Negative Gearing Calculator

How negative gearing works

A rental property is negatively geared when the yearly cost of owning it is more than the rent it brings in. The gap is a rental loss. In Australia that loss is not stranded against the property. It comes off your other assessable income, such as your salary, which lowers the tax you pay. The deductible costs include loan interest, council rates, insurance, repairs and maintenance, strata, property management and agent fees, plus depreciation on the building and fittings. The saving is the loss multiplied by your marginal tax rate, and because Australia’s rates are tiered, a higher income means a bigger saving on the same loss.

The real cost of holding a negatively geared property

The tax saving never covers the whole shortfall. Say a property loses $13,000 for the year. At a 37% marginal rate the saving is about $4,810, so you are still out of pocket for the rest. Negative gearing gives you a partial refund, not a full reimbursement. That is why the headline figure above is the real after-tax cost, the cash you actually fund each week once the tax saving is counted. The strategy only comes out ahead if the property grows in value by more than that holding cost over time, which is the bet an investor is making.

Why depreciation matters

Depreciation is a non-cash deduction. It lowers your taxable rental loss, which lifts your tax saving, but it is not money leaving your account, so it does not add to your weekly shortfall. That split is where a property can be negatively geared on paper while close to neutral in cash terms. Itemise mode keeps depreciation separate from your cash costs so the tool can show both the taxable loss and the real cash you fund. If you do not have a depreciation schedule from a quantity surveyor, leave it at zero. To estimate the deduction first, use the depreciation calculator.

Negative gearing changes (2026)

Negative gearing is part of the 2026 tax reform, and this is the piece people are most confused about, so here is the factual position. Negative gearing has not been abolished. The changes commence on 1 July 2027, with grandfathering tied to an acquisition cutoff of 7:30pm on 12 May 2026: property held before that moment keeps the existing negative-gearing treatment. Early indications are that negative gearing will be kept for new buildsand wound back on established dwellings bought after the cutoff, though the detail for later purchases is still to be set by legislative instrument, so confirm the final position with the ATO before you act. This calculator applies the current law: it deducts the full rental loss against your income at your marginal rate. For the full breakdown of who is affected and who is grandfathered, read how the negative gearing changes work.

One point is worth clearing up, because the two dates get mixed up. The 12 May 2026 time is an acquisition cutoff for grandfathering, not a start date. Both the negative-gearing changes and the separate capital gains tax change commence on 1 July 2027. The difference is the cutoff: the negative-gearing changes carry the 12 May 2026 acquisition line, while the CGT change, which swaps the 50% discount for cost-base indexation plus a 30% minimum tax, has no acquisition cutoff. If you are weighing up a future sale, model it with the capital gains tax calculator, which handles the 2027 changes and the deemed 1 July 2027 rebasing.

Negative vs positive gearing

A property is positively geared when the rent is higher than the costs, so it turns a profit. That profit is added to your income and taxed, which is the opposite of a tax saving. Positive gearing puts cash in your pocket each year and gives you a tax bill; negative gearing costs you cash each year and gives you a tax deduction. Neither is automatically better. It depends on your income, your cash flow, and what you expect the property to do in value. If your inputs show a profit, the calculator above switches to show the net rental income instead of a loss.

Frequently asked questions