About the Negative Gearing Calculator
This negative gearing calculator shows what an Australian investment property really costs you each week once tax is taken into account. Enter your income, the loan, interest rate, rent, running costs and depreciation; it works out the net rental loss (or profit), the tax you save by deducting that loss against your salary for the 2026-27 or 2025-26 income year, and the after-tax cash flow.
A property is negatively geared when deductible costs — interest, rates, strata, insurance, property management, repairs and depreciation — exceed the rent. The loss reduces your taxable income, so part of the shortfall comes back as a tax refund at your marginal rate. Depreciation is a non-cash deduction, which is why the after-tax cost can be much smaller than the paper loss. The calculator also shows the yearly capital growth needed just to cover your after-tax holding cost.
It uses resident tax rates with the low income tax offset and a 2% Medicare levy, assumes an interest-only loan and lets you set your ownership share for jointly owned properties. Current rules allow rental losses to offset any income. In the 2026-27 Budget the Government announced that, from 1 July 2027, losses on established homes bought after 7:30pm AEST on 12 May 2026 would only offset residential property income (new builds and properties already held would be unaffected) — check the status of that change before you buy.
With the default inputs, the after-tax cash flow (per year) is −$7,640.00. Change any value above to recalculate instantly.
How to use the negative gearing calculator
- 1Choose the income year and enter your taxable income before the property.
- 2Enter the property value, loan amount and interest rate.
- 3Add the weekly rent, weeks rented and yearly running costs.
- 4Enter depreciation from a quantity surveyor’s schedule and your ownership share.
- 5Read the tax refund and the after-tax weekly cost or income.
Formula and method
Rent is weekly rent × weeks rented, and interest is the loan × the interest rate (interest-only). Deductible costs include interest, cash running costs and depreciation; the result is your net rental income or loss, scaled by your ownership share. Under current law a loss is deducted from your other income, so the tax saved is the difference between tax on your income with and without the property, using resident rates, the low income tax offset and the 2% Medicare levy.
Cash flow ignores depreciation because no money leaves your account for it, so the after-tax cash flow is the pre-tax cash shortfall plus the tax saved. Dividing a negative after-tax cash flow by your share of the property value gives the capital growth needed each year just to break even, before selling costs and capital gains tax.
- tax()
- Resident income tax less LITO plus 2% Medicare levy
- Depreciation
- Division 40 plant and Division 43 capital works deductions
Worked examples
$600k loan on a $750k property, $120,000 income
Rent of $30,000 less $36,000 interest, $9,000 expenses and $8,000 depreciation is a $23,000 loss. At a 30% bracket plus 2% Medicare levy that saves $7,360 of tax. The cash shortfall of $15,000 shrinks to $7,640 after tax — about $147 a week, or 1.02% annual growth to break even.
Same property on a $200,000 income
The $23,000 loss brings income from $200,000 to $177,000: $10,000 comes off the 45% bracket (47% with Medicare) and $13,000 off the 37% bracket (39%), saving $9,770. The after-tax cost falls to $5,230 a year.
Half share, 2025-26, $80,000 income
Your 50% share of the loss is $11,500, deducted at 32% (30% + Medicare) = $3,680. Your half of the $15,000 cash shortfall is $7,500, so you are out of pocket $3,820 after tax.
Frequently asked questions
What is negative gearing?+
An investment is negatively geared when its deductible costs, mainly loan interest, exceed the income it earns. In Australia the resulting rental loss can currently be deducted from salary and other income, reducing the tax you pay.
Is negative gearing worth it?+
Only if the property’s capital growth outweighs the after-tax holding cost. A tax refund never fully covers a loss — at a 32% rate you still pay 68 cents of every dollar lost — so the investment relies on growth.
How do I get the tax refund during the year?+
You can lodge a PAYG withholding variation (Form NAT 2036) so your employer withholds less tax each pay, instead of waiting for a refund when you lodge your tax return.
What expenses can I claim on a rental property?+
Interest on the investment loan, council and water rates, strata levies, landlord insurance, property management fees, repairs and maintenance, land tax and depreciation on the building and fittings. Principal repayments and the purchase costs are not deductible.
Is negative gearing being changed?+
In the May 2026 Budget the Government announced that from 1 July 2027 losses on established residential properties bought after 7:30pm AEST on 12 May 2026 could only offset residential property income, with excess losses carried forward. New builds and properties held before the announcement keep current treatment. It needs legislation.
Does depreciation affect capital gains tax?+
Yes. Capital works deductions (Division 43) reduce your cost base, which increases the capital gain when you sell, although the 50% CGT discount usually means you still come out ahead.
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.