Negative Gearing Calculator

Negative gearing occurs when the costs of owning an investment property (loan interest, expenses) exceed the rental income, creating a loss. This loss can be offset against your other income (e.g., salary), reducing your taxable income and therefore your tax.

The tax saving equals the net loss multiplied by your marginal tax rate. For example, a $10,000 annual loss at a 37% tax rate saves $3,700 in tax. The higher your marginal rate, the bigger the benefit — this is why negative gearing favours higher-income earners.

Negative gearing only makes sense if you expect capital growth to exceed the after-tax cost of holding. A property that costs you $200/week after tax but grows 5% ($30,000/year on $600,000) is profitable. But if prices stagnate, you are just losing money with a tax discount.

Yes. Negative gearing applies to any income-producing investment, not just property. If you borrow to buy shares and the interest exceeds dividends received, the loss is deductible against your other income.