Negative Gearing Calculator Australia

Negative gearing means losing money on rent and getting some back at tax time. This calculator shows your true weekly out-of-pocket cost — and how much capital growth you need for the loss to be worth it.

True cost to you

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Interest-only basis for clarity of the cash-flow picture. Tax refund calculated with 2026-27 rates by comparing your actual tax with and without the property loss.

Uses official 2026-27 rates (last reviewed July 2026). Estimates only — see assumptions below.

What negative gearing actually is

A property is negatively geared when the deductible costs — loan interest, rates, insurance, agent fees, maintenance, depreciation — exceed the rent. That loss offsets your salary income, so the ATO refunds tax at your marginal rate. On a $20,000 loss at a 39% marginal rate (37% + Medicare), you get about $7,800 back. You still lost the other $12,200. Negative gearing is a strategy of accepting income losses in exchange for capital growth; the tax refund just subsidises the loss.

The number that decides everything: break-even growth

Divide your after-tax annual cost by the property value. If you're $12,200 out of pocket on a $750,000 property, you need 1.6% annual growth just to stand still — before selling costs and capital gains tax. Long-run Australian capital-city growth has averaged well above that, but individual suburbs and decades vary wildly. The calculator shows your break-even so you can judge the bet honestly.

Depreciation: the deduction that isn't a cost

New builds carry large depreciation deductions (often $8,000–$12,000/year early on) — paper losses that generate real refunds without cash leaving your pocket. This is why negative gearing is most powerful on new property and weakest on older established homes (post-2017 rules bar deductions on second-hand plant and equipment). A quantity surveyor's schedule (~$700, itself deductible) is essential for any post-2000 build.

Two traps: (1) HECS — investment losses are added back to your HECS repayment income, so gearing doesn't cut your student loan bill. (2) Borrowing power — banks assess the property at shaded rent and buffered rates, so a geared property usually reduces what you can borrow next.

When it stops making sense

Negative gearing suits high marginal rates (the refund is 47c/dollar at the top, only 17c in the 15% bracket... and zero if you have no other income), rate cuts flip properties positive over time, and the end game is either positive cash flow or a sale taxed at half your marginal rate under the CGT discount. If your income is modest or the property's growth story is weak, the same leverage into a positively geared property or index funds deserves a look.

Frequently asked questions

How much tax do I get back from negative gearing?

Your net rental loss multiplied by your marginal tax rate. A $15,000 loss at the 37% + 2% Medicare marginal rate returns about $5,850 — the remaining $9,150 is a genuine cost you're betting capital growth will exceed.

Is negative gearing worth it?

Only if capital growth beats your after-tax holding cost plus transaction costs. Work out your break-even growth rate (this calculator shows it); if you need 3%+ a year just to tread water, you're making an aggressive growth assumption.

Does negative gearing reduce HECS repayments?

No. Net investment losses are added back when calculating HECS repayment income, so the loss cuts income tax but not your student loan repayment.

What's the difference between cash loss and taxable loss?

Depreciation. It's deductible without any cash outflow, so the taxable loss (which drives your refund) is usually bigger than the actual cash you're out of pocket — the gap is best on new builds.

What happens when I sell?

Capital gains tax on the profit, with a 50% discount if held over 12 months. All those years of deducted losses effectively convert income-taxed dollars into discount-taxed capital gains — a core part of why the strategy works for high earners.

Sources

ATO — Rental expenses to claim