You might think the world of conveyancing is mild-tempered, with conveyancers diligently dotting Is and crossing Ts for clients.

However, as we talk to clients and get drawn into discussions about real estate investment, we come face to face with raw emotion when topics like negative gearing arise.

This is why a recent article tweeted by Michael Yardney caught my eye entitled, Is negative gearing losing its lustre?

He raises some interesting points that confirm my thoughts that any tampering with negative gearing needs to be done very carefully.

Negative gearing seems to be stuck in neutral

A fascinating insight from the Michael Yardney article is that claims for losses against rental income (the base for negative gearing in Australia) have actually been falling over the last few years.

In the article, Pitcher Partners Wealth Management director David Lane reportedly says net rent losses spiked around $14 billion in 2011-12 but have dipped to $12 billion in the latest statistics and are liable to fall further this financial year.

Much of this is due to cheaper money, given that official interest rates are around a quarter of what they were in 2008 before the global financial crisis.

Change gears very carefully or you’ll run off the road

As conveyancers, we get to see what is happening in the real estate and property investment sector first hand.

Many of our clients put a lot of capital at risk to create and manage rental accommodation in Australia, while also engaging with builders and a host of tradies and service suppliers to keep their stocks in good shape.

Amid discussion in Canberra about scrapping or ignoring negative gearing, my position would be law makers need to be very careful with this due to the huge amount the property industry contributes to our GDP.

If any hasty or short-sighted changes are made to negative gearing it could put much of this economic activity in jeopardy.

Image: Massive gears by Jane via Flickr