Peter Martin on Neg Gearing, page-36

please tel me, me is wrong


It's about managing cash flow so you can afford the repayments when they fall due.
Some people start out with interest only loans to claim maximum interest.

example from a bank to illustrate (they should update the example to reflect inflation.
Rental income - $19,000.
Interest expense - $27,000.
Other general expenses - $4,000.
Pre-tax cash flow (negative) - $12,000. ( $230 each week) to support the property while you wait for your annual tax return refund.

or....Go online through MyGov each year and make a PAYG withholding variation application
Once approved, the tax department tells your employer your new tax rate – and your take-home pay effectively increases.

Rental income - $19,000.
Interest expense - $27,000.
Other general expenses - $4,000.
Tax break (deductions) - $9,000.
After-tax cash flow (negative) - $3,000. ($57 each week) is easier to manage