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Negative Gearing Calculator

Estimate the annual tax saving from a negatively geared investment property in Australia for 2025-26.

Inputs

AUD
AUD
AUD
AUD
AUD
From 1 July 2027, new legislation proposes to quarantine losses from new established-home investments (grandfathered for existing properties and new builds remain fully deductible). This calculator uses current 2025-26 rules where rental losses are fully deductible against all income.

Annual Tax Saving

Tax reduction from property loss
$0

How negative gearing works

A property is negatively geared when the costs of owning it (interest, maintenance, rates, depreciation) exceed the rental income. Under current Australian tax law, this net rental loss can be deducted against your other income (salary, business income), reducing your tax bill.

The benefit depends on your marginal tax rate. A $10,000 rental loss saves $3,700 in tax at the 37% bracket, but only $3,000 at the 30% bracket. High-income earners benefit most from negative gearing.

Capital growth is the other half of the investment case. Property held for more than 12 months qualifies for the 50% CGT discount on any gain when sold. Note: new legislation effective 1 July 2027 proposes to quarantine losses on newly purchased established homes (existing properties and new builds are grandfathered or exempt).

FAQ

What expenses are deductible?
Interest on investment loans, property management fees, council rates, insurance, repairs and maintenance, advertising for tenants, depreciation of assets, and borrowing costs spread over 5 years. Capital improvements are added to the cost base, not immediately deductible.
What is the CGT discount on investment property?
Properties held for more than 12 months qualify for a 50% CGT discount — you only pay capital gains tax on half the gain. This is taxed at your marginal rate in the year of sale. Note: the 50% discount is under review and may change from 1 July 2027.
What is depreciation and how does it help?
Depreciation is a non-cash deduction for the wear and tear of the building (Division 43, 2.5% of original construction cost per year) and fixed assets inside (Division 40). A quantity surveyor's report helps maximise depreciation claims. New properties attract higher deductions than established ones.
Can I negatively gear shares?
Yes — interest on money borrowed to buy shares or managed funds is deductible if the investment is expected to produce assessable income. The same loss-against-income principle applies.