Plug in your property numbers and your marginal tax rate. The calculator shows the annual paper loss, the ATO refund, and your real out-of-pocket cost on a 10-year view.
Negative gearing is one of the most talked-about parts of Australian property investment, and one of the most misunderstood. The idea is straightforward: when your property's deductible expenses (interest, depreciation, management fees, rates, insurance, repairs) exceed the rent it earns, that paper loss reduces your taxable income. The ATO refunds tax at your marginal rate.
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 45 percent bracket, every $1,000 of negative gearing returns $450 in tax. At the 30 percent bracket, $300. Below the 30 percent bracket, 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.
For the full set of investment property tools see our investment property calculator hub. For specific scenarios:
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