Law change: The Australian Government has legislated changes to negative gearing. From 1 July 2027, rental losses on residential properties purchased after 7:30pm AEST on 12 May 2026 can generally no longer be deducted against your other income (losses are quarantined against rental income instead). New builds and properties purchased before 12 May 2026 are not affected. This calculator reflects the current rules, which apply to all investors until 30 June 2027.
Negative Gearing CalculatorAustralia — 2026–27
Calculate your property investment tax benefits, cash flow, and required capital growth.
Investment Details
Include deductible cash costs such as rates, insurance, repairs and property management. Enter non-cash deductions separately below.
Enter eligible non-cash deductions from your tax schedule. These reduce taxable income but are not another cash payment. Enter 0 if none apply.
Under the 2026 law change, from 1 July 2027 this property's rental losses will be quarantined — deductible against rental income only, not your salary. The tax savings shown apply only until 30 June 2027. Quarantined losses carry forward.
Summary
Estimated figures for the 2026–27 financial year, based on the first year of the loan.
Tax Rate
Annual Rent
Annual Loan Payment
Total Cash Expenses
Net Cash Flow
Tax Impact
Annual Cost to Hold
Required Annual Capital Growth
Cash Flow and Tax Deductions
Deductible loan interest: $34,922
Principal repaid (cash cost, not deductible): $6,036
Non-cash depreciation and capital works: $0
Taxable rental income / loss: -$14,322
After-tax cash flow equals rent less loan payments and cash expenses, plus the tax effect. Depreciation affects tax only. Medicare is excluded.
Annual Cash Breakdown
Cash receipts and payments only. Depreciation is a non-cash tax deduction and is excluded from these bars.
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How Negative Gearing Works in Australia
How Does Negative Gearing Work?
Negative gearing occurs when deductible rental expenses exceed rental income. The model offsets that taxable loss against other income. Cash flow can differ: principal repayments are cash costs without a deduction, while eligible depreciation is a deduction without another cash payment.
Is Negative Gearing Worth It?
Negative gearing is only worthwhile if your property grows in value faster than the after-tax cost of holding it. A common mistake is chasing the tax refund while ignoring that you are losing money each year. The calculator above helps you estimate whether the numbers stack up for your situation.
Negative Gearing Example
At an $80,000 salary, $28,600 annual rent, $35,100 interest-only loan payments, $8,000 cash expenses and $10,000 eligible depreciation, the taxable loss is $24,500. Under this model, income tax falls by $7,350, excluding Medicare. The cash shortfall before tax is $14,500, leaving an annual after-tax cash cost of $7,150.
Investment Property Tax Deductions
Deductible expenses include mortgage interest, council and water rates, property management fees, landlord insurance, repairs, depreciation on fixtures, and capital works deductions (2.5% of construction cost for eligible properties). Travel to inspect the property is no longer deductible for residential investors.
Frequently Asked Questions About Negative Gearing
Common questions about property investment tax benefits, deductions, and cash flow
Official ATO Information
For official rules, thresholds, and eligibility criteria, refer to the Australian Taxation Office.
View ATO Rental Property Tax InformationRelated Articles
General Information Only
This calculator provides general information only and does not constitute personal financial advice. Results are estimates based on the inputs provided and current ATO rates. Your actual tax obligations may differ. Please consult a licensed financial adviser before making any financial decisions.
This calculator shows year one. But will this property actually build your wealth over time — or just keep you busy?
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