Negative Gearing Calculator

Negative gearing tax deduction

According to the Australian Taxation Office (ATO), a rental property is negatively geared if the net rental income is less than the cost of owning the property, including expenses and the interest on the loan. When you have a net rental loss, you can claim a deduction for the full amount lost on your other sources of income, such as your salary, reducing your taxable income.

This can be pretty tax-effective, which is why many investment properties are negatively geared.

Our negative gearing calculator can help you estimate how much a negatively geared property could cost you each year compared to how much you could save on personal income tax.

Learn more about negative gearing

Negative gearing calculator

Our negative gearing calculator can give property investors an estimate of the tax benefits they could receive, based on the following information:

• The purchase price of the property
• The loan amount
• The loan term
• The interest rate on your loan, and the repayment type (principal and interest, interest-only)
• Your rental income and gross personal income (before tax)
• Fees you have to pay on the property (council rates, strata fees, insurance, repairs and maintenance etc.)

While this calculator can give you an estimate on how much your taxable income tax could be affected by negative or positive gearing, you shouldn’t base your investment decisions on it. Consider consulting a qualified financial adviser or accountant.

How to calculate negative gearing

If you’re looking to get a rough idea of how you may calculate negative gearing, you can follow the process below:

1. Calculate your property income: This will typically consist solely of the weekly rent your tenants are paying. Provided the property has been tenanted for the whole financial year, multiply the weekly rent by 52. If it’s sat vacant for any period, multiply the weekly rent by 52 minus the number of weeks it had no tenants.

2. Calculate your property expenses: This will include any repair costs, interest payments on your mortgage, insurance, and property management fees.

3. Subtract depreciation: As your property ages, so does its contents, bringing down their value. Using a depreciation schedule can help you figure out how much value items like carpets, ovens, and wooden floors have decreased in value, which you can also subtract from your taxable income.

The above process may give you an idea of how much you’re negatively gearing, but it’s often recommended you consult an accountant or the ATO, who are likely more experienced and knowledgeable than the everyday punter on the matter.

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