Australian Negative Gearing Calculator

Calculate your rental property tax saving from negative gearing, after-tax cash flow, and depreciation benefits. Includes quantity surveyor ROI and policy change scenarios. AUD.

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Annual Rental Loss (Negative Gearing)
A$18,373
Loss reduces your taxable income by A$18,373 — saving A$6,798 in tax
Annual Rental Income
A$33,800
Total Deductible Expenses
A$52,173
Tax Saving from Negative Gearing
A$6,798
After-Tax Monthly Cash Flow
-A$548/mo
Gross Rental Yield
4.51%
Annual Interest Cost
A$39,000
Cash Flow vs Tax Benefit
Before-Tax Cash Flow
-A$13,373/yr
Tax Saving
A$6,798/yr
After-Tax Cash Flow
-A$6,575/yr
Depreciation (non-cash)
A$5,000/yr

Depreciation is a non-cash deduction — it reduces your tax without a cash outlay. This is a major advantage of property investment vs other assets. A quantity surveyor schedule unlocks these deductions.

Negative gearing is an Australian tax feature where a rental property loss (expenses exceed income) reduces your taxable salary income. This is unique — many countries do not allow this cross-deduction.

Step 1: Calculate Rental P&L
Rental income: A$33,800/yr Expenses: A$52,173/yr Result: LOSS of A$18,373
Step 2: Apply to Tax Return
Your salary income is reduced by the rental loss. This reduces your taxable income and your tax payable.
Step 3: Tax Refund or Reduction
At 37% tax rate, a A$18,373 loss saves A$6,798 in tax — paid as a refund or reduced PAYG withholding.
The tax benefit only works while you are in the loss position. As rents rise or loan is paid down, the property may become positively geared — at which point the rental income is added to your taxable income instead.

A quantity surveyor (QS) depreciation schedule costs $600-$800 and typically identifies $2,000-$8,000+ in annual tax deductions for new properties. The ROI is usually 4-10x in year one alone.

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QS Schedule Cost
A$700
One-off investment (tax deductible)
Annual Tax Saving
A$3,000
From improved depreciation claims
Payback Period
0.2 months
Time to recoup QS fee
10-Year Net Tax Saving
A$29,300
After deducting QS cost
Who benefits most: New properties (built after 2017) get both Division 43 (building) and Division 40 (plant & equipment) claims. Older properties (pre-1985 construction) cannot claim building depreciation. The QS schedule is valid for the life of the property ownership — you pay once and claim every year.

How to Use This Negative Gearing Calculator

Enter your weekly rent, loan balance, interest rate, and all deductible expenses including management fees, council rates, insurance, maintenance, and depreciation. Select your marginal tax rate to see the tax saving from negative gearing and your true after-tax cash flow.

What Is Negative Gearing?

Negative gearing occurs when the costs of owning a rental property exceed the rental income. In Australia, this net rental loss can be deducted against your other income (typically salary), reducing your taxable income and the tax you pay. This is a uniquely Australian tax feature — many countries only allow rental losses to offset future rental income, not salary.

Is Negative Gearing Beneficial?

Negative gearing provides a tax benefit but does not create profit on its own — you are still spending more than you receive. The strategy only makes financial sense if the property's capital growth exceeds the annual cash shortfall over time. It is most beneficial for high-income earners at the 37% or 45% marginal tax rate, where the tax refund significantly reduces the out-of-pocket cost.

Negative Gearing Calculation

Rental Income (annual): Weekly Rent × 52
Total Deductible Expenses: Interest + Management Fee + Council Rates + Insurance + Maintenance + Depreciation

Taxable Rental Income = Rental Income − Total Expenses
(If negative = negatively geared)

Tax Saving = |Rental Loss| × Marginal Tax Rate

Example: $650/wk rent, $600K loan at 6.5%
Annual rent: $33,800
Interest: $39,000
Other expenses: $8,500
Depreciation: $5,000
Net rental loss: −$18,700
Tax saving at 37%: $6,919
After-tax cash shortfall: ~$11,781/yr (~$982/mo)

Example: Negative Gearing in Practice

Michael, Earning $130,000, Owning a $750,000 Investment Property in Brisbane

Weekly Rent$650 ($33,800/yr)
Interest Cost (6.5% on $600K)$39,000/yr
Management Fee (8.5%)$2,873/yr
Council Rates + Insurance$3,300/yr
Maintenance$2,000/yr
Depreciation (non-cash)$5,000/yr
Total Expenses$52,173/yr
Net Rental Loss−$18,373/yr
Tax Saving at 37%$6,798/yr
Actual Cash Shortfall~$952/month

Michael's $952/month out-of-pocket cost is effectively his "bet" on capital growth. If the property appreciates 5%/year, that is $37,500 in growth against a $11,424 annual cash cost — a strong return if sustained.

Frequently Asked Questions

Deductible rental expenses include: loan interest, property management fees, council rates, water rates (if landlord pays), landlord insurance, repairs and maintenance, advertising for tenants, accounting fees, depreciation (building and plant & equipment), body corporate fees, pest control, gardening, and travel to inspect the property (limited). You cannot claim capital improvements (only repairs), principal loan repayments, or personal use time for holiday homes.
Two types apply: Division 43 (building/capital works) at 2.5% per year of construction cost for residential buildings built after 15 September 1985. Division 40 (plant and equipment) for items like carpets, appliances, and blinds at rates between 10-30% depending on the item's effective life. Since 9 May 2017, Division 40 deductions for second-hand residential properties (previously owned) have been removed — only the original purchaser of new properties or commercial properties can claim Division 40. A registered quantity surveyor provides the schedule required by the ATO.
Negative gearing: property expenses exceed rental income — the loss reduces your taxable salary income, providing a tax benefit. The return depends on capital growth. Positive gearing: rental income exceeds expenses — the surplus is added to your taxable income and taxed at your marginal rate, but you have genuine cash flow. Neutral gearing: income equals expenses exactly — no tax effect either way. High-income earners benefit most from negative gearing; those near retirement or with lower incomes typically benefit from positive gearing.
Negative gearing has survived several reform proposals. The Labor Party proposed limiting negative gearing to new properties in 2016 and 2019 (the policy was not implemented after election losses). As of 2024-25, negative gearing remains unchanged. Any future reform would likely be grandfathered for existing investors or phased in over time. However, investors should stress-test their portfolio against a scenario where the tax benefit is removed.
The ATO requires a quantity surveyor (or other qualified person) to estimate construction costs for Division 43 depreciation claims — you cannot estimate this yourself unless you are a builder or architect who built the property. A tax depreciation schedule costs $600-$800 for a residential property and is tax deductible. For new or recently built properties, the schedule typically identifies $3,000-$8,000+ in annual deductions, making the ROI exceptional — often paid back in the first year's tax return alone.

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