The Federal Government is using its decision to leave negative gearing untouched to launch a campaign accusing Labor of "wanting to punish mum and dad investors".

Key points: Coalition to leave existing negative gearing rules in place

Coalition to leave existing negative gearing rules in place Labor proposal to negatively gear only new properties criticised by Government

Labor proposal to negatively gear only new properties criticised by Government Think-tank says negative gearing tax benefits overwhelmingly favour the rich

The Opposition's plan would mean that from July next year, investors could only negatively gear new properties.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Listen Duration: 3 minutes 37 seconds 3 m 37 s Labor dismisses social media scare campaign about negative gearing as dirty tactics Download 6.6 MB

Yesterday the Coalition ruled out any changes to negative gearing even though Treasurer Scott Morrison indicated earlier this year he could target excesses in it.

Once Prime Minister Malcolm Turnbull announced there would be no change to the Coalition's negative gearing policy a social media campaign sprang up, including the message "Labor wants to punish mum and dad investors".

Labor Senator Sam Dastyari dismissed it as "a desperate scare campaign that's factually wrong".

"It is amazing they are already resorting to these type of dirty tactics this early in the campaign period," he said.

LNP backbencher Michelle Landry, who holds the marginal seat of Capricornia in Queensland, said leaving negative gearing untouched would help her.

"I'm very happy about it," she said.

"I had a forum in Rockhampton recently with real estate agents and owners and they were very, very concerned about it.

"The worry was the impact it would have on just the average Australian who [is] trying to get ahead in their retirement, just your normal mums and dads, your teachers, your police officers, your office workers."

Benefits of negative gearing going to 'top 10 per cent'

Danielle Wood, a fellow at the Grattan Institute that supports abolishing negative gearing, said the focus on parents did not reflect the main users of the tax break.

"Our analysis shows that certainly there are some middle income earners that negatively gear but when you look at the distribution of tax benefits they overwhelmingly go to high-income earners, so about 50 per cent of the benefits of negative gearing are going to the top 10 per cent of income earners," she said.

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Greens housing spokesman Scott Ludlam said the Government's decision to make no changes to negative gearing meant investors would get an advantage and potential first homebuyers would be locked out.

"If the Government cares about housing affordability it knows that negative gearing and capital gains tax exemptions are the place to start on the demand side," he said.

"Our proposal has been to wind back those unnecessary concessions and start ploughing some of the money into affordable housing and crisis support for people who are homeless.

"They are getting yelled at by the Property Council and a tiny handful of other industry groups who can't handle the idea that this artificial incentive for property speculation might get taken off the table and they've caved in."

Labor argues making new investors buy newly constructed property will increase the housing supply and boost affordability.

Prime Minister at odds with Grattan Institute

But Mr Turnbull's message is that it will drive down house prices.

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"What Labor is proposing is a huge reckless shock to the market. This is not fine-tuning. This is a big sledgehammer they are taking to the property market," Mr Turnbull said.

Ms Wood disagreed, saying the Government was "strongly overstating" the effects of Labor's proposed changes and that scrapping the tax breaks would not have a major impact.

"Our numbers show that at most the impact would be about 2 per cent, so if you put that in context of growth in prices of about 7 per cent a year for the past 15 years it really is just a blip," she said.

"It makes it somewhat more affordable but again that effect can be overstated."

Ms Wood said abandoning negative gearing and the capital gains tax discount on profit could completely free up about $5 billion a year.

She said leaving it in place meant the Government had to find other revenue.

"If you leave these tax concessions in place that means that if you want to repair the budget you are going to have to raise more taxes elsewhere or you are going to have to cut spending if you are serious about doing something about the deficit," she said.