Finance & property Australia
Negative Gearing Calculator Australia
A property is negatively geared when its deductible costs, mainly loan interest, exceed the rent. The loss can be deducted against your other income, which lowers your tax. This calculator uses your actual income and the 2026-27 tax scale to show how much tax you get back and what the property really costs you.
Free, no signup Runs in your browser
Non-cash, so it reduces tax but not your bank balance.
Annual tax benefit
—Net rental result
—
Tax with the property
—
Tax without it
—
After-tax cash cost
—
Cash flow before tax
—
Benefit per dollar of loss
—
How the tax benefit arises
Working with a different rate? Edit the rates this calculator uses
These are the figures we verified on 2026-10-26. Change them to work with a historic period, or with a new rate that has been announced but which we have not published yet.
Reduced from 16% on 1 July 2026
General information, not tax advice. Tax law on rental deductions, depreciation and any changes to negative gearing can change. This is a general illustration of the arithmetic, not tax or investment advice. Speak to a registered tax agent about your own position.
How does negative gearing save tax?
When rent is less than deductible costs, the loss reduces your taxable income, so you pay less tax at your marginal rate. A $18,000 loss on a $110,000 income saves about $5,760 in tax and levy, so the property costs you about $12,240 after tax. It is a cost reduction, not a profit.
The idea
If you earn more from rent than the property costs, the profit is taxed. If you earn less, the loss reduces your other taxable income. Negative gearing is the second case, and the Australian tax system treats it as it treats any other loss in earning income.
The strategy depends on the property rising in value enough to outweigh the losses and the tax on the eventual gain.
What the tax benefit depends on
Your marginal tax rate sets the benefit, so it is larger for higher earners. A loss does not create a refund by itself: it reduces the tax you owe. If your income falls in a future year, the same loss gives a smaller benefit.
To work out yield on the property, use the rental yield calculator.
How this is calculated
The rule, step by step, so you can check any figure by hand.
net rental result = rent − loan interest − other costs − depreciation (negative means a loss)tax benefit = tax on your income − tax on (income + net rental result)cash flow before tax = rent − interest − other costs (depreciation is non-cash)after-tax cash cost = cash loss − tax benefit
The tax benefit is worth only your marginal rate on the loss, so every $1 you lose gives back 32 to 47 cents depending on your bracket. You still lose the rest. That is why negative gearing is rarely a reason to buy: it softens a loss, it does not turn one into a gain, and it relies on capital growth to produce a return.
Depreciation is the quiet part. It reduces tax without costing cash, so a property can look negatively geared on paper while the cash flow is closer to neutral.
A worked example
A $110,000 income, $28,000 of rent, $32,000 of loan interest, $9,000 of other costs and $5,000 of depreciation.
- Net rental result-$18,000
- Tax without the property$25,720
- Tax with the property$19,960
- Tax benefit$5,760
- Cash flow before tax, no depreciation-$13,000
- After-tax cash cost$7,240
About $5,760 of tax saved on a $18,000 loss, leaving a cash cost of about $7,240 a year.
A gain on sale is taxed later, with the 50% discount for assets held over 12 months.
Depreciation
Capital works deductions on the building and depreciation on plant and equipment reduce taxable income without costing cash. A quantity surveyor's depreciation schedule is the usual evidence. Newer properties generally depreciate more.
Policy risk
Negative gearing rules have been debated at several federal elections, and a change could limit or remove the deduction. This calculator shows the arithmetic under current rules and cannot predict future law.
What this calculator does not do
- Resident individual with one rental property
- No capital gains tax on a later sale
- No offsets other than LITO
- Current rules, which may change
Common questions
What is negative gearing?
When the costs of an investment property, mainly loan interest, are greater than the rent, producing a loss that can be deducted against other income.
Do I get all the loss back as a tax refund?
No. You get back your marginal rate times the loss, so the property still costs you the rest.
Is negative gearing a good strategy?
Only if the property's growth outweighs the losses and tax. The tax benefit softens a loss but does not create a return.
Does depreciation count?
Yes. It is a non-cash deduction that reduces taxable income.
What happens when the property is sold?
A capital gain is taxed, with a 50% discount if held for more than 12 months. The capital gains tax calculator estimates it.
Where these numbers come from
- ATO — rental properties Deductions and records for residential rentals
- ATO — tax rates, Australian residents 2026-27 resident brackets, 15% lowest rate and the $18,200 tax-free threshold
Rates last verified 2026-10-26 Every figure Australian Taxation Office sets is re-checked against the source at least once a year, and again whenever a change is announced. Out of date? Tell us and we will fix it.
Related AU calculators
Investment property
Rental cash flow before and after tax, both yields, and the gearing position.
Open calculator Finance & propertyRental yield
Gross and net rental yield from price, rent and costs.
Open calculator Tax & governmentCapital gains tax
Estimate CGT on a sale, with the 50% discount and losses.
Open calculator Tax & governmentIncome tax & take-home
Tax, Medicare and HELP on your income, then what you actually take home.
Open calculatorAustralia · Finance & property