It's pitched as the battle between young and old; the rich and poor; the investors who can buy housing that loses money, versus renters watching 'the dream' slip from their grasp.

If you know a tiny bit about housing policy, you know that negative gearing is contentious. It's an issue both sides of politics have studiously avoided for years. But then, a bit over a week ago, Labor announced they would do away with negative gearing on existing housing to make it easier for first home owners to enter the market. Turnbull hit back; Labor's policy would "smash" the value of house prices.

So, here's what you need to know to understand the negative gearing debate and whether it will actually make it cheaper for you to buy your first house.

Former ANZ Chief Economist Saul Eslake reckons "there's never been a more exciting time to be an advocate for winding back negative gearing"!

101: What is negative gearing?

If you buy a house that makes more money (in rent) than it costs (in repayments), then you can say it's 'positively geared'. Nice work, savvy investor, your mortgage is paying itself off.

But if the rent doesn't cover the costs, then you can claim that loss on tax (negative gearing). In the 2012-13 tax year, the average loss on an investment property for negatively geared investors was about $10,000.

You can then say to the taxman 'hey, can you knock that off my taxable income?' and reduce the amount you can be taxed by $10,000. So if you're earning $90,000 per year, the amount you pay tax on is $80,000.

Blah blah blah, why should I care?

Because investors are subsidised to buy housing they're losing money on, it makes housing a really attractive investment option which pushes up prices. Which makes it harder and harder for younger people to get into the market and you end up renting for longer.

CEO of Youth Action, Katie Acheson says originally negative gearing was pitched as a way to increase the number of houses being built, which would push down rent prices and make it easier for people to save for their deposit. But then, Katie says "negative gearing became a tax rebate for investors and for wealthier older people. So we started having housing prices being driven up by investors rather than actual home buyers."

Katie says younger Australians should be jumping up and down about negative gearing. "It's really a systemic inequality issue for young people... it's super important that we start talking about it now, because we really need to change this or young people will be completely left out of the market."

Would removing negative gearing on existing housing make it easier for first home buyers?

Independent economist Saul Eslake says "it's hard to think of any single measure that a federal government could take that would do more to help first home buyers than what Labor is proposing".

According to the Australian Bureau of Statistics, 93 per cent of home-loans in Australia go towards existing properties. Labor says by restricting negative gearing to brand new properties, it will drive investors to build more housing stock and reduce competition amongst existing housing. Because if you're an investor trying to reduce the amount of tax you pay, then investing in new housing will be your only option to access negative gearing.

Btw, Labor aren't proposing to reverse negative gearing arrangements already in place. If you're already taking advantage of negative gearing, then keep doing what you're doing.

"I don't like that very much, but I accept that's probably a compromise you have to make because there are almost 1.5 million people who've got them [negative gearing deductions]. And no opposition who hopes to be in government can afford to annoy that many people," says Saul Eslake.

Will Labor's policy drive housing prices up or down?

Malcolm Turnbull says all homeowners should be concerned; "Bill Shorten's policy is calculated to reduce the value of your home". Because Labor have given a timeline for when they would introduce the policy (June 30, 2017), it gives investors time to snap up properties before the changes kick in. That competition will likely see an increase in prices up to the cut off.

"There's obviously nine months where there will be a bit of a rush," says Saul Eslake. "You can imagine real estate agents and investment agents will be saying 'you've got nine months to gear up to the gills'. So that is a risk with what the Labor party is proposing."

Eliza Owen, housing market analyst at 'onthehouse.com.au' agrees prices for existing housing could surge and then drop off. But she says if people are a little more forward-thinking about it, that might not happen.

"If you rush in to buy a house over a million dollars, if after the negative gearing policies are implemented it's only worth half that much, then really you've lost out. Because essentially, once you take away the negative gearing benefits there will be a real dramatic fall in demand in that market which will affect prices."

And then Eliza says there's the problem of house prices surging for new properties (which you could still negatively gear). "Once you buy a new property you can negatively gear it, but if you try and sell it on, you can't negatively gear it because it's not a new property anymore. So the prices might fall dramatically there as well."

"I think it would have a really interesting effect on prices over time, but short answer is yes when you take away financial incentives from property it'll make prices go down, it'll be good for affordability."

Why retain negative gearing on building new houses?

"The argument for exempting new housing, is that investors might be encouraged to invest in building new houses which would add to housing supply, of which there is currently a shortage," says Saul Eslake.

But Eliza Owen says keeping negative gearing for new houses will make it really hard for first home buyers to get into new property. "But it'll be easier for them to get into the established market."

Will removing negative gearing on existing housing drive up rental prices?

This is a question ABC's Fact Check examined in detail recently. Negative gearing was removed temporarily between 1985-1987, and rental prices went up in Melbourne and Sydney (but dropped everywhere else). But there were other factors at play (interest rates and boom in the share market), so the conclusion both Saul Eslake and Fact Check came to was no, removing negative gearing won't drive up rental prices.

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Whatsapp A block of environmentally-friendly houses in a newly created estate in Sydney. (Photo by Ian Waldie/Getty Images)

Will removing negative gearing hurt 'Mum and Dad investors'?

This is one of the government's main arguments. They say two thirds of people who use negative gearing have a taxable income of $80,000 or less. But that's after they've knocked the costs of their investment off their taxable income. Addressing the Press Club last week, Treasurer Scott Morrison said "70 per cent [of people using negative gearing] own just one property, and 70 per cent have a net rental loss of less than $10,000. It is one of the few opportunities that people on modest incomes have to try to get ahead. They have taken advantage of that, and I say to them good luck, and good on you."

Shadow Treasurer Chris Bowen says using the same set of statistics, 64,000 people are claiming negative gearing interest deductions who have no income at all.

"The more relevant figure in my view is that according to the ABS [Australian Bureau of Statistics] in 2013/14, 72 per cent of the total value of investment property was owned by households in the top 20 per cent of the wealth distribution," says Saul Eslake. "And 51 per cent of the property investment debt was owed by the top 20 per cent of households."

"To put it another way, someone in the top tax bracket - that is with a taxable income of over $180,000 - is more than three times as likely to be using negative gearing than someone earning less than 80,000."

Why is housing so expensive in Australia in the first place?

Eliza Owen says there's a combination of factors that make Australian housing so unaffordable. She thinks the generation of baby boomers coming up to retirement have looked to property to reliably make money, because housing is considered a safe investment. "And then you have the benefits of negative gearing! It's virtually impossible to make a loss on property whereas shares can be a bit more risky."

Saul Eslake agrees first home buyers are being out-gunned by older investors. "Especially in the last three or four years when investors have accounted for more than half the amount lent to home purchasers, compared with about 30 per cent 12 years ago."

What about foreign investment? Eliza says there's no data to support the idea Chinese foreign investors are pushing up prices, citing a 2014 University of Sydney study that found they only made up 2 per cent of all residential property transactions in Australia.

What happens when you sell the property?

Capital gains is how much money you make (let's keep the focus on property) on a house when you sell it, compared with how much you paid for it. So if your parents bought an investment property for $200,000 when you were little, and now they want to sell that to fund their retirement, but the house is now worth $700,000 - well, they need to pay tax on the extra half a million they just made. That's called capital gains tax (and it doesn't apply to the house you live in).

Investors are given a 50 per cent concession on the capital gains tax on properties - so they only pay tax on $250,000 rather than the $500,000. Labor are proposing reducing capital gains discounts available to investors down to 25 per cent, so in the same example they would pay capital gains tax for $375,000 of the $500,000.

Has that answered your questions?

If not, hit us up in the comments and we'll put the best questions to an economist on air, during Wednesday's show at 5:30pm.

Editor's note: This article has been updated. In the original explanation of negative gearing, the example would have only applied to interest only loans, which is something people do for the first few years of the mortgage.