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.

Compare Home Loans


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Buying a home or looking to refinance? The table below features home loans
with some of the lowest interest rates on the market for owner occupiers.

Lender

Variable
More details
GREAT INTEREST RATE
  • Option to add an offset for 0.10%
  • No monthly or ongoing fees
  • Unlimited redraws
GREAT INTEREST RATE

Smart Booster Investor Bundle (Principal and Interest)

  • Option to add an offset for 0.10%
  • No monthly or ongoing fees
  • Unlimited redraws
Variable
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NO UPFRONT OR ONGOING FEES
  • No upfront or ongoing fees
  • 100% full offset account
  • Unlimited extra repayments
NO UPFRONT OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Investment) (LVR < 80%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Unlimited extra repayments
Variable
More details
BUNDLE YOUR HOME LOAN AND YOUR INVESTMENT LOAN FOR MORE SAVINGS
  • No upfront or ongoing fees
  • 100% full offset account
  • Unlimited extra repayments
BUNDLE YOUR HOME LOAN AND YOUR INVESTMENT LOAN FOR MORE SAVINGS

Yard Investor Bundle Loan (Bundled with Home Loan)

  • No upfront or ongoing fees
  • 100% full offset account
  • Unlimited extra repayments
Variable
More details
REFINANCE ONLY
  • A low-rate variable investment home loan from a 100% online lender. Backed by the Commonwealth Bank.
REFINANCE ONLY

Variable Rate Investment Loan – Refinance Only

  • A low-rate variable investment home loan from a 100% online lender. Backed by the Commonwealth Bank.
Variable
More details
FREE REDRAW FACILITY
  • Pay more to reduce the amount of interest you pay
  • Easily access additional funds in your redraw
  • Great rates and low fees
FREE REDRAW FACILITY

Basic Investment Loan (Principal and Interest) (LVR < 60%)

  • Pay more to reduce the amount of interest you pay
  • Easily access additional funds in your redraw
  • Great rates and low fees
Variable
More details
100% FULL OFFSET ACCOUNT
  • Free redraw facility
  • Split account option
  • Unlimited extra repayments
100% FULL OFFSET ACCOUNT

Ocean Investment (Amounts < $1m, LVR < 60%)

  • Free redraw facility
  • Split account option
  • Unlimited extra repayments
Variable
More details
FAST TURNAROUND TIMES AND FLEXIBLE LOAN OPTIONS
FAST TURNAROUND TIMES AND FLEXIBLE LOAN OPTIONS

Basic Investment Loan (Principal and Interest) (LVR 60%-70%)

    Variable
    More details

    Budget Investment Loan (Principal and Interest) (LVR ≤ 80%)

      Variable
      More details

      Ocean Investment (Amounts < $1m, LVR < 70%)

        Variable
        More details
        GET A FULL OFFSET ACCOUNT FOR NO EXTRA COST
        • No upfront or ongoing fees
        • 100% full offset account
        • Extra repayments + redraw services
        GET A FULL OFFSET ACCOUNT FOR NO EXTRA COST

        Low Rate Home Loan - Prime (Principal and Interest) (Investment) (LVR < 60%)

        • No upfront or ongoing fees
        • 100% full offset account
        • Extra repayments + redraw services
        Variable
        More details
        UNLIMITED EXTRA REPAYMENTS
        UNLIMITED EXTRA REPAYMENTS

        Budget Investment Loan (Principal and Interest) (LVR 80%-90%)

          Variable
          More details

          Yard Investment Loan (Principal and Interest) (LVR > 80%)

            Variable
            More details

            Basic Investment Loan (Principal and Interest) (LVR 70%-80%)

              Variable
              More details

              Ocean SMSF (No Offset) (Metro) (Principal and Interest) (LVR < 60%)

                Variable
                More details

                Base Variable Investment Loan Special Offer (Principal and Interest) (LVR > 80%)

                  Variable
                  More details

                  Extra Investment Loan (Principal and Interest) (LVR 80%-90%)

                    Variable
                    More details

                    Standard Variable Investment Loan (Principal and Interest) (LVR < 80%)

                      Variable
                      More details

                      Base Variable Investment Loan (Principal and Interest)

                        Variable
                        More details

                        Ocean SMSF (With Offset) (Metro) (Principal and Interest) (LVR 60%-65%)

                          Variable
                          More details
                          SELF MANAGED SUPER FUND LOAN
                          • Easy refinance process
                          • No application fee and no settlement fee
                          • No monthly, annual or ongoing fees
                          SELF MANAGED SUPER FUND LOAN

                          SMSF 80

                          • Easy refinance process
                          • No application fee and no settlement fee
                          • No monthly, annual or ongoing fees

                          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. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. 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 June 26, 2022. View disclaimer.

                           

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