Negative Gearing Calculator
See exactly how much tax you save on your Australian investment property — including interest, depreciation, and all deductible expenses.
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Your marginal tax rate (incl. Medicare): 32.0%
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Enter your property details and tap Calculate to see your annual tax saving, weekly out-of-pocket cost, and full deduction breakdown.
How Negative Gearing Works in Australia
Negative gearing is one of Australia's most-used property investment strategies. When your investment property costs more to run than it earns in rent, the ATO lets you deduct that loss against your other income — reducing the tax you pay that year. The strategy relies on capital growth making up the shortfall: you accept a short-term cash loss in exchange for a long-term capital gain.
The biggest deductible expense is almost always the loan interest. On a $560,000 investment loan at 6.5%, you're paying around $36,400 in interest per year. If your property rents for $600/week ($31,200/year), you're already $5,200 short before any other costs. Add management fees, council rates, insurance, maintenance, and depreciation, and a typical investment property runs a $15,000–$25,000 annual loss.
Depreciation is particularly powerful because it's a non-cash deduction. A quantity surveyor's depreciation schedule can identify $3,000–$10,000 in annual deductions for newer properties, reducing your taxable loss further without you spending another dollar. For high-income earners at the 47% marginal rate (including Medicare levy), the government effectively subsidises almost half of every dollar of rental loss.
Frequently Asked Questions
What is negative gearing in Australia?
Negative gearing occurs when the costs of owning an investment property — including loan interest, management fees, rates, and depreciation — exceed the rental income it earns. The resulting loss is deductible against your other income (such as salary), reducing the tax you pay. The ATO allows this because the investor is expected to make a capital gain when the property is eventually sold.
How does negative gearing reduce your tax?
The net rental loss is added to your tax return and reduces your total taxable income. If you earn $120,000 and your property makes a $15,000 loss, you are taxed on $105,000. At the 32% marginal rate (including Medicare levy), this saves you approximately $4,800 per year. The calculator above shows the exact saving based on current 2024–25 tax brackets.
What expenses can you claim on a negatively geared property?
Deductible expenses include: loan interest, property management fees, council rates, water rates, landlord insurance, repairs and maintenance, and building/capital works depreciation. You cannot claim the principal portion of your loan repayments, or personal expenses. Depreciation is a non-cash deduction — you get the tax benefit without actually spending the money that year.
Is negative gearing worth it?
Negative gearing only makes sense if you expect strong capital growth that outweighs the ongoing cash losses — even after the tax saving. The tax benefit is proportional to your marginal rate, so high-income earners get the most benefit. At a 47% marginal rate, nearly half of every dollar of rental loss is returned via the tax refund. Lower-income investors face higher after-tax holding costs.
What is the difference between negative gearing and positive gearing?
A negatively geared property costs more to hold than it earns in rent — the investor tops up the shortfall from their own income but receives a tax deduction. A positively geared property earns more rent than it costs, creating taxable income. Investors choose between these strategies based on their income tax bracket, cash flow needs, and outlook for capital growth.