Property cash flow is the difference between your rental income and all ownership costs, including mortgage repayments, council rates, insurance, property management fees, and maintenance. A property is positively geared when rental income exceeds costs, and negatively geared when costs exceed income.
When your investment property runs at a loss (negative gearing), you can deduct that loss from your taxable income. If your property loses $10,000 per year and your marginal tax rate is 30%, you get a $3,000 tax refund. This reduces your actual out-of-pocket cost to $7,000. From 1 July 2027 this salary offset only continues for new builds and properties owned before 12 May 2026 - losses on established properties bought after that date carry forward against property income instead. Read more in our guide to negative gearing.
Interest-only loans give you lower weekly repayments and higher tax deductions because the full repayment is deductible interest. Principal and interest loans cost more per week but build equity faster. Most investors start with interest-only for cash flow, then switch to P&I later. Our IO vs P&I comparison breaks this down in detail.
Gross rental yields typically range from 3% to 7% across Australia. Capital city houses average 3-4%, while regional areas and apartments can reach 5-7%. A higher yield improves cash flow, but you also need to consider capital growth potential. The best investments balance both.
The 2026 federal budget changes (Act No. 49 of 2026) start on 1 July 2027. Properties owned or contracted before 7:30pm on 12 May 2026 are grandfathered and new builds keep full negative gearing, so nothing changes for them. An established property bought after that date can no longer offset its rental losses against salary from 1 July 2027 - the losses carry forward against future property income or capital gains instead. Set your situation with the Negative Gearing Status option on the Tax & Deductions tab and the calculator applies the right treatment. Our guide to the changes and the strategy deep-dive cover the detail.
Depreciation depends on the property's age and construction cost. New properties can generate $8,000-$15,000 per year in depreciation claims. Properties built after 1985 can claim the building itself (Division 43) at 2.5% per year. Plant and equipment (Division 40) covers items like carpets, blinds, and appliances. You need a quantity surveyor's depreciation schedule to claim. Learn more in our depreciation schedules guide.
Cash flow is the number that tells you whether you can afford to hold an investment property. Not the rent, not the loan repayment in isolation, but the weekly out-of-pocket cost after rent, expenses, and tax. Get this number wrong and you end up forced-selling a property in year three because the holding cost crept up.
This calculator runs the full picture: gross rent, less interest, rates, insurance, property management, maintenance allowance, and depreciation. Then it applies your marginal tax rate to the loss (or gain) to give the after-tax weekly cost.
Annual rent minus annual expenses minus depreciation gives you the pre-tax position. If it's negative, the loss reduces your taxable income, which generates a tax refund at your marginal rate. The after-tax cost is the pre-tax loss minus the tax refund. Divide by 52 for weekly. The full formula is Annual Rent - Interest - Rates - Insurance - Property Management - Maintenance - Depreciation = Pre-Tax Position. Then Pre-Tax Position - (Pre-Tax Loss × Marginal Tax Rate) = After-Tax Position.
Three things. First, vacancy. Most assume 100 percent occupancy. Realistic vacancy is 2 to 4 weeks per year, which costs $1,200 to $2,400 on a $600 per week rental. This calculator has an optional vacancy allowance on the Income & Costs tab - tick it and the 2 percent national average is applied, adjustable to suit the market you are buying in. Second, depreciation. Spreadsheet versions skip it entirely. A quantity surveyor's depreciation schedule on a recently renovated property can add $5,000 to $15,000 of non-cash deductions. Third, interest rate stress. Today's rate is not tomorrow's rate. Nudge the interest rate slider 1 to 2 percent above your current rate and watch the weekly figure - if you cannot hold the property at that number, you are relying on rates staying put.
Negative cash flow means the property costs you money to hold week to week, with the trade-off being capital growth and tax benefits. Positive cash flow means the rent and tax refund cover the holding costs, with the trade-off usually being lower growth potential. Neither is automatically better. The right answer depends on your income, your risk tolerance, and what you want from the investment. High-income earners often prefer slight negative cash flow paired with strong growth markets. Lower-income earners or retirees usually want positive cash flow.
The 12 May 2026 federal budget changed the negative gearing rules, and the changes passed Parliament as Act No. 49 of 2026. From 1 July 2027 there are three situations. Properties owned or contracted before 7:30pm on 12 May 2026 are grandfathered and keep full negative gearing for as long as you hold them. New builds also keep the full salary offset. An established property bought after budget night loses it: from 1 July 2027 its losses can only offset income from other residential property, with the excess carried forward against future property income or capital gains. The loss is deferred, not destroyed, but it is not in your pocket each year.
This calculator models all three. Pick your situation under Negative Gearing Status on the Tax & Deductions tab, and the after-tax cashflow applies the correct treatment, including the transition position for the period before 1 July 2027. For the full detail read our guide to the changes and the strategy deep-dive.
Cash flow is one piece of the puzzle. Run the rental yield calculator first to filter on which properties stack up. Use this cash flow calculator to validate the weekly position. If land tax applies, this calculator estimates it automatically from your land value, owner entity, and state - the land tax calculator has the full entity comparison and multi-property picture. Then layer in the negative gearing calculator for the tax detail and the growth projection calculator for the long-term picture. Together they tell you whether the property pays off across 10 to 20 years.
For the full set of investment property tools see our calculator hub. To talk through a specific property, book a free strategy call.