I found what looks like punishment for negative gearers and FTB A.
"Your Family Tax Benefit Part A will stay at (base) rate until your family’s adjusted taxable income reaches $94 316 a year ... will reduce by 30 cents for every dollar over that amount"
Now income for FTB counts negative gearing as income. Let's go with this example.
Say the family income is $94316 - the boundary. Say your rental loss is $10000.
This means you're on the 30% bracket. Your taxable income becomes $84316 Your loss saved you 30% in tax ie $3000. Then you have a baby.
Now for the FTB part. Your income is counted + loss, ie $104316. Your FTB is reduced 30%, ie $3000.
At this point you've gained $3k from tax savings and lost $3k in FTB. You're in the same position as if you never had rental income. OK, at least you're getting some capital gains hopefully.
BUT part of the rental loss (depreciation) you have to pay back in capital gains when you sell. Frankly any capital gains will likely push you to the 45% bracket. You get a 50% discount for holding over 1 year. Say $5000 of that loss is countable. When you sell you'd pay on that 45% of $2500 which is $1125
So in the future you're paying some extra tax, effectively you're worse off by $1125.
If you had no rental property, you'd be better off by $1125? Does this sound right? I'm having a hard time getting my head around these numbers, but sounds like I should sell and put the money in the bank?