What is negative gearing in Australia?

Negative gearing means your investment property's total costs (including loan interest) exceed your rental income. The net loss is deductible against your other income, reducing your tax bill, and until the 2027-28 income year it can be claimed in the same year the loss occurs. From 2027-28, a loss on an established dwelling contracted after 7:30pm on 12 May 2026 is quarantined: it offsets residential rental income or a residential capital gain only, never wages. Enter your contract date above and the result card tells you which applies to you.

Is negative gearing worth it?

It depends on your tax rate, your capital growth expectations and — from the 2027-28 income year — whether the property is quarantined. At a 32% marginal rate, every $10,000 in losses saves you $3,200 in tax while the loss is deductible against your wages, leaving you $6,800 out of pocket. If the loss is quarantined, the saving is nil in any year you have no residential rental income to absorb it, and the whole $10,000 is out of pocket until you do. Either way the strategy only makes financial sense if capital growth outweighs the cumulative cash losses.

Can I claim all my property expenses as deductions?

Yes — loan interest, property management fees, council rates, water rates, insurance, maintenance, repairs, strata fees and depreciation are all generally deductible. Capital improvements (not repairs) are usually depreciated over time rather than immediately deductible. Always confirm with your accountant.

What is the break-even rent?

The pre-tax break-even is the weekly rent at which rental income covers all your cash expenses. The after-tax break-even is lower only when you claim non-cash deductions, which in practice means depreciation. A cash shortfall is deductible, but the deduction hands back only your marginal rate on it and you fund the remainder, so it does not change the rent you need to break even — with depreciation at $0 the two figures are the same. Depreciation is different because you never pay it: each dollar claimed lowers the annual break-even by your marginal rate divided by one minus your marginal rate, so $10,000 of depreciation at a 32% rate lowers it by about $4,706 a year, or roughly $90 a week.

How does depreciation help with negative gearing?

Depreciation is a non-cash tax deduction for the wear and tear on the property and its fittings. You don't pay it out of pocket, but it increases your deductible loss and therefore your tax saving — a $10,000 claim at 32% is worth $3,200 with no cash outlay, while the loss is deductible against your other income. It is also the only deduction that lowers your after-tax break-even rent, for exactly that reason. If the loss is quarantined, depreciation adds to the quarantined pool rather than producing a refund that year.

Negative Gearing Calculator Australia

Calculate your investment property cash flow, tax benefit and true weekly out-of-pocket cost — now with the negative gearing quarantine that starts 1 July 2027 applied automatically based on your contract date.

Negative gearing changes for some investors from 1 July 2027 — what changes

Property & Loan

Property value

Loan amount

LVR: 80%

Interest rate

Rental Income

Weekly rent

$28,600/yr gross

Management fee

Usually 7–10% of gross rent

Annual Expenses

Council rates

Water & sewage

Landlord insurance

Maintenance & repairs

Strata / body corporate

For units/apartments

Depreciation (optional)

Non-cash deduction — get a QS report

Your Tax Rate

Marginal tax rate (incl. Medicare levy)

Select the bracket matching your total income

Negative Gearing Changes (1 July 2027)

Contract (purchase) date

Dwelling type

Net income from your other residential properties

Rent MINUS the costs of those properties, not gross rent. s26-155(6)(a) brings back only the amount by which their income exceeds their deductions, so a property earning $30,000 against $28,000 of costs contributes $2,000 here, not $30,000.

Not sure if this applies to you? Check grandfathering on its own.

Grandfathered — full negative gearing continues to apply, unaffected by the 1 July 2027 changes.

Negatively Geared

Weekly cost (pre-tax)

$416

Weekly cost (after tax)

$283

Annual tax saving

$6,922

Gross yield

3.57%

Income & Expenses

Gross annual rent$28,600

Deductible Expenses

Loan interest$41,600

Property management$2,431

Council rates$1,800

Water & sewage$900

Insurance$1,500

Maintenance$2,000

Total expenses$50,231

Net rental loss$21,631

Tax Benefit

Deductible rental loss$21,631

Tax saving at 32%$6,922

Saving per week$133

Your $21,631 annual cash shortfall is reduced to $14,709 after the tax benefit — saving $6,922/yr.

Break-Even & Yields

Break-even rent (pre-tax)$966/wk

Break-even rent (after tax)$966/wk

Current weekly rent$550/wk

Gross yield3.57%

Net yield (excl. interest)2.50%

LVR80.0%

Equity$160,000

How to Use This Calculator

1Enter your property value and loan amount (or LVR)
2Enter the interest rate on your investment loan
3Enter the expected weekly rent
4Add your annual property expenses — management fees, rates, insurance, maintenance
5Optionally add depreciation if you have a quantity surveyor report
6Select your marginal tax rate to see the after-tax benefit

What Is Negative Gearing?

Negative gearing occurs when the costs of owning an investment property (including loan interest) exceed the rental income it generates. The resulting loss is deductible against your other income, reducing your overall tax bill — and for an established dwelling contracted after 7:30pm AEST on 12 May 2026, that stops from the 2027-28 income year, when the loss can only be offset against residential rental income or a residential capital gain.

For example, if your rental property costs you $15,000 more per year than it earns, and your marginal tax rate is 32%, you receive a $4,800 tax refund — reducing your real out-of-pocket cost to $10,200.

Australia has had one of the most generous negative gearing systems in the world, and it has been widely used by property investors to reduce taxable income while hoping for long-term capital growth to offset the ongoing losses. The 2026 reform narrows that considerably: it leaves pre-cutoff purchases and new dwellings alone, and quarantines the rest.

Key Factors to Understand

Loan interest: The largest expense for most investors. On a $640,000 loan at 6.5%, annual interest is about $41,600. This is fully deductible against rental income.
Marginal tax rate: The higher your tax rate, the bigger the tax benefit. On the same rental loss, a 47% taxpayer gets 2.8× the benefit of one on 17% — both figures are options in the selector above, and the ratio is simply one rate divided by the other.
Depreciation: A non-cash deduction based on the wear and tear of the property and its fittings. A quantity surveyor report can identify $5,000–$15,000+ in annual deductions on newer properties.
Break-even rent: The weekly rent at which your property becomes cash-flow neutral. The after-tax figure is lower only to the extent you have non-cash deductions — depreciation, in practice. With depreciation at $0 the two break-evens are identical, because a cash shortfall returns you only your marginal rate and you still fund the rest of it.
Capital growth: Negative gearing is a long-term strategy that depends on capital growth to deliver a profit. The ongoing loss is the price you pay for exposure to property appreciation.

Tips for Property Investors

•Compare the after-tax break-even rent to current market rents in the area — this tells you how sustainable the investment is
•Get a quantity surveyor depreciation report on any property built after 1985 — it can significantly improve your after-tax position
•Interest rates move — use the scenario comparison feature to model your cash flow at rates 1–2% higher
•Positive gearing is more tax-efficient at lower income levels; negative gearing provides the most benefit at the top marginal rate
•Consider LMI cost recovery time when borrowing above 80% LVR on an investment property
•Track your rental income and expenses with our Expense Tracker for a clean EOFY report

Frequently Asked Questions

Official Sources

Estimates only. Not financial or tax advice. Full disclaimer for your rights and our limitations of liability.

About this calculator

This calculator exists to show you the arithmetic. It applies published Australian rates, thresholds and formulas to the numbers you enter and shows the working, so you can check it. That is all it does — it produces a number and describes what the number is. It does not recommend anything and it holds no opinion about any financial product.

What can move this result

It only knows the figures you type in. Offsets, deductions, prior-year losses, other income, your partner's position and anything you have not entered are not in the result, and any of them can move it a long way.
Rates and thresholds change, sometimes mid-year and occasionally with retrospective effect. Each calculator shows the financial year and the verification date it is working from — outside that year the result is wrong rather than approximate.
Assumptions are set to a reasonable default and every non-statutory one can be changed. Defaults are not predictions, and a small change to a growth or inflation assumption compounds into a large change in a long projection.
Where a result reaches two or more years into the future it is shown in today's dollars as well as future dollars, because a future-dollar figure overstates what the money will actually buy.
It is a generic calculator. It is not built around any particular product, it does not compare the market, and it cannot tell you whether a product is suitable for you.

Why these default assumptions are reasonable

Investment loan rate — 6.5% a year. The RBA's published average variable rate on outstanding INVESTMENT loans (table F6, June 2026) — investment loans price above owner-occupier loans, and the previous 6.25% default sat a quarter-point under the published average, quietly flattering the cash-flow answer. Interest is the largest line in most gearing calculations, so the loan's actual rate matters more here than anywhere. Source · You can change this input.
Management fee, rates, insurance and maintenance — illustrative figures for a suburban house. The 8.5% management fee sits in the range agents publish and the council rates, water, insurance and maintenance figures are mid-range for a metropolitan house — but every one of them is the property's own bill, not a rate anyone can source for you. They are starting points that make the page work before your figures arrive; the answer is only as good as replacing them. Source · You can change this input.

This calculator is not intended to be relied on for the purposes of making a decision in relation to a financial product. Before you make a financial decision, consider obtaining advice from someone who holds an Australian Financial Services Licence. We do not, and we cannot advise you.

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About this calculator

What can move this result

It only knows the figures you type in. Offsets, deductions, prior-year losses, other income, your partner's position and anything you have not entered are not in the result, and any of them can move it a long way.
Rates and thresholds change, sometimes mid-year and occasionally with retrospective effect. Each calculator shows the financial year and the verification date it is working from — outside that year the result is wrong rather than approximate.
Assumptions are set to a reasonable default and every non-statutory one can be changed. Defaults are not predictions, and a small change to a growth or inflation assumption compounds into a large change in a long projection.
Where a result reaches two or more years into the future it is shown in today's dollars as well as future dollars, because a future-dollar figure overstates what the money will actually buy.
It is a generic calculator. It is not built around any particular product, it does not compare the market, and it cannot tell you whether a product is suitable for you.

Why these default assumptions are reasonable

Investment loan rate — 6.5% a year. The RBA's published average variable rate on outstanding INVESTMENT loans (table F6, June 2026) — investment loans price above owner-occupier loans, and the previous 6.25% default sat a quarter-point under the published average, quietly flattering the cash-flow answer. Interest is the largest line in most gearing calculations, so the loan's actual rate matters more here than anywhere. Source · You can change this input.
Management fee, rates, insurance and maintenance — illustrative figures for a suburban house. The 8.5% management fee sits in the range agents publish and the council rates, water, insurance and maintenance figures are mid-range for a metropolitan house — but every one of them is the property's own bill, not a rate anyone can source for you. They are starting points that make the page work before your figures arrive; the answer is only as good as replacing them. Source · You can change this input.