fall". No, demand will outstrip supply.

Old or new, providing shelter is providing a public good.

That more shelter is required and prices go up, is down to the government's enthusiasm for immigration and of course to the myriad of taxes, direct and indirect, that government takes from the milch cow of housing, investment and owner-occupied.

The leftists don't want those dreadful owners, the despised 'landlords' making a loss out of their investment, but they particularly don't like them making a profit either. So, both positive and negative gearing are out, as is ownership of property anyhow they'd say. They'd say that the State should own it all. That way they hope to get something for nothing. Fat chance.

Perhaps Shorten and others can explain how government will be making up for the housing shortfall when private investors take a step back from abysmally low returns and high risks and find better, easier returns elsewhere. Or money is moved abroad, probably with the exasperated investor and family.