Is negative gearing being abolished?

As of 2026, negative gearing remains available for all investment properties in Australia. There have been policy discussions about limiting it to new properties only, but no changes have been legislated. Current rules allow losses from investment properties to be offset against all income.

Should I negatively gear?

Negative gearing makes most sense when: you have a high marginal tax rate (30%+), the property has strong capital growth potential, and you can comfortably afford the holding costs. It's NOT a money-making strategy on its own — it's a tax reduction strategy while you wait for the property to grow in value.

What's the CGT impact when I sell?

Any depreciation you claimed is added back to your capital gain when you sell (called a 'CGT wash-up'). However, you still benefit because: 1) you received the tax savings upfront, 2) the 50% CGT discount applies if held 12+ months, and 3) you may be in a lower tax bracket when you sell.

Negative Gearing Calculator

Calculator

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

Free to useNo data storedAI insightsUpdated: February 2026

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. While it doesn't make money on its own, the tax benefit combined with potential capital growth and rental income growth can create long-term wealth. This calculator shows you the real numbers.

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Real-World 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%: $8,377/year ($161/week). After-tax cost of holding: $14,263/year ($274/week).

Positively Geared Property

Same property but in a regional area: $400,000 purchase, $320,000 loan at 6.2%, $450/week rent.

Annual rent: $23,400. Interest: $19,840. Expenses: $6,000. Depreciation: $6,000. Total costs: $31,840. Net loss: $8,440. At 37% rate: $3,123 tax saving. If rates drop or rent rises, this property could flip to positive gearing.

Frequently Asked Questions

Glossary

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 wear and tear of a property's structure (Division 43) and fixtures/fittings (Division 40). Must be calculated by a qualified quantity surveyor.

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.

Related Tools

Capital Gains Tax Calculator

Calculate CGT when you sell your investment property.

Income Tax Calculator

See how negative gearing reduces your overall income tax.

Tax Deduction Finder

Find all the deductions available for your rental property.

How to Use

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 to see your actual tax benefit.

Key Information

Negative gearing means your property runs at a loss — this loss is deductible against your other income (salary, etc.).
The higher your marginal tax rate, the greater the tax benefit. At 45%, every $1 of loss saves you 45c in tax.
Depreciation is a non-cash deduction — you claim wear and tear without spending money. New properties offer the best depreciation.
The ATO closely scrutinises rental property claims — keep meticulous records of ALL expenses.

Pro Tips

Get a quantity surveyor depreciation report ($600-$800) — it typically identifies $5,000-$15,000 in annual depreciation claims, paying for itself many times over.
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.

Avoid These 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 getting a depreciation schedule for properties built after 1985 — you're leaving thousands in deductions on the table.
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).

Disclaimer: This calculator provides estimates only and should not be relied upon for financial decisions. Interest rates, fees, and policies change frequently. Always verify information with lenders directly. This is general information, not personal financial advice. Consider seeking advice from a licensed mortgage broker or financial advisor.

Last updated: February 2026