Free Negative Gearing Calculator Australia (2025–26)

Negative gearing occurs when the costs of owning an investment property exceed the rental income. The resulting net loss can reduce the tax you pay because it is taken into account with your other taxable income. The calculator above estimates the tax offset, weekly out-of-pocket cost, and after-tax holding cost using the current settings built into the site.

How does negative gearing work in Australia?

If you want the plain-English explanation first, read our Negative Gearing Guide, then come back to run your numbers.

Negative gearing is one of the most discussed concepts in Australian property investment. If an investment property costs more to hold than it earns in rent, the net loss reduces the owner’s taxable income. Australia’s tax system is progressive, so the tax effect depends on the investor’s marginal rate: higher-income earners generally receive a larger tax benefit per dollar of deductible loss than lower-income earners.

What does this calculator calculate?

This calculator computes three figures:

1. Annual tax offset — the difference between tax payable without the property and tax payable with it. This is the tax effect of the net rental loss.
2. Weekly out-of-pocket cost — the cash shortfall before tax benefits, calculated as total expenses minus rental income.
3. After-tax weekly cost — the out-of-pocket cost minus the tax offset. This is the net weekly cost of holding the property after accounting for the tax effect.

What expenses are included in the negative gearing calculation?

The calculator includes all ATO-deductible rental expenses:

• Loan interest — only the interest portion of your mortgage repayments, and only for the investment portion of the loan
• Council rates and water charges
• Insurance — building, contents, and landlord insurance
• Property management fees — agent fees and commissions
• Repairs and maintenance — restoring existing items to their original condition (not improvements)
• Body corporate fees — administration fund levies (not special purpose capital levies)
• Land tax — the state-based tax on your investment property land
• Depreciation — Division 43 capital works (building structure) (ATO — Capital works deductions (Div 43)) and Division 40 plant and equipment (new items only for most post-1 July 2017 residential rental settings) (ATO — Second-hand depreciating assets (depreciation section))

What are the 2025-26 Australian income tax brackets?

The tax offset from negative gearing depends on the investor’s marginal tax rate. The following table shows the 2025-26 income tax brackets for Australian residents, which this calculator uses.

Plus Medicare levy: 2% of taxable income (ATO — What is the Medicare levy) (reduced or not payable for some low-income earners; thresholds vary by income year and family status (ATO — Medicare levy reduction for low-income earners)). The Low Income Tax Offset (LITO) provides up to $700 for taxable incomes up to $66,667 (ATO — Low income tax offset).

Source: ATO - Tax rates for Australian residents, retrieved 9 Feb 2026.

What assumptions does this calculator make?

• Uses 2025-26 ATO income tax brackets (Stage 3 tax cuts) (ATO — Tax rates for Australian residents), Medicare levy (2%), and LITO
• Models vacancy using your weeks rented per year input (rental income is weekly rent x weeks rented; expenses are treated as annual)
• Does not include HELP/HECS-HELP repayments or Medicare Levy Surcharge
• Does not include PAYG withholding variation benefits (improved in-year cash flow)
• Principal loan repayments are not deductible and are not included in the calculation

Worked example: Melbourne apartment, $95,000 income

Sarah, 34, is a software developer in Melbourne earning $95,000. She bought a 2-bedroom investment unit in Parramatta for $650,000, with a $520,000 loan at 6.1% interest.

Property details:

• Weekly rent: $550 (52 weeks = $28,600/year)
• Loan interest: $31,720/year ($520,000 at 6.1%)
• Council rates: $2,100
• Water: $1,300
• Insurance: $1,600
• Property management: $2,288 (8% of rent)
• Repairs: $1,200
• Body corporate: $3,800
• Depreciation: $6,500 (Div 43, built 2015) + $2,200 (Div 40, new items)
• Land tax: $0 (NSW, below $1,075,000 threshold)

Results:

• Gross rental income: $28,600
• Total deductions: $52,708
• Net rental loss: -$24,108
• Tax without property: ~$23,117
• Tax with property: ~$15,799
• Annual tax saving: $7,318 ($141/wk)
• Cash out-of-pocket: $15,408/yr ($296/wk) (cash expenses minus rent, excluding depreciation)
• After-tax cost: $8,090/yr ($156/wk)

After the tax offset, the net holding cost of Sarah’s investment property is approximately $156 per week. The tenant covers roughly 54% of annual cash costs, the ATO effectively covers around 14% through the tax offset, and Sarah pays the remaining 32%. Without depreciation deductions, her after-tax cost would increase to approximately $213 per week — that $8,700 in depreciation saves her about $2,958 per year in tax.

Unsure how much depreciation to enter? Use our property depreciation calculator to estimate Division 43 and Division 40 deductions for your property.

Who Benefits Most from Negative Gearing? Income Bracket Analysis

The tax saving from negative gearing depends on your marginal rate. Not all income brackets benefit equally — and the difference can be substantial.

Under the 2025-26 ATO brackets, the largest jump in marginal rate occurs at the $135,001 threshold, where the rate increases from 30% to 37%. Investors earning between $90,000 and $135,000 are in the “sweet spot” where negative gearing provides meaningful savings at the 30% rate, and any salary increase that crosses $135,001 produces an even larger tax benefit on the same rental loss.

How the same $15,000 rental loss produces different tax savings:

An investor earning $140,000 receives $3,150 more in annual tax savings than someone earning $40,000, on the same property. That is the difference between the property costing $177 per week or $237 per week after tax.

What this means in practice: If your salary is approaching $135,001, the tax benefit of negative gearing increases meaningfully once you cross the threshold. However, a higher marginal rate also means you pay more tax on any rental income when the property eventually becomes positively geared. The decision to negatively gear should consider your expected income trajectory over the holding period, not just this year’s bracket.

When Does a Negatively Geared Property Turn Positive?

Many investors ask: “How long until this property stops costing me money?” The answer depends on rent growth, expense growth, and how your loan balance changes over time.

Using historical Australian averages of approximately 3% annual rent growth and 2.5% annual expense growth (excluding interest, which depends on the loan structure and rate environment), a property that is negatively geared by $15,000 in Year 1 may approach cash-flow neutral by Year 4-5 — assuming interest rates remain stable. If interest rates fall, the crossover comes sooner; if rates rise, it takes longer.

Conceptual 5-year projection for Sarah’s property:

In this scenario, the cash shortfall reduces each year but the property remains negatively geared at Year 5 because the large loan balance generates substantial interest. Properties with smaller loans relative to value (lower LVR) or higher rental yields reach the crossover point faster.

Want to model this in detail? The free calculator shows your current year position. Our premium spreadsheet projects 10-30 years with changing interest rates, rent growth, and depreciation decline — so you can see exactly when a negatively geared property becomes cash flow positive and what it costs you along the way.

Approaching 30 June? See our EOFY tax planning guide for property investors and the EOFY property investor checklist for strategies to maximise deductions before the financial year ends.

Don’t know your land tax liability? Use our land tax calculator to estimate the annual charge for your state before entering it here.

Negative Gearing for Couples

When a couple jointly owns an investment property, the rental income and deductions are split according to their legal ownership share. For joint tenants, this is typically 50/50. For tenants in common, the split can be any agreed proportion (for example, 70/30 or 60/40).

Each co-owner reports their share of the net rental income or loss on their individual tax return. The tax saving from negative gearing depends on each person’s marginal tax rate. If one partner earns $180,000 (37% marginal rate) and the other earns $40,000 (16% marginal rate), a 50/50 ownership split means the higher earner’s share generates a larger tax saving per dollar of loss.

Key rules for couples:

• You cannot transfer your share of rental losses to your partner
• The ownership split for tax purposes must reflect the legal ownership structure
• Changing ownership proportions after purchase may trigger a CGT event
• Loan interest is deductible only to the extent the borrowed funds were used to purchase the investment property — not any portion used for private purposes

For couples with significantly different incomes, the ownership structure affects how the tax offset is distributed. A tenants-in-common arrangement with a higher share to the higher-income earner results in a larger tax offset on that person’s share, but this should be weighed against asset protection and estate planning considerations. Speak with a registered tax agent or financial adviser about your specific situation.

Go Deeper with the Full Spreadsheet

This calculator estimates your current year position. Our premium spreadsheet models 10-30 years with changing interest rates, rent growth, and depreciation decline — plus multi-property comparison and hold-vs-sell analysis. See exactly when your negatively geared property becomes cash flow positive and what it costs you along the way.

Need a tax-time worksheet first? Start with the ATO rental property worksheet to track rental income, deductions, and net rental loss in one place.

Want to compare all spreadsheet options? See our investment property spreadsheet guide for free, DIY, and premium options compared.

What is Positive Gearing?

Positive gearing is the opposite of negative gearing: the rental income from your investment property exceeds all deductible expenses (including loan interest, rates, insurance, management fees, depreciation, and other holding costs). The net profit is added to your taxable income and taxed at your marginal rate.

When does positive gearing typically occur?

• The property has a high rental yield relative to its purchase price
• The loan-to-value ratio is low (smaller mortgage means less interest)
• The loan has been substantially paid down over time
• Interest rates have decreased since purchase

While negative gearing receives more attention, many experienced investors aim for positive gearing over time. A property that starts negatively geared can become positively geared as rent increases and the loan is paid down. The trade-off is that positive gearing increases your taxable income, but it also means the property is self-sustaining and generating real income.

Use this calculator to model both scenarios by adjusting your loan interest and rental income inputs. If total deductions are less than gross rental income, the property is positively geared.