I cannot believe how little some people understand the concept of negative gearing....
Was having lunch the other day with a friend. Their parents had just sold an investment property and wanted to give them a lump sum of cash - advancement of inheritance if you want to look at it in that way.
Now my friend isn't stupid by any means, they work in the private sector and earn over $180k.
They have an IP and said they didn't know where to park the funds because it affect their negative gearing. I tried explaining to them that they would pay less in interest payments to the bank as a result and all it kept coming back to was they would pay tax.
They also some how had the notion that once a property became positively geared you couldn't make it negatively geared and positively geared is a bad thing.
I tried to explain to them in simple terms - you give me $1, i give you back 30c. How does that sound to you? Obvious response was "that's a bad deal" - That's what negative gearing is. Oh but I still don't want to pay more tax... so i don't know where to park the money.
No wonder spruikers are able to make so much money.