Negative Gearing Calculator
Calculate the annual tax impact of a negatively geared investment property in Australia, including your property loss, tax saving, and after-tax cash outflow.
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How to Use This Negative Gearing Calculator
This negative gearing calculator is designed for Australian property investors who want to estimate the tax effect of holding an investment property that runs at a loss. It helps you move beyond the headline idea of “tax savings” and see the more important numbers underneath: your total property loss, your estimated tax reduction, and how much cash you may still be out of pocket after tax.
Enter your annual rental income first. Then add the annual loan interest, other deductible property expenses such as council rates, insurance, and property management fees, plus any depreciation deduction. Finally, enter your other taxable income so the calculator can estimate the value of those deductions against your broader income.
The results show your annual property loss, annual tax saving, net cash outflow after tax, and your effective tax rate. That gives you a clearer picture of what negative gearing is really doing. A tax saving can help, but it does not turn a poor investment into a good one on its own.
What This Calculator Is Best For
It is useful when comparing different property scenarios, estimating the effect of higher interest costs, or understanding how depreciation changes your position. It is also helpful for investors who hear that a property is “good for tax” and want to see the actual cash impact.
A Practical Way to Think About Negative Gearing
Negative gearing is a concession on a loss, not a profit strategy by itself. The key question is whether the property still makes sense once you consider cash flow, long-term capital growth, vacancy risk, and selling costs.
Formula
Property Loss = deductible expenses + depreciation - rental income | Tax Saving = tax without property loss - tax with property lossFrequently Asked Questions
What is negative gearing?
Negative gearing happens when the deductible costs of owning an investment property are higher than the rent it brings in. In Australia, that loss can usually be offset against your other taxable income, which reduces your tax bill for the year.
Is negative gearing worth it?
Sometimes, but only if the overall investment case still works. A tax deduction softens the cash loss, but you are still losing money on the property in the meantime. Investors usually justify that only if they expect strong long-term capital growth or other strategic benefits.
Does depreciation matter in negative gearing?
Yes. Depreciation can increase the deductible loss without always increasing the immediate cash you spend, which can improve the tax result. That is one reason depreciation schedules are often important for investment properties, especially newer buildings or properties with qualifying plant and equipment.
What is the 50% CGT discount?
If you hold an eligible investment property for more than 12 months, individuals generally pay capital gains tax on only half of the taxable gain when they sell. That can materially affect long-term after-tax returns, but it only matters if the property actually increases in value.
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