Negative Gearing Calculator

How to Use the Negative Gearing Calculator

A property is negatively geared when its deductible costs — including loan interest and depreciation — are higher than the rent it earns. Enter the weekly rent, your running costs, your loan and your taxable income, and this negative gearing calculator shows how to calculate negative gearing in dollars: the rental loss, the tax refund at your marginal rate, and what the property really costs you each week after tax.

How Negative Gearing Is Calculated

Worked Example

An investment property rents for $650 a week with 2 weeks of vacancy, so $32,500 of rent is collected. A 7% management fee is $2,275, and running costs (council rates $2,200, insurance $1,600, maintenance $1,500 and water $900) add $6,200. The owner has a $600,000 interest-only loan at 6.2%, so interest is $37,200, plus $6,000 of depreciation. That leaves a rental loss of $19,175 for the year.

On a $120,000 salary (2026-27), the loss cuts tax from $28,920 to $22,784 — a tax refund of about $6,136, roughly the loss times a 32% marginal rate (30% plus the 2% Medicare levy). Before tax, the cash shortfall is $13,175 a year (about $253.37 a week), because depreciation isn't cash. After the refund, the real cost is $7,039 a year, or about $135.37 a week. On a $750,000 property, it would need to grow roughly 0.94% a year just to cover that after-tax cost.

Investment Property Deductions Checklist

Use this investment property deductions calculator guide to make sure you haven't missed a cost. Common deductions include:

• Loan interest on the investment loan
• Council rates and water rates
• Strata or body corporate fees
• Landlord insurance
• Repairs and maintenance (not capital improvements)
• Property manager and letting agent fees
• Land tax — which varies by state, including Victoria
• Depreciation on the building and eligible fittings, usually from a quantity surveyor's schedule

Capital improvements, such as a renovation that improves the property rather than repairing it, generally aren't deductible immediately. They're typically claimed over several years instead.

A Loss Still Costs Real Money

The refund only returns part of your loss — at a 32% marginal rate you still fund about 68 cents of every dollar lost. A negatively geared property works out only if capital growth (and rent increases) outpace the after-tax cost of holding it, which is why the calculator shows break-even growth when you enter a property value. The refund usually arrives at tax time unless you lodge a PAYG withholding variation with the ATO.

Frequently Asked Questions

How do I calculate negative gearing?

Add up the rent you collect, then subtract your deductible costs: property management fees, council and water rates, strata, insurance, repairs, land tax, loan interest and depreciation. If the answer is below zero, the property is negatively geared and that loss can generally be offset against your other taxable income. The tax saving is roughly the loss multiplied by your marginal tax rate, including the 2% Medicare levy where it applies.

How to work out negative gearing on an investment property step by step?

Start with weekly rent × 52, take off vacancy weeks, then subtract the management fee, running costs, interest and depreciation to get the rental loss. Work out your tax with and without that loss, and the difference is your refund. Finally, add depreciation back (it isn't a cash cost) and add the refund to get your real after-tax cash cost, which this negative gearing calculator shows per week.

Is this a negative gearing tax calculator or just a rental loss calculator?

Both. It works out the rental loss, then calculates your tax with and without that loss using resident income tax rates, the Medicare levy and the low income tax offset. You see the estimated refund (or extra tax if the property is positively geared) and a table showing how the same property looks at other salaries.

Is there a negative gearing calculator on the ATO website?

The ATO publishes guidance on rental property income and deductions, but it doesn't provide a negative gearing calculator like this one. This tool is independent of the ATO and gives an estimate only; the ATO guidance and your tax agent are the places to confirm what you can actually claim.

Does negative gearing work the same in Victoria and other states?

Yes — negative gearing is a federal tax rule, so the income tax treatment is the same in every state and territory. What differs by state is land tax, stamp duty and some rates, which affect your running costs. If you own in Victoria, enter your land tax in the running costs section so it's deducted like any other cost.

What deductions can I include in an investment property deductions calculator?

Common deductions include loan interest, council rates, water rates, strata or body corporate fees, landlord insurance, property management and letting fees, repairs and maintenance, land tax, and depreciation on the building and eligible fittings. Capital improvements such as a renovation or new extension are generally not deductible immediately; they're usually claimed over time through capital works or depreciation, so check the treatment with a tax agent.

How is depreciation treated in negative gearing?

Depreciation reduces your taxable income but doesn't cost you any cash, so it makes the paper loss bigger without making your bank balance smaller. Capital works and plant and equipment amounts normally come from a depreciation schedule prepared by a quantity surveyor. This calculator deducts depreciation for tax, then adds it back when it works out your pre-tax and after-tax cash flow.

If I'm negatively geared, am I really making money?

Not from the rent. Negative gearing (some people search for a 'negative gear calculator') means the property loses money each year, and the tax refund only gives back part of that loss at your marginal rate — you still pay the rest from your own pocket. Investors who negatively gear are relying on capital growth over time to outweigh those holding costs, and growth isn't guaranteed. The break-even growth figure shows how much the property needs to rise each year just to cover your after-tax loss.

When do I actually get the tax refund from negative gearing?

Usually when you lodge your tax return after the end of the financial year, because your employer withholds tax as if you had no rental loss. Some people lodge a PAYG withholding variation with the ATO so less tax is withheld during the year and the benefit shows up in each pay instead. Whether a variation suits you depends on your circumstances, so ask your tax agent.