Country Gal,

Capital Gainst Tax was a short sighted tax designed prevent the market distortion caused by people converting income into asset appreciation so as to escape income tax.

Unfortunately, whilst it addressed that distortion, it compounded another by effectively punishing the liquidation of assets. The effect being that investor's don't sell properties as often as they once did. This is just another factor decreasing the availability of real estate and pushing up prices. More generally, free markets work best when they are free of distorting influences. The whole theory of capitalism is that money will naturally flow to opportunites for profit, which naturally appear where there is demand. CGT unfortunately, has the effect that if you sink money into an investment for a few years in an appreciating market, you can't move that capital to a new opportunity (other than by borrowing against the existing assets) without paying a very heavy tax burden. The consequence is that, capital does not flow nearly as freely as it used to and the problem will get worse over time as assets appreciate.

This is bad for our economy in all sorts of subtle ways.

Bronco investors in NSW have already deserted the property market.That is why rents are soaring.Look to our state Govts.They slowly release land in order to Maximise their return.Look also at stamp duty infrastructure taxes etc that in NSW add a total of $170,000.00 to a house/land package.Abolish negative gearing and no one will produce another dwelling.

Our state govts have used land releases as a cash cow to pay for their bloated bureaucracies.

You may all say that I am being simplistic and that sums it up.
Investors are rushing to purchase land as soon as it is released they are even queueing and camping overnight to purchase land. The investors have the collateral of all of their properties so have ready finance. Potential home owners ma have only $80,000.00 deposit if they are lucky and perhaps financial approval. We in Western Australia are witnessing investors from Eastern States building houses before they have even sighted the land it has all been secured by an agent. A young couple visit the developer with high hopes and then told dong sorry that is sold. I was once a landlord myself and only charged $120 dollars a month now the greedy landlords with low interest rates are charging at least $250.00 a week and on auction. This is the unacceptable face of capitalism supply and demand created and engineered by the Howard Government. Previous Conservative State Governments sold off State Housing and the current State Governments have inherited the lack of State Housing and GEHA Housing. No Federal Government should subsidise landlords to supply low cost housing the Federal Governments should be subsidising home owners with mortgages.

What we need is an independent agent who inspects every auction (on site) and who selects the bidders who are in need of a home for their family to live in.NO (overseas or local) investors allowed to own more then two properties including their own dwelling.The second home should be fully taxed and treated as income minus legit expenses.Independent agents should have access to investors' business arrangements.Televised home buying/investment schemes should be abolished.Simplistic? You bet!
Last but not least is the banks' usury system,which makes money out of air.If you would ask them to show the gold as per equalising the paper money being circulated there wouldn't be any