Negative Gearing Calculator FY2026-27
Every rate here checked against its official source on or after 2026-08-19 — per-source dates listed below.
Enter your taxable income and a rental property's weekly rent, interest, running costs and depreciation to see the net rental result for tax, the tax saving it produces via your marginal rate, and what the property truly costs (or earns) you in cash after tax — per year and per week.
Calculate your negative gearing result
After-tax holding cost (per year) $6,800 That's $131 per week.
Net rental loss for tax (per year): $10,000
Tax saving (per year): $3,200
Annual rental income (weekly rent × 52): $26,000, against $36,000 of cash expenses
Depreciation deducted (no cash spent): $0, of which capital works $0
New taxable income: $90,000
This is general information, not financial or tax advice — consider a registered tax agent or financial adviser for guidance specific to your situation.
Tax saving by income and loss size (FY2026-27)
Tax saving and after-tax holding cost for a range of taxable incomes and rental loss sizes, computed from the engine above — not the rent/expense split, just the loss amount and your taxable income.
| Taxable income | $5,000 loss | $10,000 loss | $15,000 loss | |||
|---|---|---|---|---|---|---|
| Tax saved | After-tax cost | Tax saved | After-tax cost | Tax saved | After-tax cost | |
| $80,000 | $1,600 | $3,400 | $3,200 | $6,800 | $4,800 | $10,200 |
| $100,000 | $1,600 | $3,400 | $3,200 | $6,800 | $4,800 | $10,200 |
| $135,000 | $1,600 | $3,400 | $3,200 | $6,800 | $4,800 | $10,200 |
| $190,000 | $1,950 | $3,050 | $3,900 | $6,100 | $5,850 | $9,150 |
How this is calculated
The net rental loss (deductible expenses minus rent) is subtracted from your taxable income, and the tax saving is the difference between the tax on your original taxable income and the tax on that reduced figure — the same marginal-rate composition the income tax calculator uses. If the loss is small enough to stay inside one bracket, the saving is simply the loss multiplied by that bracket's rate plus the 2% Medicare levy. If the loss is large enough to push your taxable income down across a bracket boundary, part of the loss is sheltered at the higher rate and the rest at the lower rate — the two portions are added together, not averaged.
| Taxable income | Marginal rate | Combined with 2% levy |
|---|---|---|
| $0 – $18,200 | 0% | 2% |
| $18,200 – $45,000 | 15% | 17% |
| $45,000 – $135,000 | 30% | 32% |
| $135,000 – $190,000 | 37% | 39% |
| $190,000 and over | 45% | 47% |
Depreciation (capital works plus plant and equipment) is added to the deductions, so it enlarges the tax loss and the tax saving, but it isn't added to the cash cost: the after-tax holding cost is cash expenses minus rent minus the tax saving. With enough depreciation a property can show a loss for tax while putting cash in your pocket after tax; the result then reads "after-tax cash income".
A positively geared property (rent above expenses) runs the same formula in reverse: the "loss" is negative, taxable income goes up instead of down, and the tax change is an INCREASE — shown on this page as a negative tax saving, with the after-tax result relabelled "net after-tax income" rather than "holding cost" so it always reads honestly.
Sources
- ATO — tax rates for Australian residents (FY2026-27) — income tax brackets — verified 2026-09-17
- ATO — Work out your capital works deductions (2.5% residential rate, 40 years, worked example) — verified 2026-10-28
- ATO — Second-hand depreciating assets (residential rental properties, 9 May 2017 rule) — verified 2026-10-28
- ATO — Rental properties guide 2025 (NAT 1729-06.2025) — deductible expenses — verified 2026-08-19
- Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (No. 49) Sch 2 — residential rental-loss quarantine from 2027-28 (grandfathered pre-12-May-2026 acquisitions; new dwellings excepted) — verified 2026-08-19
Assumptions used here follow the same general approach as ASIC's MoneySmart calculators and may not reflect every personal circumstance — see "What this doesn't model" for specifics.
What this doesn't model
- The law is changing from 2027-28. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (assented 26 June 2026) quarantines net rental losses on residential property from the 2027-28 income year: the excess of deductions over rental income will no longer reduce your salary or other income — it carries forward against future rental profits or the property's capital gain instead. Two big exceptions: dwellings you acquired (contract date) before 7:30pm AEST on 12 May 2026 keep today's treatment indefinitely, and NEW residential dwellings (criteria to be set by ministerial determination) are also carved out. This calculator models the CURRENT rules, which still apply to everyone for FY2026-27 — from 2027-28 they continue only for grandfathered and new-build properties.
- Capital gains tax (CGT) when you eventually sell the property — see the capital gains tax calculator. Money saved via negative gearing today can increase the capital gain (and the CGT payable) later, because some expenses reduce the property's cost base instead of being an annual deduction.
- Working out depreciation for you. The two depreciation inputs take figures from a quantity surveyor's schedule. Capital works is applied at 2.5% for a full year; buildings started before 16 September 1987, part-year rentals, and non-residential buildings use other rates or pro-rating this calculator doesn't apply. See the ATO's capital works deductions page.
- State land tax on the property — enter what you pay in the land tax field; this page doesn't calculate the amount for you; see the land tax calculator.
- Carrying forward a loss to a future year if your other income isn't enough to absorb it in the current year (rare, since most negatively geared owners have salary or other income well above the loss).
- Loan principal repayments, which aren't deductible and don't appear in this calculation at all.
If any of these apply to you, your actual after-tax result will differ from the figures above.
Frequently asked questions
How much tax do I get back from negative gearing?
Only your marginal tax rate on the loss, plus the 2% Medicare levy — never the whole loss. In this page's example, a $10,000 rental loss against $100,000 of taxable income saves $3,200 in tax (30% marginal rate + 2% levy = 32% of the loss). If the loss instead straddled a bracket boundary, part of it would be sheltered at one rate and part at another — see "How this is calculated" below.
Does the same rental loss save more tax on a higher income?
Yes — the saving tracks the bracket the loss comes out of, not the size of your income as such. A $10,000 loss saves $3,200 on $100,000 of taxable income (all of it in the 30% band, plus the 2% levy), $3,550 on $140,000 (half comes off the 37% band above $135,000, half off the 30% band below it), and $4,700 on $200,000 (all at the top 45% rate, plus the levy). In every case you still carry the rest of the loss yourself.
Is negative gearing worth it?
Not on the tax alone. The tax saving (at most your marginal rate, up to 47% combined) is always smaller than the loss that produced it, so a negatively geared property costs you real after-tax cash every year — $6,800 a year in the example above, even after the $3,200 tax saving. Negative gearing only pays off if the property's capital growth (or future rent increases) eventually outweighs that ongoing cash cost — it isn't a way to profit from the tax system by itself.
What expenses are deductible?
Loan interest, council rates, land tax, building and landlord insurance, property agent/management fees, repairs and maintenance (but not the cost of initial repairs or capital improvements), body corporate fees, advertising for tenants, and the decline in value of depreciating assets and capital works deductions (the two depreciation fields above; see "How does depreciation change the result?" below). The ATO's Rental properties guide has the full list and the rules for apportioning expenses when the property isn't rented out all year.
How does depreciation change the result?
Depreciation is a deduction you don't pay for in cash this year, so it makes the tax loss bigger without making the property cost you more. There are two kinds. Capital works (Division 43) is 2.5% a year of the building's construction cost for residential construction started after 15 September 1987, for 40 years from completion. Plant and equipment (Division 40) covers the decline in value of things like carpets, blinds and appliances, but only for new assets: second-hand ones bought after 7:30pm on 9 May 2017 generally can't be claimed in a residential rental. Both figures come from a quantity surveyor's depreciation schedule. In this page's example, adding capital works on a $400,000 construction cost ($10,000 a year) lifts the tax loss from $10,000 to $20,000 and the tax saving from $3,200 to $6,400, so the after-tax cash cost falls from $6,800 to $3,600 a year. Capital works deductions also reduce the property's cost base, so they can add to the capital gain when you sell.
What happens when the property becomes positively geared?
It flips from reducing your tax to increasing it. This is common over time, as rent tends to rise and — on a principal-and-interest loan — the deductible interest portion of your repayments shrinks. For example, the same $100,000 taxable income with $40,000-a-year rent against $26,000 of expenses is a $14,000 rental GAIN, which adds $4,480 to your tax bill — but you still keep $9,520 of it after tax. It's the mirror image of negative gearing: the profit is taxed, not sheltered.