Negative gearing is a tax strategy used by Australian property investors where the costs of owning a rental property exceed the rental income it generates. The resulting loss is deducted from your other taxable income (such as salary), reducing the tax you owe. Combined with the 50% CGT discount for assets held over 12 months, negative gearing is one of the most widely used investment property strategies in Australia.
Property & Loan Details
Rental Income
Typical: 2-4 weeks
Annual Deductible Expenses
Typical: 7-10% of rent collected
Building Depreciation (Capital Works)
Eligible if built after 15 Sep 1987
Your Income
Auto-calculated from your income
Capital Growth Projection (Optional)
How to Use the Negative Gearing Calculator
Negative gearing is a cornerstone of Australian property investment strategy. When your rental property expenses exceed your rental income, the resulting loss reduces your taxable income elsewhere, saving you tax. This free negative gearing calculator shows exactly how much tax you save and what your true cost of holding is.
Step 1: Enter Your Property and Loan Details
Start with the property value and your loan amount. Most investors borrow 80% of the property value (or more with lenders mortgage insurance). Enter your current interest rate and select whether the loan is interest-only. Interest-only loans maximise the tax deduction because 100% of the repayment is deductible interest. With principal-and-interest loans, only the interest portion is deductible and this reduces over time.
Step 2: Enter Your Rental Income
Enter the weekly rent your property earns (or is expected to earn). The calculator converts this to annual income and subtracts vacancy weeks. Vacancy of 2-4 weeks per year is realistic for most Australian capital city properties. Regional areas may have higher vacancy.
Step 3: Add Your Deductible Expenses
Enter all annual deductible costs: council rates, water rates, landlord insurance, property management fees (entered as a percentage of rent), repairs and maintenance, strata or body corporate fees, land tax, and any other deductible expenses. For building depreciation, enter the original construction cost. Properties built after September 1987 qualify for 2.5% capital works depreciation per year over 40 years. This is a non-cash deduction that increases your paper loss without costing you any actual money.
Step 4: Enter Your Taxable Income
Your annual salary or other taxable income (excluding the property) determines your marginal tax rate. The calculator auto-detects the correct Australian tax bracket and Medicare levy. Higher income earners receive a proportionally larger tax benefit from negative gearing because their marginal rate is higher.
Step 5: Review Your Results
The results show your gross rental income, total deductions, net rental position (the loss), and the tax saving from that loss. The after-tax cost of holding tells you the real annual expense of owning the property once the tax refund is accounted for. The capital growth projection shows your estimated property value over time, the capital gain, and the CGT payable when you sell — including the 50% CGT discount for assets held over 12 months. Compare the total holding cost against projected capital growth to assess whether the investment makes financial sense.
FAQ
Is this negative gearing calculator free?
Yes, this negative gearing calculator is completely free with no signup, no hidden fees, and no usage limits. You can run as many scenarios as you like. Everything runs locally in your browser, so your financial data stays completely private.
Is my financial data safe?
Absolutely. All calculations run entirely in your browser using client-side JavaScript. Your income, property details, and loan information are never sent to any server or stored anywhere. You can disconnect from the internet and the calculator will still work.
What is negative gearing in Australia?
Negative gearing occurs when the costs of owning a rental property (mortgage interest, rates, insurance, maintenance, depreciation) exceed the rental income it generates. The resulting loss can be deducted from your other taxable income such as your salary, reducing the amount of tax you pay.
How is the tax benefit of negative gearing calculated?
The tax benefit equals your net rental loss multiplied by your marginal tax rate. For example, if your rental loss is $10,000 and your marginal tax rate is 37%, your tax saving is $3,700. Higher income earners receive a larger tax benefit because they are taxed at a higher marginal rate.
What is the 50% CGT discount and who qualifies?
Australian individual taxpayers who hold an investment property for more than 12 months receive a 50% discount on the capital gain when they sell. This means only half the profit is added to your taxable income. Companies do not receive this discount, and trusts may distribute discounted gains to individual beneficiaries.
Can I claim depreciation on my investment property?
Yes, properties built after September 1987 are eligible for building depreciation (capital works) at 2.5% of the original construction cost per year over 40 years. Plant and equipment items like carpets, appliances, and blinds can also be depreciated at various rates. Depreciation is a non-cash deduction that increases your rental loss on paper.
What expenses can I deduct on an investment property in Australia?
Common deductible expenses include mortgage interest (not principal repayments), council and water rates, landlord insurance, property management fees, repairs and maintenance, depreciation, strata or body corporate fees, and land tax. Travel to inspect the property is no longer deductible for residential properties since July 2017.
What are the Australian tax brackets used in this calculator?
This calculator uses the current Australian individual tax rates: 0% up to $18,200, 16% for $18,201-$45,000, 30% for $45,001-$135,000, 37% for $135,001-$190,000, and 45% above $190,000. The Medicare levy of 2% is added on top. These rates are updated for the current financial year.