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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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Lender

VariableMore details
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VariableMore details
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VariableMore details
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VariableMore details
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VariableMore details

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    VariableMore details
    4.6 Star Customer RatingsIncludes Nov RBA Rate Increase
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      VariableMore details
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      VariableMore details

      ubank – Neat Variable Home Loan (Principal and Interest) (LVR 70%-80%)

        VariableMore details
        • $0 application fee
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        Macquarie Bank – Basic Home Loan (Principal and Interest) (LVR 70%-80%)

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        FixedMore details

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          FixedMore details

          Westpac – Premier Package Fixed Options Home Loan (Principal and Interest) 1 Year (LVR < 70%)

            FixedMore details

            Commonwealth Bank – Fixed Rate Home Loan (Principal and Interest) 3 Years

              VariableMore details

              NAB – Base Variable Home Loan (Principal and Interest) (New Customer)

                FixedMore details

                ANZ – Fixed Rate Home Loan (Principal and Interest) 5 Years (LVR < 80%)

                  FixedMore details
                  • Up is 100% owned by Bendigo Bank.
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                  Up – Up Home Fixed 4 Years (Principal & Interest) (LVR ≤ 90)

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                  VariableMore details

                  Heritage Bank – Discount Variable Home Loan ($150k+) (LVR < 70%)

                    VariableMore details

                    P&N Bank – & Basic Home Loan (LVR < 60%)

                      FixedMore details

                      Newcastle Permanent – Premium Plus Package Fixed Rate Home Loan Special (Principal and Interest) 2 Years

                        VariableMore details

                        MOVE Bank – Straightforward Plus Home Loan (LVR < 80%) (New Customer)

                          FixedMore details

                          HSBC – Package Fixed Rate Home Loan (Principal and Interest) 4 Years (LVR < 80%)

                            Important Information and Comparison Rate Warning

                            Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of December 6, 2023. View disclaimer.