Work out your rental property's profit or loss for tax, how much negative gearing saves you at 2026–27 tax rates, and what the property really costs you each week.
Key facts
- Negative gearing is when an investment property's deductible costs (interest, rates, insurance, repairs, depreciation) are more than its rent; the loss reduces your other taxable income.
- The tax saved is the loss times your marginal tax rate plus the Medicare levy, so it's worth more at higher incomes.
- Example: $650 a week rent for 50 weeks, $36,000 interest, $9,000 other costs and $5,000 depreciation is a $17,500 loss; on a $120,000 income it saves $5,600 in tax (2026–27).
- From 1 July 2027, losses on established residential properties bought after 7:30pm AEST 12 May 2026 can only reduce income from residential property, including capital gains; the rest is carried forward.
- Properties held before the announcement and new builds keep negative gearing (now law).
How it's worked out
- Rental result = rent − interest − other deductible costs − depreciation.
- Tax change = tax (after the low income tax offset, plus the Medicare levy) on your income plus the rental result, less the tax on your income alone.
- Cash flow after tax = rent − interest − other costs − the tax change. Depreciation isn't a cash cost.
Same property, different incomes (2026–27)
| Taxable income | Tax saved | Cash flow after tax |
|---|---|---|
| $60,000 | $5,575.00 | $-6,925.00 |
| $90,000 | $5,600.00 | $-6,900.00 |
| $120,000 | $5,600.00 | $-6,900.00 |
| $180,000 | $6,825.00 | $-5,675.00 |
| $250,000 | $8,225.00 | $-4,275.00 |
$650 a week for 50 weeks, $36,000 interest, $9,000 other costs, $5,000 depreciation. Not included: the Medicare levy surcharge, HECS-HELP repayments and the capital gain when you sell.
Common questions
How much tax does negative gearing save?
Your rental loss times your marginal rate plus the 2% Medicare levy. On a $17,500 loss: about $5,575 at a $60,000 income and $8,225 at $250,000, in 2026–27.
Is negative gearing being abolished?
It's being limited, not abolished. From 1 July 2027, losses on established residential properties bought after 7:30pm AEST 12 May 2026 can only be deducted against residential property income, including capital gains, with excess losses carried forward. Properties held before then and new builds are unaffected. The change is law.
Does depreciation count?
Yes. Depreciation is a deduction that reduces your taxable rental result without costing cash each year, so it increases the tax saving without increasing your cash loss.
Is a negatively geared property a good investment?
Only if the capital growth outweighs the after-tax loss you fund each year. The tax saving reduces the loss; it doesn't remove it.
See also the rental yield calculator, the capital gains tax calculator and the stamp duty calculator.
Sources: ATO negative gearing and CGT reform and rental expenses; Budget 2026–27 tax explainer. Checked 22 October 2026. General information, not tax or financial advice.