We need a mature debate about abolishing this inefficient and outdated tax and replacing it with a modest land tax across all owners.
ACIL Allen Consulting was commissioned jointly by the Real Estate Institute of Australia and the Property Council of Australia.
Australian politician and economists have been debating the merits of negative gearing for decades.
REIA has long argued stamp duties are a highly inefficient tax that limits population mobility as highlighted in the Henry Tax Review.
"A lot of Australians have invested their hard earned money in real estate, and in doing so, they have offset the losses of that real estate against their primary income, in order to give themselves and their children some financial security."
The debate surrounding negative gearing heats up a Labor says it would take the issue to the next election.
Negative gearing will not be changed as part of the government's tax reforms.
Aussie Home Loans' John Symond says the tax measure should be scrapped for luxury homes.
Treasurer Joe Hockey and Shadow Treasurer Chris Bowen questioned over negative gearing last night on ABC's Q&A program.
The real estate industry has stepped up its defence of negative gearing ahead of the budget.
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