End-to-end Australian investment property planner for 2025-26 and 2026-27. Stamp duty, loan serviceability, year-1 negative-gearing cashflow, Div 40 & Div 43 depreciation, CGT at exit, 10-year projection vs ETF benchmark.
Want the long-term picture? Our Negative Gearing Calculator projects your position over 10–30 years, including breakeven year and ETF comparison.
How negative gearing works
Negative gearing occurs when your rental property expenses exceed your rental income, creating a tax loss. This loss can be offset against your other income (like salary), reducing your total taxable income and therefore your tax bill.
Higher income earners benefit more from negative gearing because of higher marginal tax rates:
Taxable income
Marginal rate
Tax benefit per $10k loss
$45,001 – $135,000
32%
$3,200
$135,001 – $190,000
39%
$3,900
$190,001+
47%
$4,700
What expenses can you claim?
Immediately deductible
→Loan interest: Interest on your investment loan (not principal repayments)
→Council & water rates: Annual rates and service charges
→Insurance: Building, landlord, and contents insurance
→Property management: Agent fees (typically 5–10% of rent)
→Repairs & maintenance: Fixing existing items to their original condition
→Body corporate: Strata fees for units and townhouses
→Land tax: State-based tax on investment property land value
→Advertising & cleaning: Costs to find tenants; cleaning between tenancies
Depreciation (non-cash deductions)
→Capital works (Division 43): Building structure depreciation at 2.5% per year
→Plant & equipment (Division 40): Fixtures, appliances, carpets etc.
Tip: Get a depreciation schedule from a quantity surveyor. The cost ($500–$800) is tax-deductible and typically identifies $5,000–$10,000+ in annual deductions, especially for newer properties.
Worked example — $100k income, $550/week rent
Sarah earns $100,000 and owns an investment property rented at $550/week. Here's her annual position:
Item
Amount
Rental income (50 weeks × $550)
$27,500
Loan interest
−$24,000
Council rates
−$2,400
Water rates
−$1,100
Insurance
−$1,800
Property management (7.5%)
−$2,063
Repairs
−$1,500
Depreciation
−$6,000
Total expenses
−$38,863
Net rental loss
−$11,363
Tax benefit ($11,363 × 32%)
$3,636
Sarah's cash expenses (excluding depreciation) are $32,863. With rent of $27,500, her cash shortfall is $5,363. After the $3,636 tax benefit, her after-tax cost is just $1,727/year ($33/week).
Cash position vs tax loss
Depreciation is a "paper loss" — it reduces your taxable income without costing you actual cash. This makes your tax loss larger than your cash loss, increasing your tax benefit.
Type
What it includes
Impact
Cash flow
Rent received minus cash expenses paid
Money in/out of your bank
Tax loss
Cash expenses plus depreciation
Deductions on your tax return
FAQ
What is negative gearing?
Negative gearing occurs when your rental property expenses exceed your rental income, creating a loss. This loss can be offset against your other income (like salary), reducing your overall tax bill. The tax benefit equals your loss multiplied by your marginal tax rate.
What expenses can I claim on a rental property?
Deductible expenses include: loan interest (not principal), council and water rates, insurance, property management fees, repairs and maintenance, body corporate fees, land tax, advertising for tenants, cleaning, gardening, pest control, and depreciation of the building and fixtures.
How much tax will I save with negative gearing?
Your tax saving equals your rental loss multiplied by your marginal tax rate. For example, a $10,000 rental loss at the 32% marginal rate saves $3,200 in tax. Higher income earners benefit more due to higher marginal rates.
What is depreciation and how do I claim it?
Depreciation is a non-cash deduction for the wear and tear of your property's building (capital works at 2.5% per year) and fixtures like appliances and carpets. You need a quantity surveyor's depreciation schedule to claim these deductions.
Should I negatively gear a property?
Negative gearing provides tax benefits but you're still losing money overall. The strategy relies on capital growth to make up for ongoing losses. Consider your cash flow, risk tolerance, and whether the property will grow in value.
Can I claim loan principal repayments?
No, only the interest portion of your loan repayments is tax-deductible. Principal repayments are not deductible as they're building your equity in the property.
Tax Accuracy & Sources
Reviewed: March 2026 · Tax year: 2025-26
Estimates rental income, deductible expenses, and negative gearing tax benefit from the inputs entered. It does not calculate CGT on sale, stamp duty, or depreciation schedules.