How to use the negative gearing calculator
- 1 Enter your taxable income before the rental.
- 2 Enter the rent received for the year.
- 3 Enter loan interest and other costs, such as rates, insurance, strata, agent fees and repairs.
- 4 Enter depreciation and read the tax saving and after-tax cash flow.
Worked example
A $120,000 earner with $30,000 of rent, $36,000 of interest, $7,000 of other costs and $5,000 of depreciation. The rental loss is $18,000, which saves about $5,760 in tax at 32%. Cash flow before tax is −$13,000, so the real after-tax cost is about $7,240 a year, or $139 a week.
What investors can claim
- Immediate deductions: loan interest, council rates, insurance, strata, property management, repairs and advertising for tenants.
- Over time: capital works (usually 2.5% a year of construction cost) and depreciation of new plant and equipment.
- Second-hand items: for residential property bought after 9 May 2017, you generally cannot claim depreciation on previously used plant and equipment.
- Not claimable: travel to inspect residential rental property, and interest on the part of a loan used for private purposes.
A tax loss is still a cash loss; check whether the rent covers costs with the Rental Yield Calculator. When you sell, see the Capital Gains Tax Calculator.
Features
Tax saving
The rental loss reduces your taxable income at your marginal rate.
Cash vs tax
Depreciation lowers tax without costing cash.
Weekly cost
The real after-tax cost of holding the property.
When to use it
Buying an investment property
Estimate holding costs before you buy. Check the yield with the Rental Yield Calculator.
Rent reviews
See how a rent rise changes your position. When you sell, see the Capital Gains Tax Calculator.
Interest rate changes
Test higher rates. Work out depreciation with the Depreciation Calculator.
Tax time
Estimate your refund from a rental loss. See how much you can borrow with the Borrowing Power Calculator.
Related Tax tasks
Frequently asked questions
What is negative gearing?
When the costs of an investment property, including loan interest, are more than the rent. The loss can be deducted from other income, such as salary.
Is negative gearing a good strategy?
It reduces tax, but you still lose money each year. It relies on capital growth to make a profit.
What expenses can I claim?
Loan interest, council rates, water, land tax, insurance, strata fees, property management, repairs, advertising and depreciation.
What is depreciation?
A deduction for the decline in value of the building (capital works, usually 2.5% a year) and fittings. It is a non-cash expense.
Can I claim travel to inspect the property?
No. Travel to residential rental properties has not been deductible since 1 July 2017.
Do I get the tax back each pay?
You can apply for a PAYG withholding variation so less tax is taken from your pay during the year.
What happens when I sell?
Capital gains tax applies, with a 50% discount if held more than 12 months. Depreciation claimed on the building reduces the cost base.
Is negative gearing changing?
The rules have been debated, but negative gearing remains available for 2026-27.
Does it work with low income?
The benefit is smaller, because the loss saves tax at a lower marginal rate.
What is positive gearing?
When rent is more than costs, giving taxable rental income.
Can I claim interest on a loan used for a holiday?
No. Only interest on money borrowed to buy or improve the rental property is deductible, so keep private borrowing separate.
What records should I keep?
Keep rental statements, invoices, loan statements and a depreciation schedule from a quantity surveyor for at least five years after you sell.
Results are estimates based on the official rates linked above. Confirm important figures with the issuing authority or a qualified adviser before you act on them.
Built and reviewed by Hamza Farooq, founder and lead developer
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