What young Australians should know about the Greens' housing policy

Also, homebuyers don't lose out

The Greens' myth is that negative gearing squeezes home buyers out of the market because it is a tax benefit that homeowners don't get.

When you do the figures, it is actually homeowners who are tax-advantaged.

While investors pay capital gains tax, the homeowner doesn't. When it comes to real estate investment it is actually capital gains that provide the majority of earnings, particularly when gearing is involved.

So, the homeowner is already ahead, but it doesn't stop there.

Homeowners also receive a benefit in that they don't pay any tax on the "rent" that accrues to them by owning the property.

This is an unfamiliar concept to most, but if you regard a homeowner as an investor who lives in their investment, then it makes sense to look at what rent it is they would pay to live there and see that as part of their investment return.

This is called "imputed rent" and some countries, like the Netherlands and Switzerland, tax this as income.

We don't, and I'm happy about that, but it is another tax advantage that homeowners get over investors who do pay tax on the rent they receive.

All of which means that when it comes to a contest over who can afford to pay the most for a residence, it is the homeowner that comes with all the advantages.

The only advantage the investor generally has is that they normally already have assets they can use for a deposit, like the house they live in, and a first homeowner has to save for their deposit, but you can't "fix" that disparity by abolishing negative gearing.

Another Green's party idea that is not feasible

The Greens also want to step beyond fiddling with the tax system to fiddling with the rental markets by imposing rent caps. We've been here before and they don't work.

However, we don't need to look at Australian history to see what a bad idea rent control is.