Australia Negative Gearing Calculator
Calculate how investment property losses reduce your taxable income and how much tax you save through negative gearing.
Last updated: April 2026
LVR: 80.0%
Non-cash deduction — does not affect your cash flow.
Negative Gearing Loss
−$22,700
Net Cost After Tax Benefit
−$9,301/year
Gross Rental Yield
3.71%
Gross Rental Income
$26,000
Annual Interest
$36,400
Total Deductions
$48,700
Tax Benefit
$8,399
Cash Shortfall (before tax)
−$17,700
Net Cost After Tax
−$9,301
Gross Yield
3.71%
Net Rental Position
Negatively Geared
Negative Gearing Explained
Your property is negatively geared — rental income is less than total deductions. The $8,399 annual tax benefit reduces your out-of-pocket cost from $17,700 to $9,301 per year. Remember: capital growth is required for this strategy to be profitable.
What is negative gearing?
Negative gearing is an investment strategy where the costs of owning an investment property exceed the rental income it generates. The net loss is deductible against your other income, reducing your overall tax liability.
Widely used in Australia, negative gearing is particularly attractive for high-income earners because the tax saving is proportional to your marginal tax rate.
How to use this calculator
- 1Enter your income — Input your annual salary or other taxable income before property losses.
- 2Add rental income — Enter the total annual rent you receive from the investment property.
- 3Enter property expenses — Include loan interest, rates, insurance, management fees, repairs, and depreciation.
- 4Review your tax saving — The calculator shows the property loss, tax saving, and net out-of-pocket cost.
Formula & example
Property Loss = Total Expenses - Rental Income | Tax Saving = Property Loss x Marginal Tax Rate
Example: Salary AUD 120,000 with rental income AUD 24,000 and expenses AUD 40,000. Property loss = AUD 16,000. Taxable income = AUD 104,000. At 37% marginal rate, tax saving = AUD 5,920 per year.
Benefits
Reduces taxable income
Property losses directly offset your salary and other income, lowering the amount you pay tax on.
High-income advantage
The higher your marginal rate, the greater the tax benefit from negative gearing.
Capital growth potential
Over time, property value appreciation can outweigh short-term rental losses.
CGT discount
If you hold the property for more than 12 months, only 50% of the capital gain is taxable when you sell.
Use cases
First investment property
Understand the real after-tax cost of holding your first investment property.
Comparing properties
Compare the net holding cost of different properties with different rental yields and expense profiles.
Tax planning
Estimate tax savings to decide the optimal time to purchase or sell an investment property.
Refinancing decisions
See how changing your loan interest rate affects the property loss and tax saving.
Frequently asked questions
What is negative gearing in Australia?+
Negative gearing occurs when rental income from an investment property is less than total expenses such as interest, maintenance, and depreciation. The resulting loss can be offset against other income, reducing your total tax payable.
How does negative gearing reduce tax?+
The property loss reduces your taxable income. For example, if you earn 100,000 and have a 20,000 property loss, you are taxed on only 80,000. The tax saving equals the loss multiplied by your marginal tax rate.
Is negative gearing still available in 2025?+
Yes. Negative gearing remains available in Australia for investment properties. The 50% CGT discount also continues to apply when you sell an investment property held for more than 12 months.
What expenses can I deduct on a rental property?+
Deductible expenses include loan interest, council rates, property management fees, insurance, repairs and maintenance, depreciation of building and assets, and other expenses directly related to earning rental income.
What is the difference between negative and positive gearing?+
Negative gearing means your expenses exceed rental income, creating a tax-deductible loss. Positive gearing means rental income exceeds expenses, producing a taxable profit. Neutral gearing means income and expenses are equal.