What if I can't get a tenant?

1. It is not your job to get a tenant. That is one of the reasons you have a Property Manager. It is his job, and it costs him money if he doesn't have a tenant in your property.
2. You have the right house, in the right area, at the right rental, with the right Property Manager. In the area where the vacancy rate is only 2%, there is no possibility that your property would be untenanted for any length of time.
3. Any shortfall in rental income is tax deductible. The taxation department will help to fund the shortfall.
4. Your investment account has a 'buffer zone' of couple of thousand dollars. You have enough there to ensure your household budget is not disrupted.
5. If a tenant moved out, and for whatever reason, new tenant had not moved in within a couple of weeks and it caused you to worry, you would simply drop your rent by $10 or $20 per week for one rental period. This shortfall would be tax deductable.

What if I lose my job?

1. You need to be able to cover the tax rebate requirements until you get another job. The best way in the short term is to have 'Income Protection Policy' insurance. This would give you at least three months to get an income again.
2. You could take some of your redundancy pay or termination payment, and put into the offset account on the loan so as to reduce the interest payments to where the rental income will cover it. That way you can go on indefinitely, until you need the money. When you are re-employed, you simply re-draw the funds, and gear up the investment once again. You would need to redraw the money to use for business or investment purposes. If you redrew it to use for personal use that part of the debt would no longer be tax deductible.
3. As a last resort, you could sell the investment property, and pay out the loan, keeping any profit you have made from the sale.

What if interest rates rise?

1. It is important to understand that where investment property is involved, and interest rates do rise, then the tax rebate also rises.
2. In any business, when your costs go up, you pass it onto the end user. Therefore rents also rise, and so do property values. Therefore if interest rates rise, so do property prices, so the investor still wins, by gaining capital growth.
3. The property investor is buffered against any interest rate rises by these two factors, and his 'bottom line' remains much the same.
   

What if the Government abolishes 'negative gearing'?

1. They can't. It would impact on too many other areas in the economy.
2. The building industry would collapse. All the people who work in construction (about 50% of workforce) would be out of work instead of working and paying tax.
3. The rental market would collapse. There would be no investors to provide housing for the 40% of people who rent, rather than buying their homes. With the shortage of rental properties, rents would go sky-high, and families would be living on the street.
4. Both Liberal and Labor have stated that they will not abolish negative gearing, and this has been borne out in the release of the 'tax package' on August 14, 1998.