General opinion is that -40mm for max handling benifits from stock golf height. Ie how the 16v left the factory

Reason being is the driveshaft is paralelle to ground.
I enjoyed my golf when it was -90mm ish on suspension kit and that was lower than knocking off your cousin... But managed to schnapp a driveshaft, probs as result of it being at an odd angle due to excessive lowness and trying a crazy taxi move.

16in wheels are generally the biggest people consider ok without work but it all depends on et, width and suspension height will dictate whether further arch work etc will be required. However I've seen mk2's with 17s, look a tad "overwheeled", but that's just my opinion.