a)The following details relate to the negative gearing of a rental property:

Purchase property for $810,000

Borrow $650,000 @ 5.25% p.a.

Net rental income is $23,500 p.a. (after all operating expenses, but before interest)

Property holder's marginal tax rate = 45% (+ 2% Medicare Levy)

Determine the (%) amount of annual capital gain that would need to be earned on the property for this negative gearing strategy to be profitable. [You will first need to determine the net after-tax cost of the negative gearing strategy].