Free tool
Negative Gearing Calculator
Estimate what a rental loss saves you in tax this year, and what changes from 1 July 2027 under the negative gearing rules legislated in 2026.
The property, for a year
You
Tax saved in 2026–27
$2,989
The $9,340 loss, against your other income
From 1 July 2027
$0
A year against your salary — $9,340 carried forward instead
Rental loss
$9,340
Rent less every deductible cost
Costs you after tax
$122.14
A week in 2026–27, in cash — −$6,351 a year
The loss after 30 June 2027
From 1 July 2027 the $9,340 loss can reduce only income from residential property — rent from other properties, or a capital gain when you sell one — and whatever it cannot use is carried forward to future years. It is not lost, but it stops reducing your salary: after tax, the property would cost you about $179.62 a week instead of $122.14.
How the number is built
| Rent received | $30,000 | |
| − | Loan interest | $32,240 |
| − | Other deductible costs | $7,100 |
| = | Rental loss | −$9,340 |
| Tax on $120,000, with the Medicare levy | $28,920 | |
| − | Tax on $110,660, after the loss | $25,931 |
| = | Tax saved, 2026–27 | $2,989 |
Your top tax rate is 30% plus the 2% Medicare levy, so each dollar of loss saves up to 32 cents. The property still costs you the rest.
General information only, and not tax advice. It uses 2026–27 resident tax rates, the Medicare levy and the low income tax offset, and the negative gearing rules legislated in 2026 as the Government and the ATO describe them. It values the loss against the income you enter alone, and does not model carried-forward losses being used later, the Medicare levy surcharge, other deductions or offsets. Whether a property is a new build, and how your losses are treated, depends on facts a tax adviser should confirm. Our Credit Guide sets out who we are and how we are licensed.
How negative gearing works
A property is negatively geared when its deductible costs — interest, management, rates, insurance, repairs, depreciation — add up to more than the rent. The shortfall is a rental loss, and where the rules allow it, the loss reduces the taxable income from your job, so you pay less tax on your salary.
The saving is the difference between two tax bills. Someone earning $120,000 with a $9,340 rental loss pays tax as if they earned $110,660, which saves $2,988.80 — 32 cents for every dollar of loss, their 30% rate plus the 2% Medicare levy. The other 68 cents is still money the property cost them.
The 2026 changes, in plain English
The Government announced changes to negative gearing in the Budget on 12 May 2026, and they are now law. From 1 July 2027, negative gearing is limited to new builds — but the change was designed so that nobody’s existing investment is caught by it:
- Owned on Budget night. A property held at 7:30pm AEST on 12 May 2026 — including one under contract but not yet settled — can be negatively geared in future years, as before, until it is sold.
- A new build. Can be negatively geared before and after 1 July 2027, by the investor who buys it new.
- Established, bought after Budget night. Can be negatively geared until 30 June 2027. From 1 July 2027, its losses can reduce only income from residential property, including capital gains, and the excess is carried forward.
The change covers residential property held by individuals, partnerships, companies and most trusts. Commercial property, super funds including SMSFs, and widely held trusts are outside it.
What counts as a new build
The test is whether the property adds to the number of homes. The Government’s own examples:
- Eligible: a newly built apartment bought off the plan; a duplex built by knocking down a single house; any home built on land that was vacant; and a new property first sold after being occupied for less than 12 months.
- Not eligible: an established home extended with extra bedrooms; a knock-down rebuild that replaces one house with one house; a granny flat added to an established property; and a new property occupied for more than 12 months before being sold to another investor.
The treatment belongs to the first buyer of the new home. Whoever buys it from them next is under the established-property rules.
Your income decides what the loss is worth
The same $9,340 loss is worth different amounts to different people, because it comes off the top of their income. At $120,000 it saves $2,988.80; at $150,000, where the top rate is 37%, it saves $3,642.60; at $200,000 it saves $4,389.80. At $60,000 it saves slightly more than the headline rate suggests — $3,128.90 — because bringing taxable income down also increases the low income tax offset. The calculator works out the two tax bills in full, so it catches effects like that.
Capital gains tax is changing too
The same law replaces the 50% capital gains tax discount with indexation of the cost base and a minimum 30% tax on capital gains, for gains that build up from 1 July 2027. Gains made before then keep the discount, and investors in new builds can choose between the discount and the new rules when they sell.
A negatively geared property depends on a capital gain to come out ahead, so both halves of the change matter together. It is exactly the kind of decision our tax accountants and investment team work through with clients, and the property cash flow calculator shows what a property would cost you week by week under each set of rules.
Frequently asked questions
Can I still negatively gear a property I buy now?
Yes, if it is a new build — the reform keeps negative gearing for new builds before and after 1 July 2027. An established property bought after 7:30pm AEST on 12 May 2026 can be negatively geared only until 30 June 2027. From 1 July 2027 its losses can offset only income from residential property, including capital gains, and any excess is carried forward to future years.
What happens to losses I cannot deduct from 1 July 2027?
They are carried forward. Each year, a quarantined loss can reduce income from residential property — rent from other properties, or a capital gain on selling one — and whatever cannot be used rolls into the next year. The loss is not lost; its tax value arrives later, when you have property income or a gain to set it against, rather than as a reduction in the tax on your salary each year.
What counts as a new build?
A residential property that genuinely adds to supply: a dwelling built on vacant land, or a site where an existing home is demolished and replaced with more dwellings — so a duplex replacing a house counts, but a new house replacing an old house does not. An apartment bought off the plan counts. It must not have been sold before, unless the builder owned it and it was occupied for less than 12 months. Later buyers of the same property do not get the new-build treatment.
How much tax will negative gearing save me?
Roughly the loss multiplied by your top tax rate plus the 2% Medicare levy, though a loss that crosses a bracket is worth a little less. A $9,340 rental loss saves $2,988.80 for someone earning $120,000 — 32 cents in the dollar — and $4,389.80 for someone earning $200,000, at 47 cents. The property still costs you the other 53 to 68 cents of every dollar it loses.
Do the changes apply to commercial property or super funds?
No. The negative gearing changes apply only to residential property, so commercial property is unaffected. They apply to individuals, partnerships, companies and most trusts, but superannuation funds — including self-managed funds — and widely held trusts such as most managed investment trusts are excluded.
Is negative gearing worth it?
Only as part of a growth strategy, never on its own. Negative gearing reduces the cost of holding a property that loses money; it does not make a loss into a gain. The question is whether the property's growth over time will outweigh what it costs you after tax, and whether you can carry that cost comfortably — a question to answer with a tax adviser before you buy, and all the more so under the new rules.
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