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Australian Negative Gearing Calculator 2026 — Tax Saving & After-Tax Property Cost

Last updated: Reviewed by James O'Brien, CPA
**Negative gearing** occurs when the costs of owning an investment property — primarily loan interest — exceed the rental income received. Under Australian tax law, this net loss is deductible against your other income, reducing your tax bill at your marginal rate. For investors in the 37% or 45% tax bracket, the annual tax saving can be substantial, partially offsetting the cash flow shortfall while the property (ideally) appreciates in value. As of 2026, with investment loan rates around **6.5% per annum**, a $640,000 investment loan costs $41,600 in annual interest alone — typically far exceeding rental income on properties in Sydney and Melbourne. The tax saving from negative gearing equals your net rental loss multiplied by your marginal tax rate. Depreciation deductions (building write-off at 2.5% per year plus fixtures and fittings) can significantly increase the tax benefit without any additional cash outlay — a quantity surveyor's report typically costs $600–$800 and pays for itself many times over in the first year.
Australian Negative Gearing Calculator
Purchase price or current market value
Gross weekly rent before expenses
Total outstanding loan on the investment property
Annual interest rate — investment rates are typically ~0.3% above owner-occupier rates
Management fees, rates, insurance, maintenance, repairs
Quantity surveyor estimate — typically $3,000–$10,000/year for modern properties
Your personal marginal income tax rate
Annual Rental Income —
Total Deductible Expenses —
Net Tax Loss / Income —
Annual Tax Saved (Negative Gearing Benefit) —
After-Tax Annual Cash Cost —
View Year-by-Year Breakdown
Year-by-year growth breakdown

Real-World Examples — 2026

Melbourne townhouse — $800,000, negatively geared by $14,000/year

An investor in the 37% marginal bracket buys a Melbourne townhouse for $800,000 with a $640,000 investment loan at 6.5% (annual interest: $41,600). Weekly rent is $600 ($31,200/year). Annual expenses including management, rates, insurance, and maintenance: $9,000. Depreciation claim: $6,000. Total deductions: $56,600. Net loss: $25,400. Tax saving at 37%: $9,398. After-tax annual cash cost: $15,802 — or $304/week out of pocket.

Sydney apartment — $650,000, positively geared after depreciation

An investor buys a newer Sydney apartment for $650,000 with $520,000 in borrowings at 6.5% (interest: $33,800). Weekly rent is $700 ($36,400/year). Expenses: $8,000. Depreciation on new building: $12,000. Total deductions: $53,800. Net loss: $17,400. Tax saving at 30% bracket: $5,220. After-tax cost: $12,180/year. Without depreciation, the loss would be only $5,400 and tax saving would be $1,620 — showing how depreciation transforms the investment economics.

Frequently Asked Questions

Negative gearing occurs when the costs of owning an investment property — primarily loan interest, but also rates, insurance, and management fees — exceed the rental income received. Under Australian tax law, this net loss is deductible against your other income, reducing your overall tax bill. The tax saving partially offsets the cash flow shortfall, and investors rely on capital growth to make the strategy profitable long-term.

The tax saving equals your net rental loss multiplied by your marginal tax rate. If your rental loss is $15,000 and your marginal rate is 37%, your annual tax saving is $5,550. For someone in the 45% bracket with the same loss, the saving is $6,750. The higher your marginal rate, the more valuable negative gearing becomes — which is why it primarily benefits higher-income earners.

Fully deductible in the same year: loan interest, property management fees (7–10% of rent), council rates, landlord insurance, repairs and maintenance, land tax, advertising for tenants, strata/body corporate fees, and depreciation on fixtures. Capital works deductions (building structure) are claimed at 2.5% per year over 40 years. A quantity surveyor's depreciation schedule unlocks the full range of these deductions.

Yes. Negative gearing applies to any income-producing investment where borrowing costs exceed returns — including margin loans to buy shares or managed funds. However, property is the most common vehicle for negative gearing in Australia because property prices relative to rents make cash flow losses common, lending is available at high LVRs, and capital growth expectations are high. Share margin loans are used similarly but carry higher risk due to margin call exposure.

No. Negative gearing is only profitable if the capital growth of the property exceeds the cumulative cash flow losses (after tax benefits). If a property is negatively geared by $10,000/year after tax, you need the property to grow in value by at least $100,000 over 10 years just to break even. In markets with low capital growth — such as some regional areas or oversupplied unit markets — negative gearing can destroy wealth rather than build it.