Not fit for purpose
Under an income tax, expenses are deductible against income only if they’re incurred in earning that income. Negative gearing violates that rule: a loss on your investment property is deductible against your salary although it’s not related to earning your salary. Meanwhile the cost of travelling to work is not deductible although it is related.
This rort costs many billions a year (The Age, 1/5). It also fails to achieve its stated purpose of providing affordable rental housing. You can claim negative gearing if you buy an existing home, which forces a prospective owner-occupant onto the rental market. The solution is to allow negative gearing only on new homes. Only this would increase the stock of rental properties.
Gavin Putland, Melbourne
And (same page) the RSPT mining tax that became the MRRT: