Is negative gearing being abolished?

It's being limited, not abolished. Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, from 1 July 2027 a loss on an established home bought after 7:30pm AEST on 12 May 2026 can only be deducted against residential property income and capital gains, with any excess carried forward. Properties held before then keep negative gearing, as do new builds whenever they're bought. Established homes bought after Budget night can still be negatively geared until 30 June 2027.

Does negative gearing make money?

Not on its own. The tax saving only offsets part of the loss, so you are still out of pocket each year, and any overall return depends on capital growth, which isn't assured. The higher your tax rate, the more of the loss is offset; the holding costs have to be affordable either way.

What's the CGT impact when I sell?

Capital works deductions you claimed reduce the cost base, which increases the capital gain when you sell. For gains accruing before 1 July 2027, the 50% CGT discount applies to assets held 12 months or more; from 1 July 2027 it's replaced by cost base indexation and a 30% minimum tax on gains accruing after that date, with new builds able to choose either.

Negative Gearing Calculator

Calculate the tax benefits of negative gearing on your investment property. See how rental losses reduce your taxable income.

Updated October 2026Built and checked by MaverickHow it's calculated Report an error

Your numbers

Updates as you type

Property purchase price*

$600k

Purchase price of the investment property

Weekly rental income*

$500

Current or expected weekly rent

Investment loan amount*

$480k

Outstanding loan balance on this property

Loan interest rate (%)*

7.13%

The RBA's average rate on new investor variable loans is 7.13%, against 6.8% for owner-occupiers

Annual property expenses*

$8k

Rates, insurance, management fees, maintenance, strata

Annual depreciation claim

$8k

Building + fixtures: get a quantity surveyor report

Your marginal tax rate (%)*

37%

Your income tax rate on the next dollar (15%, 30%, 37% or 45% in 2026-27). The 2% Medicare levy is added

When was the property bought?*

From 1 July 2027, losses on established homes bought after Budget night (7:30pm AEST, 12 May 2026) can't reduce tax on wages

The button asks our AI to explain these figures in words.

Negative gearing impact

Annual rental loss

$24,224

Tax saved, 2026-27

$9,447

marginal rate plus Medicare levy

Net holding cost

$6,777

$130/week

Rent coverage

76%

Rent vs interest only

Where the money goes (and how much comes back)

Rent in vs interest, expenses, and depreciation. The tax refund offsets some of the cash gap.

Rental income34.1%

Interest44.9%

Expenses10.5%

Depreciation10.5%

What ±1% does to your weekly holding cost

Investment property is highly leveraged: small rate moves materially change your out-of-pocket.

The tax saving reduces the loss; it doesn't remove it. You're still out of pocket every year the property runs at a loss, so the return depends on capital growth exceeding the losses, which isn't assured. Budget for vacancies and repairs. Under the 2026 reforms, new builds and properties held before 12 May 2026 keep negative gearing.

How it works

Negative gearing is one of Australia's most talked-about tax strategies. It occurs when your investment property expenses (loan interest, maintenance, depreciation) exceed rental income: creating a 'loss' that reduces your taxable income and therefore your tax bill. The 2026 tax reforms limit it from 1 July 2027: losses on established homes bought after Budget night (12 May 2026) can then only offset residential property income and capital gains, while new builds and properties held before then keep negative gearing. This calculator shows the loss, the tax it saves in 2026-27 and from 2027-28, and the cash you'd still put in.

1Enter your property purchase price and expected weekly rent.
2Input your investment loan amount and interest rate.
3Add annual expenses (rates, insurance, management, maintenance).
4Include depreciation if you have a quantity surveyor report.
5Enter your marginal tax rate and when the property was bought.

Worked examples

Standard Negative Gearing

Jenny buys a $650,000 unit, borrows $520,000 at 6.2%, rents for $550/week. Expenses: $9,000/year. Depreciation: $10,000/year. Marginal rate: 37%.

Annual rent: $28,600. Interest: $32,240. Expenses: $9,000. Depreciation: $10,000. Total costs: $51,240. Net loss: $22,640. Tax saving at 37% plus the 2% Medicare levy: $8,830 a year. After-tax cash cost of holding (interest + expenses − rent − tax saving; depreciation is non-cash): $3,810 a year ($73/week). If she bought an established unit after 12 May 2026, from 2027-28 the loss carries forward instead and the cash cost rises to $12,640 a year.

Cash Flow Positive After Tax

A regional property: $400,000 purchase, $320,000 loan at 6.2%, $450/week rent, $6,000 of expenses and $6,000 of depreciation.

Annual rent: $23,400. Interest: $19,840. Expenses: $6,000. Depreciation: $6,000. Net loss on paper: $8,440, saving $3,292 of tax at 37% plus Medicare. The cash shortfall before tax is $2,440, so after the tax saving the property pays its own way. If rent rises or rates fall, it could become positively geared.

Questions people ask

Is negative gearing being abolished?: It's being limited, not abolished. Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, from 1 July 2027 a loss on an established home bought after 7:30pm AEST on 12 May 2026 can only be deducted against residential property income and capital gains, with any excess carried forward. Properties held before then keep negative gearing, as do new builds whenever they're bought. Established homes bought after Budget night can still be negatively geared until 30 June 2027.
Does negative gearing make money?: Not on its own. The tax saving only offsets part of the loss, so you are still out of pocket each year, and any overall return depends on capital growth, which isn't assured. The higher your tax rate, the more of the loss is offset; the holding costs have to be affordable either way.
What's the CGT impact when I sell?: Capital works deductions you claimed reduce the cost base, which increases the capital gain when you sell. For gains accruing before 1 July 2027, the 50% CGT discount applies to assets held 12 months or more; from 1 July 2027 it's replaced by cost base indexation and a 30% minimum tax on gains accruing after that date, with new builds able to choose either.

The terms, in plain English

Negative Gearing: When the expenses of an investment property exceed the rental income, creating a net loss. This loss can be deducted from your other income, reducing your overall tax.
Depreciation: A non-cash tax deduction for the building (capital works, Division 43) and its plant and equipment (Division 40). Usually worked out in a quantity surveyor's depreciation schedule. Plant and equipment in second-hand residential properties bought after 9 May 2017 generally can't be depreciated.
Positive Gearing: When rental income exceeds all expenses. The property makes a profit, which is added to your taxable income. Often occurs when the loan is paid down or rents increase.
Cost Base: The total cost of acquiring a property including purchase price, stamp duty, legal fees, and capital improvements. Used to calculate capital gain when selling.

Good to know

Negative gearing means the property runs at a loss, which is deductible against your other income, such as salary.
From 1 July 2027, a loss on an established home bought after 7:30pm AEST on 12 May 2026 can only be deducted against residential property income and capital gains; the excess carries forward. Properties held before then and new builds aren't affected.
The higher your marginal tax rate, the greater the tax benefit: at 45% plus the 2% Medicare levy, each $1 of loss saves 47c.
Depreciation is a non-cash deduction: you claim wear and tear without spending money in that year.
The ATO closely scrutinises rental property claims: keep meticulous records of all expenses.

Tips

A quantity surveyor's depreciation report sets out the building and fixture deductions you can claim each year, and its fee is itself tax-deductible.
Interest is only deductible on the portion of the loan used for the investment: don't mix with personal borrowing in the same loan.
Pre-pay interest before 30 June to bring forward deductions: commonly used by high earners.
Track your occupancy rate: if vacant for extended periods, the ATO may adjust your claims.

Common mistakes

Buying a property solely for tax benefits: the property must still make financial sense. A bad investment with good tax deductions is still a bad investment.
Not claiming capital works deductions: residential buildings whose construction started after 15 September 1987 can generally be deducted at 2.5% of construction cost a year.
Claiming travel to inspect rental property (no longer deductible since 2017) or personal use portion of a holiday home.
Forgetting that when you sell, depreciation claimed is added back to your capital gain (CGT wash-up).

Compare the real products

The cheapest way to avoid the Medicare levy surchargeThe surcharge you would pay against the cheapest hospital policy that removes it, after the rebate.

Disclaimer: Estimates only. Interest rates, fees and policies change frequently. Always verify with lenders directly. General information, not personal financial advice.

Negative Gearing Calculator

Your numbers

Negative gearing impact

Where the money goes (and how much comes back)

What ±1% does to your weekly holding cost

How it works

Worked examples

Standard Negative Gearing

Cash Flow Positive After Tax

Questions people ask

The terms, in plain English

Official sources

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Negative Gearing Calculator

Your numbers

Negative gearing impact

Where the money goes (and how much comes back)

What ±1% does to your weekly holding cost

How it works

Worked examples

Standard Negative Gearing

Cash Flow Positive After Tax

Questions people ask

The terms, in plain English

Official sources

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