Negative Gearing Calculator

When to use this

You want to understand the true after-tax cost of holding a negatively geared investment property. This calculator shows how depreciation and your marginal tax rate reduce the real out-of-pocket cost.

Steps

1. Enter the property value and weekly rent.
2. Enter your loan amount and interest rate.
3. Enter total annual expenses (council rates, insurance, management fees, maintenance combined).
4. Enter depreciation amounts from your quantity surveyor report — building (Div 43) and fixtures (Div 40).
5. Select your marginal tax rate.

Understanding your results

• Taxable income/loss is your rental income minus all deductions including depreciation. A loss here means you can offset it against your salary income.
• Tax benefit is the tax refund you receive because the property loss reduces your taxable income.
• Pre-tax cash flow is the actual money in and out — it excludes depreciation because that's a paper deduction, not a real expense.
• After-tax cash flow is your real bottom line after factoring in the tax benefit.

Tips

• Depreciation is a “paper loss” that reduces your tax without costing you any cash. It's one of the biggest advantages of property investment.
• Get a quantity surveyor report to maximise your depreciation deductions — they typically cost $600–$800 and are themselves tax deductible.
• The tax benefit makes the actual weekly cost much less than the pre-tax loss suggests. The higher your marginal rate, the bigger the benefit.