Matt Grudnoff

And that basically means they'll just add the inflation rate to the price of the asset and that's how they'll discount it.

And the advantage of that one is we know that

back before the capital gains tax discount came in in 1999, house prices weren't booming.

We didn't see a massive increase in house prices.

And so therefore, it's more likely not to be pushing up house prices.

Well, negative gearing means that you may hear loss.

So you rent out a property, but the rent doesn't cover the interest on the mortgage plus all the other expenses you have for running the property.

Now that's a bad thing, right?

You're losing money.

And the only reason people would be happy to be negatively geared is if they made a big capital gain at the end and that wiped out all of the losses.

Negative gearing wasn't a problem before the capital gains tax discount came along because people didn't want to be negatively geared.

And so if you actually properly fix the capital gains tax discount, you wouldn't have to worry about negative gearing.

But if they only go kind of halfway, like if they go to 33% or 25%, then if they really want to get an impact on the property market, if they really want to help make housing more affordable,

then they'll probably want to limit negative gearing.

At the moment, a lot of people just have one investment property, but there's a small group of people who have massive numbers of properties.

In fact, a quarter of all rental properties are owned by just 1% of taxpayers.

So there's a very small group that own a lot.

And if you limit negative gearing to just one or two properties,

then you effectively force these people not to use this way of basically reducing their income.

And you essentially force them to either positively gear their property, basically invest properly, or to sell up.