Negative Gearing Calculator
For Australian property investors: work out your annual rental loss, the tax refund it generates at your marginal rate, and what the property really costs you to hold after tax.
A property is "negatively geared" when the costs of owning it — loan interest, rates, insurance, management, maintenance and depreciation — add up to more than the rent it earns. That annual loss can be deducted against your other income in Australia, reducing your tax. This calculator shows the size of the loss, the tax it saves at your marginal rate, and the true out-of-pocket cost after the refund.
How negative gearing is calculated
Add up all deductible costs (including non-cash depreciation) and subtract the rent to get the taxable loss. Multiply that loss by your marginal tax rate to get the tax benefit. Your real cash cost is the cash shortfall minus the tax benefit — depreciation reduces tax without costing cash.
Tax benefit = Taxable loss × Marginal rate
Real cash cost = (Cash costs − Rent) − Tax benefit
| Item | Counts as |
|---|---|
| Loan interest | Cash cost + deductible |
| Rates, insurance, management | Cash cost + deductible |
| Depreciation | Deductible only (no cash outflow) |
| Rent received | Income |
Worked example
$26,000 rent, $22,000 interest, $6,000 other expenses, $6,000 depreciation, 39% marginal rate:
| Taxable loss = 22,000 + 6,000 + 6,000 − 26,000 | $8,000 |
| Tax benefit = 8,000 × 39% | $3,120 |
| Cash shortfall = (22,000 + 6,000) − 26,000 | $2,000 |
| Real cash cost = 2,000 − 3,120 | −$1,120 (cash positive after tax) |
Why depreciation matters
Depreciation is the quiet hero of negative gearing: it's a deduction you claim for the building and fittings wearing out, but it doesn't cost you any cash. That means a property can show a taxable loss — and generate a refund — while actually being close to cash-neutral. It's why the "real cash cost" here can be much lower than the headline loss, and sometimes positive.