Hi Debbie,

The first thing I’d suggest is talking to your accountant about a tax variation form, if you’re on PAYG it means you should be able to get your tax back in your weekly/fortnightly pay, rather than in a lump sum at the end of the financial year. This should significantly reduce your out of pocket expenses. Refinancing is an option, but was the size of the deposit you initially paid on the property? As the value has fallen, you might end up with mortgage insurance if you refinance now (as the new lender will work off the valuation as it stands at the moment, not at what your original purchase price was) or worse still, having to put more of your savings in the property to avoid mortgage insurance.
As for to sell or not to sell- You’ve got savings so you’re in a comfortable position, the property is probably costing you around $4500-$5500 in real terms once the tax advantages, depreciation etc. are taken into account. Why wouldn’t you look at riding this out for a few years and hopefully make a profit on the property rather than the loss?

Best of luck!

nathan