No tax break has drawn quite the opprobrium of negative gearing, fingered as an egregious rort favouring the wealthy that punches a massive hole in federal finances, and drives up house prices to boot.

The assessment is not entirely without basis, but there are other concessions to home owners that cost the budget far more, and negative gearing sits well down on the list of factors affecting housing affordability.

Former treasurer Paul Keating tried to end negative gearing, but was rebuffed by his cabinet colleagues. Credit:Rob Homer

Negative gearing allows investors to claim losses, including interest payments, associated with investments against other income. It applies to all investments, not just housing, and has been in the tax code since the 1930s.