All calculators →Calculate how negative gearing reduces your tax on an Australian investment property. See your after-tax cost, itemised deductions, and a 10-year projection showing when your property turns positively geared.
Negative gearing means you borrowed to buy an investment property and its deductible expenses (interest, depreciation, management fees, rates, insurance, repairs) come to more than the rent it earns. That net rental loss comes off your other income, such as your salary, so you pay less tax at your marginal rate. If your other income is too small to absorb it all, the rest carries forward to next year.
From 1 July 2027 the rules change for an established home bought after 7:30pm AEST on 12 May 2026. Its losses will only come off residential property income, including a capital gain when you sell, and anything unused carries forward. Homes you owned or had under contract before that cut-off keep the old treatment, and so do new builds.
This calculator runs the numbers for your situation. Enter the property price, deposit, interest rate, expected rent, and your marginal tax rate. You'll see the annual cashflow, the tax refund, and your real out-of-pocket cost.
The calculator stacks each line of your annual property economics: gross rent, less interest on your investment loan, less property management (typically 7-9%), less rates, insurance, repairs, and depreciation. If the total expenses exceed the rent, the difference is your paper loss. That loss is multiplied by your marginal tax rate to give the tax refund. The "after-tax cost" is what the property actually costs you per year once the refund lands.
Depreciation is the line item most spreadsheets get wrong. On an established property with a recent renovation, the building plus fixtures can deliver $5,000 to $15,000 of non-cash deductions per year. That extra deduction often flips a property from "looks expensive" to "actually positive after tax." If your property has had a kitchen, bathroom, or floor reno in the last 10 years, get a quantity surveyor's depreciation schedule before lodging your return.
Two factors decide whether negative gearing is a smart strategy for you. Your marginal tax rate does most of the heavy lifting: the higher your income, the more each dollar of paper loss is worth in tax refund. At the top bracket, every $1,000 of negative gearing returns $470 in tax once the Medicare Levy is counted. In the 30 percent bracket it is $320. Below that, the maths starts to matter much less.
The second factor is capital growth. Negative gearing only makes strategic sense paired with a market that's appreciating. A property losing $200 a week but growing $50,000 a year is a wealth-building win. The same property losing $200 a week with no growth is an expensive hobby. This is why buyers agents spend more time on market selection than on negotiation. Picking the right market is what makes negative gearing pay off.
Buying purely for the tax refund. The refund is a side benefit, not a strategy. Anyone telling you to buy a property because of "great tax benefits" without showing you the growth and yield numbers is selling you something. Run the cash flow calculator and the rental yield calculator alongside this one for a full picture.
Ignoring vacancy and rate rises. The calculator assumes 100 percent occupancy and a fixed rate. In practice, factor 2-4 weeks vacancy per year and stress-test your cash flow at an interest rate 1-2 percent above current. A property that's marginal at today's rates becomes painful when rates move.
Not factoring in depreciation. As above, this is the most overlooked deduction. Get a depreciation schedule.
Negative gearing as this calculator models it is legislated to change. Two reforms take effect on 1 July 2027, both already law under Act No. 49 of 2026, assented 26 June 2026.
Negative gearing is limited to new builds. If you bought an established residential property after 7:30pm on 12 May 2026, measured by the contract date rather than settlement, its rental losses stop coming off your salary from 1 July 2027. They are quarantined instead. A quarantined loss offsets other residential rental income in the same year, and anything left over carries forward until you have residential rental income or a residential capital gain to use it against. It is deferred, not lost. What it no longer does is reduce the tax on your wages, or on any non-residential income.
A new residential dwelling is exempt and keeps negative gearing in full. That means a dwelling built on land that was vacant, or a demolition replaced with a greater number of dwellings. A knock-down rebuild that replaces one house with one house does not qualify, and neither does a substantial renovation. The exemption runs to the first investor to buy the dwelling, so a new build bought second-hand is treated as established.
The 50 percent CGT discount is replaced. In its place is a discount based on inflation, meaning indexation of your cost base, plus a minimum 30 percent tax on the gain. It applies to assets held by individuals, trusts and partnerships. Investors in new-build property can choose at sale between the current 50 percent discount and the new regime.
Grandfathering covers negative gearing, and only negative gearing. A property you owned before 7:30pm on 12 May 2026 keeps the salary offset for the whole time you hold it, and selling is what ends it. The 50 percent CGT discount is not grandfathered for anyone. Every asset held by an individual or trust is treated as sold and immediately bought back on 1 July 2027, so growth up to 30 June 2027 keeps the 50 percent discount whenever you eventually sell, and growth from 1 July 2027 goes through indexation and the 30 percent floor. Owning before the Budget protects your deductions, not your discount. For the full detail, read our guide to the 2027 negative gearing and CGT changes, or model a sale with the sell before 2027 calculator.
Until 30 June 2027 the salary offset still applies to every purchase, including one made today. Set the two reform questions at the top of the calculator and it will show you both positions, what the property costs you this financial year and what it costs from 1 July 2027.
The same rental loss is worth a different amount to different earners, because the refund follows your marginal rate. These are the FY2026-27 rates, including the 1 July 2026 rate cut, with the 2 percent Medicare Levy added.
On a $10,000 annual rental loss:
An investor earning $60,000 sits in the 30 percent bracket. With Medicare that is 32 percent, so the loss returns about $3,200.
An investor earning $150,000 sits in the 37 percent bracket. With Medicare that is 39 percent, so the same loss returns about $3,900.
An investor earning $200,000 sits in the 45 percent bracket. With Medicare that is 47 percent, so the same loss returns about $4,700.
The gap between the top and bottom of that list is $1,500 a year on an identical property. It is why the same deal can work for one buyer and not another, and why the after-tax cost matters more than the headline loss.
Note what this does not say. A larger refund means a larger loss, and a loss is still money leaving your account. Negative gearing reduces the cost of holding an asset that is growing. It does not turn a bad asset into a good one.
Take a $650,000 property bought with a 20 percent deposit, so a $520,000 loan at 6.2 percent interest only. Rent is $560 a week, which is $29,120 a year, on a gross yield of 4.5 percent.
Interest costs $32,240 a year. Council and water rates, insurance, property management at 7 percent, and maintenance add roughly $7,500. Total cash costs are about $39,740 against $29,120 of rent, so the property is $10,620 out of pocket before tax.
Add a depreciation schedule. On a property of this age and price a schedule commonly returns $5,000 to $8,000 in the first full year. Take $6,000. The taxable loss becomes $16,620 even though only $10,620 left your account.
At a 39 percent marginal rate including Medicare, that loss returns about $6,482. The real after-tax holding cost is roughly $4,138 a year, or $80 a week. That is the number worth comparing against the growth you expect, and it is what this calculator solves for.
The same property with no depreciation schedule returns about $4,142 instead, leaving $6,478 a year to carry. The schedule costs several hundred dollars once and is deductible.
A positively geared property earns more rent than it costs to hold. You pay tax on the surplus rather than claiming a refund. Neither is automatically better, and a portfolio usually needs both.
Negatively geared property tends to sit in markets where prices have run ahead of rents, often capital cities. The strategy relies on growth to justify the annual cost, and on your salary to fund it. It limits how many properties you can hold at once, because each one takes cash out.
Positively geared property tends to sit in more affordable markets with higher yields, often regional. It funds itself, which is what lets a portfolio keep growing, but growth is usually slower.
We buy for both. Growth builds the equity for the next purchase, yield pays for the holding, and a portfolio built on only one of them either stalls or bleeds. See how the two work together in our guide to capital growth versus rental yield.
Most properties move over time. Rents typically rise faster than a fixed loan balance, so a property that starts $80 a week negative often reaches neutral within five to eight years without you doing anything.
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