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Australian Negative Gearing Calculator 2026

Calculate your rental property's net loss, tax saving from negative gearing, and true after-tax weekly cashflow — using 2025-26 Australian income tax rates.

Building (2.5%/yr) + fixtures — get a QS schedule for precision
For informational purposes only. Tax outcomes depend on your individual circumstances. Consult a qualified tax agent or accountant before making investment decisions.
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Net Rental Result
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After-Tax Weekly Shortfall
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Marginal Tax Rate
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Annual Interest Cost

How Negative Gearing Works

  1. Net rental loss: Total allowable expenses (interest + rates + insurance + management + maintenance + depreciation) minus gross annual rent. If costs exceed rent, the property is negatively geared.
  2. Tax offset: The net loss is offset against your salary at your marginal tax rate. A $15,000 loss at 37% = $5,550 tax saving. This is the "negative gearing benefit."
  3. After-tax cashflow: Your weekly pocket-money shortfall = (gross loss ÷ 52) minus (tax saving ÷ 52). The true cost is always less than the headline rental shortfall.
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Negative Gearing in Australia: A Complete Guide

Negative gearing is one of Australia's most discussed — and politically contentious — tax strategies. It allows property investors to deduct rental losses from their taxable income, effectively sharing the cost of an investment loss with the ATO. In a country where homeownership is central to wealth-building culture, negative gearing shapes investment decisions for millions of Australians.

For informational purposes only. Tax outcomes are highly individual. Consult a registered tax agent or financial adviser before making property investment decisions.

Who Benefits Most from Negative Gearing?

Negative gearing is most advantageous for high-income earners in the 37% or 45% marginal tax brackets. At a 45% rate, the ATO effectively subsidises 45 cents of every dollar of rental loss. At the 19% rate, the benefit is much smaller. The value of negative gearing is always limited by your marginal rate — so higher-income investors receive a proportionally larger benefit.

Depreciation: Often the Biggest Deduction

Building depreciation (Division 43 at 2.5%/yr) and plant-and-equipment depreciation (Division 40) can turn a marginally positive property into a tax loss without requiring additional out-of-pocket expenditure. For a new $700K apartment with $400K in construction costs, the building depreciation alone might be $10,000/year — a significant non-cash deduction. Getting a Quantity Surveyor (QS) depreciation schedule typically costs $500–$800 and usually pays for itself many times over in tax savings.

For complete AU property investment planning, see our Australian income tax calculator and capital gains tax calculator.

Frequently Asked Questions

What is negative gearing in Australia?
Negative gearing occurs when the costs of owning an investment property (interest, rates, insurance, repairs, depreciation) exceed the rental income it earns. This net loss can be deducted from your other taxable income (e.g. salary), reducing your tax bill. It is a uniquely Australian tax strategy and hotly debated in property policy.
How is the negative gearing tax benefit calculated?
The tax benefit equals your net rental loss multiplied by your marginal tax rate. For example, a $10,000 net rental loss for someone on a 37% marginal rate saves $3,700 in income tax. This is known as the tax offset. Your true out-of-pocket cashflow is the gross rental shortfall minus this tax saving.
What expenses can I claim for a negatively geared property?
Claimable expenses include mortgage interest, council rates, landlord insurance, property management fees, repairs and maintenance, advertising, stationery, and depreciation of building structure (2.5%/yr for post-1985 buildings) and fixtures/fittings. Capital improvements must be depreciated rather than claimed upfront.
Does negative gearing make sense as an investment strategy?
Negative gearing relies on capital gains eventually outpacing the accumulated out-of-pocket cashflow shortfall. It works best when property values are rising and you have a high marginal tax rate. The 50% CGT discount on assets held 12+ months reduces the after-tax cost of eventual sale. However, if property values stagnate or fall, negative gearing can result in ongoing losses with no recovery.
What is the difference between negative gearing and positive gearing?
Positively geared properties earn more rent than they cost to hold — creating taxable income. Negatively geared properties cost more than they earn — creating a tax-deductible loss. Neutral gearing is where rental income exactly covers costs. Many investors accept short-term negative gearing losses in exchange for long-term capital growth.
Can I claim depreciation on my investment property?
Yes. You can claim Division 43 depreciation (2.5%/yr) on the construction cost of buildings built after 15 September 1985, and Division 40 depreciation on plant and equipment (carpets, appliances, etc.) for properties where you owned the items when new. A quantity surveyor's depreciation schedule is recommended to maximise your claim.

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