I think one of the 'rules' of any
investment is that it not be done exclusively for tax benefits. That is to say, the investment must one that can be fully expected to generate a good return Vs risk to the investor. So IPs must be a good investment with or withour neg. gearing to my way of thinking.
Govts. come and govts. go and tax laws change, but IPs are a longer term strategy than a 4 year govt. term.
Do I like neg. gearing? - sure.
Would I still invest in IPs without it? - yes!
Would I be able to hold as many IPs without neg. gearing? - probably not
Do I think they'll take away neg. gearing?
Some investors needing to off-load
some of their stock would have the effects of:
1. Dumping stock on a market that could hardly be said to be 'robust'. Not likely in the current economic climate
2. Removing available rental stock from the market with already tight vacancy rates. I don't think K Rudd wants his time on ACA when ppl have to live in their cars (more than they do now)
As others have rightly pointed out, this was tried before and it failed miserably and had to be reversed. It is political suicide.
The govt. has no way that it could provide the shortfall from its housing commission stock and even now is seeking private developers to build its low cost affordable housing. And is subsidising the lower rental return of investors who buy it.
This removal of neg. gearing thing raises its ugly head every couple of years and then goes away again. IMO it won't happen unless there is a major change in our tax system (which can & admittedly has happened in the past).
To me neg. gearing is just the icing on the cake but the cake is still worth having without icing on it. Just like some kids, some ppl only want to lick the icing off and give the cake to the dog.