Project rental results and cash flow over 1–30 years, including the legislated 2027–28 loss quarantine for affected established residential property. Compare scenarios without inventing post-reform sale CGT.
IO, P&I & IO→P&I2027–28 loss treatmentBefore-CGT scenario comparison
01 —INPUTS
Property & Loan
The statutory cutoff is 7:30pm ACT legal time on 12 May 2026. Established residential property acquired from then is subject to loss quarantine from 2027-28, unless another legislated exception applies.
Enter actual duty and eligible buying costs. No flat stamp-duty rate is assumed.
Editable sale-cost assumption; leave blank to exclude.
Rental Income
Editable scenario assumption—not an official forecast.
Annual Expenses
Your Income
Projection
Applied to entered cash expenses each projection year.
Editable scenario assumption—not an official forecast.
Editable total-return assumption before tax and fees.
Check the inputs
Choose the property treatment that applies from 2027-28.
When deductible rental-property amounts exceed assessable rent, you have a net rental loss. Through 2026-27, that loss may reduce other taxable income. The calculator measures the change in estimated resident income tax, LITO and Medicare levy rather than multiplying the loss by a headline marginal rate.
From 2027-28, the selected property treatment matters. Affected post-cutoff established residential losses are carried forward instead of reducing salary or other non-residential income. Rent, expenses and interest assumptions determine whether—and when—the projected rental result becomes positive.
For a detailed year-by-year depreciation schedule combining Div 43 capital works and Div 40 plant & equipment, see our Property Depreciation Calculator.
Legislated change from 2027-28: The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 quarantines excess deductions for affected residential dwellings. The calculator now models the annual carry-forward for the selected single property. Other residential income, qualifying exceptions, trust flows and use against residential gains can change the tax outcome — see the reform explainer.
When negative gearing makes sense
Negative gearing is most effective when these conditions apply:
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Sufficient taxable income — The current-law tax reduction depends on the actual change in tax liability, including offsets and Medicare levy—not just a headline marginal rate.
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Strong capital growth expectations — The after-tax cash cost is the price of exposure to property appreciation. Without growth, you're just funding a loss.
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Long holding period — Short-term negative gearing without capital growth is a cash drain. The strategy needs time for rent growth and appreciation to pay off.
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Stable employment income — You need salary income to fund the shortfall each year and to generate the taxable income the deduction offsets.
Use the calculator's estimated tax change and after-tax cash flow rather than assuming every dollar of rental loss produces the same benefit. For the full strategy walkthrough—deductible expenses, depreciation, CGT interaction and PAYG variation—read the complete negative gearing guide.
Interest-only vs principal & interest
Loan structure changes cash flow and the interest component of repayments:
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Interest follows the borrowing purpose — Interest attributable to funds used for the income-producing rental may be deductible; principal repayments are not. Private or mixed-purpose use requires apportionment.
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Lower early cash outflow — IO keeps monthly payments lower in the early years when the property is most negatively geared.
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No equity reduction on IO — IO doesn't reduce your loan balance, so you're relying on capital growth alone for equity. Consider switching to P&I before IO term expires.
Use the "IO then P&I" option in the calculator to model the transition. See our mortgage calculator for detailed repayment analysis.
FAQ
What is negative gearing?
Negative gearing means your investment property expenses (loan interest, rates, insurance, maintenance, depreciation) exceed the rental income it generates. The resulting loss reduces your taxable income from other sources like your salary, giving you a tax benefit at your marginal rate.
When does a negatively geared property become positively geared?
There is no standard breakeven year. It depends on the rent, deductible interest, other expenses, depreciation and every growth assumption you enter. The calculator reports the first projected year in which rental income is no longer below deductions.
Should I choose interest-only or principal & interest for an investment loan?
The interest attributable to borrowing used for the income-producing rental property may be deductible while the property is rented or genuinely available for rent. Principal repayments are not deductible. An interest-only loan does not make private or mixed-purpose borrowing deductible, so choose the loan structure for its cash-flow and debt consequences rather than tax alone.
How is the ETF comparison calculated?
The ETF alternative starts with the deposit plus the acquisition costs you enter, then adds each year in which the property's after-tax cash flow is negative. The return is your editable assumption. For projected sales after 1 July 2027, the comparison is shown before sale CGT because the legislated indexation, transitional gain allocation and minimum-tax rules require a separate calculation.
What depreciation can I claim on an investment property?
Eligible residential capital works generally use a 2.5% rate where construction began after 15 September 1987 (a 4% rate applies to the 18 July 1985 – 15 September 1987 window), based on qualifying construction expenditure rather than the purchase price. Division 40 plant deductions depend on the asset, effective life, method, taxable use and second-hand restrictions. Confirm the dates and costs from records or a qualified schedule.
Can I claim depreciation on a second-hand residential property?
Under the Treasury Laws Amendment (Housing Tax Integrity) Act 2017, individual investors who acquired a second-hand residential property after 7:30pm on 9 May 2017 cannot claim Division 40 plant & equipment depreciation on existing assets. Only Division 43 capital works (2.5% p.a.) applies. Exceptions: new builds, substantially renovated properties, and commercial property are unaffected.
Does this calculator account for capital gains tax when selling?
Only for a projected sale before 1 July 2027, where the tool can show an indicative current-law discount calculation. For later projected sales it excludes sale CGT rather than incorrectly applying the old 50% discount to the whole gain. Enter your own expected selling costs; the calculator no longer inserts a hidden commission or legal-cost assumption.
How does the calculator handle the 2027 negative gearing changes?
Choose the applicable property treatment in the calculator. From 2027-28, an established residential dwelling acquired from 7:30pm ACT legal time on 12 May 2026 generally has excess residential rental deductions quarantined and carried forward. A pre-cutoff ownership interest and a new residential dwelling in relation to the taxpayer are among the legislated exceptions. The model applies the annual single-property carry-forward but does not apply it against sale gains.
Reviewed: 17 July 2026 · Tax year: 2026-27; 2027-28 loss reform
Uses 2026-27 resident tax, LITO and Medicare levy settings throughout the projection and applies the legislated single-property residential loss quarantine from 2027-28. Rent, expense growth, capital growth, ETF return and selling costs are editable assumptions. Post-1 July 2027 sale CGT, residential gains available to absorb quarantined amounts, trust flows, private-use apportionment and final depreciation eligibility remain outside scope.