Investment Property Calculator (Negative Gearing)
Calculate your rental property's net position and see how much tax you'll save through negative gearing. Enter your income and expenses to find your after-tax cost.
Based on 2025-26 tax rates. Assumes Australian tax resident.
Interest portion only, not principal repayments
Your salary or other income before this property
Enter property details to calculate your rental position
How Negative Gearing Works
Negative gearing occurs when your rental property expenses exceed your rental income, creating a tax loss. This loss can be offset against your other income (like salary), reducing your total taxable income and therefore your tax bill.
The Tax Benefit Calculation
Tax Benefit = Rental Loss × Marginal Tax Rate
Example: $10,000 loss × 32% marginal rate = $3,200 tax saving
Who Benefits Most?
Higher income earners benefit more from negative gearing because of higher marginal tax rates:
| Taxable Income | Marginal Rate | Tax Benefit per $10k Loss |
|---|---|---|
| $45,001 – $135,000 | 32% | $3,200 |
| $135,001 – $190,000 | 39% | $3,900 |
| $190,001+ | 47% | $4,700 |
What Expenses Can You Claim?
Immediately Deductible
- Loan interest – Interest on your investment loan (not principal repayments)
- Council rates – Annual rates paid to local council
- Water rates – Service charges and usage (unless tenant pays)
- Insurance – Building, landlord, and contents insurance
- Property management – Agent fees (typically 5-10% of rent)
- Repairs & maintenance – Fixing existing items to their original condition
- Body corporate – Strata fees for units and townhouses
- Land tax – State-based tax on investment property land value
- Advertising – Costs to find tenants
- Cleaning & gardening – Between tenancies
- Pest control – Regular treatments
Depreciation (Non-Cash Deductions)
- Capital works (Division 43) – Building structure depreciation at 2.5% per year
- Plant & equipment (Division 40) – Fixtures, appliances, carpets etc.
Tip: Get a depreciation schedule from a quantity surveyor. The cost ($500-$800) is tax-deductible and typically identifies $5,000-$10,000+ in annual deductions, especially for newer properties.
Worked Example
Sarah earns $100,000 and owns an investment property rented at $550/week. Here's her annual position:
| Item | Amount |
|---|---|
| Rental Income (50 weeks × $550) | $27,500 |
| Less Expenses: | |
| Loan interest | -$24,000 |
| Council rates | -$2,400 |
| Water rates | -$1,100 |
| Insurance | -$1,800 |
| Property management (7.5%) | -$2,063 |
| Repairs | -$1,500 |
| Depreciation | -$6,000 |
| Total Expenses | -$38,863 |
| Net Rental Loss | -$11,363 |
| Tax Benefit ($11,363 × 32%) | $3,636 |
Sarah's cash expenses (excluding depreciation) are $32,863. With rent of $27,500, her cash shortfall is $5,363. After the $3,636 tax benefit, her after-tax cost is just $1,727/year ($33/week).
Cash vs Tax Loss
It's important to understand the difference between your cash position and your tax position:
| Type | What It Includes | Impact |
|---|---|---|
| Cash flow | Rent received minus cash expenses paid | Money in/out of your bank |
| Tax loss | Cash expenses plus depreciation | Deductions on your tax return |
Depreciation is a "paper loss" — it reduces your taxable income without costing you actual cash. This makes your tax loss larger than your cash loss, increasing your tax benefit.
FAQ
What is negative gearing?
Negative gearing occurs when your rental property expenses exceed your rental income, creating a loss. This loss can be offset against your other income (like salary), reducing your overall tax bill. The tax benefit equals your loss multiplied by your marginal tax rate.
What expenses can I claim on a rental property?
Deductible expenses include: loan interest (not principal), council and water rates, insurance, property management fees, repairs and maintenance, body corporate fees, land tax, advertising for tenants, cleaning, gardening, pest control, and depreciation of the building and fixtures.
How much tax will I save with negative gearing?
Your tax saving equals your rental loss multiplied by your marginal tax rate. For example, a $10,000 rental loss at the 32% marginal rate saves $3,200 in tax. Higher income earners benefit more due to higher marginal rates.
What is depreciation and how do I claim it?
Depreciation is a non-cash deduction for the wear and tear of your property's building (capital works at 2.5% per year) and fixtures like appliances and carpets. You need a quantity surveyor's depreciation schedule to claim these deductions.
Should I negatively gear a property?
Negative gearing provides tax benefits but you're still losing money overall. The strategy relies on capital growth to make up for ongoing losses. Consider your cash flow, risk tolerance, and whether the property will grow in value.
Can I claim loan principal repayments?
No, only the interest portion of your loan repayments is tax-deductible. Principal repayments are not deductible as they're building your equity in the property.
Tax Accuracy & Sources
This calculator is an estimate tool and may not cover all personal circumstances. For state-based taxes, confirm details with your state or territory revenue office.
Compare property against ETF wealth-building scenarios
A rental property calculator tells you the tax position. The FIRE app is the better next step when you want to compare property against ETF accumulation, staged contributions, and time-to-target outcomes.
Last reviewed: February 2026. Based on current ATO rental property rules.