Tax, on a rental loss
Negative gearing calculator.
Gearing is borrowing to invest, and a property is negatively geared when its rent is less than its costs for tax, interest and depreciation included. This tool estimates what that loss may cost you after tax, this year and under the rules from 1 July 2027, starting from an editable example.
After tax, a week
-$80
This year's after-tax figure spread across the weeks of the year; a minus sign is what you top up.
Out of pocket before tax
-$10,658
Rent less management, other costs and interest for the year; a minus sign is money you put in.
Loss for tax
-$16,658
Rent less management, other costs, interest and depreciation; a minus sign is a loss, a plain figure a profit.
Tax effect
$6,497
An estimate of how the property may change the tax on your other income; a minus sign is extra tax, and a figure without one is less tax.
After tax, a year
-$4,162
Out of pocket before tax, with the tax effect applied.
At a marginal rate of 39%, including the Medicare levy, the property costs you about $80 a week after tax this year, on these assumptions.
2026-27 / From 2027-28
| 2026-27 | From 2027-28 | |
|---|---|---|
| Loss for tax | -$16,658 | -$16,658 |
| Tax effect | $6,497 | $0 |
| Loss carried forward | $0 | $16,658 |
| After tax, a year | -$4,162 | -$10,658 |
| After tax, a week | -$80 | -$205 |
The next 10 years, on these assumptions
| Year | Loss for tax | Tax effect | After tax, a year | Loss carried forward |
|---|---|---|---|---|
| 2026-27 | -$16,658 | $6,497 | -$4,162 | $0 |
| 2027-28 | -$16,011 | $0 | -$10,011 | $16,011 |
| 2028-29 | -$15,344 | $0 | -$9,344 | $31,355 |
| 2029-30 | -$14,657 | $0 | -$8,657 | $46,012 |
| 2030-31 | -$13,950 | $0 | -$7,950 | $59,962 |
| 2031-32 | -$13,221 | $0 | -$7,221 | $73,183 |
| 2032-33 | -$12,470 | $0 | -$6,470 | $85,653 |
| 2033-34 | -$11,697 | $0 | -$5,697 | $97,351 |
| 2034-35 | -$10,901 | $0 | -$4,901 | $108,252 |
| 2035-36 | -$10,081 | $0 | -$4,081 | $118,333 |
Sources · 2026-27
- Federal Register of Legislation: Treasury Laws Amendment (Tax Reform No. 1) Act 2026, No. 49, 2026 (as made)
- ATO Legal Database: ITAA 1997 s 115-100 (discount percentage, as amended by No. 49, 2026)
- Federal Register of Legislation: Treasury Laws Amendment (Tax Reform No. 2) Act 2026, No. 71, 2026, Schedule 4 (negative gearing exceptions, from 2027-28)
- Parliament of Australia: Explanatory Memorandum, Tax Reform No. 1 Bill 2026 (Chapter 1 CGT, Chapter 2 negative gearing)
- ATO: Tax rates, Australian resident (2026-27 table)
- ATO: Personal income tax, new tax cuts (16% to 15% on 1 July 2026, then 14% on 1 July 2027)
- Treasury Laws Amendment (More Cost of Living Relief) Act 2025, Schedule 1 (rates for 2026-27 and 2027-28)
- ATO: Medicare levy reduction for low-income earners
Rates last checked 25 October 2026.
How it is worked out
- The loan is the price less your deposit, charged interest only at your rate. No buying costs or LMI are added to it.
- Out of pocket before tax is a full year's rent, with no allowance for vacancy, less management, your other costs and the interest.
- The loss for tax is the same figure less depreciation as well, which the tool counts although no cash is paid for it that year.
- The tax effect is worked out by calculating your tax twice, once on your income alone and once with the loss added, and taking the difference. A loss that crosses a tax bracket is priced across both brackets, not at a single marginal rate.
- For an established property contracted after the cut-off, from 2027-28 the tool does not set a loss against your other income: the tax effect is nil and the loss is carried forward. Properties bought before the cut-off, and new builds, are not affected.
- Each later year, rent grows at your rent growth rate and other costs at your cost growth rate. Interest, depreciation and your income stay where they are, and tax rates after the latest legislated year are held at that year's rates.
- In a later year when the property makes a rental profit, the tool first uses up any loss carried forward, then works out tax on what is left.
What this tool leaves out
- Vacancy and principal repayments. The tool assumes the property is let every week and the loan is interest only. The cash flow calculator handles both.
- Buying costs. Stamp duty, legal fees and LMI are not added to the loan.
- Capital growth, the sale and capital gains tax, including using a carried-forward loss against a gain.
- Changes the projection holds still: your income, the interest rate and depreciation, which in a real schedule changes from year to year.
- Other owners, structures and tax adjustments. The tool assumes one owner in their own name, not a couple, a company, a trust or an SMSF, and leaves out the Medicare levy low-income reduction and surcharge and tax offsets.
- Other residential rental income you may have. Under the rules from 1 July 2027, a loss on an established home acquired at or after the cut-off can be used in the same year against rental income from your other residential properties and against residential capital gains, before anything carries forward. The tool looks at this property alone, so it may overstate the after-tax cost if you have that income.
Questions investors ask
What changes from 1 July 2027?
From 1 July 2027, a net rental loss on an established residential dwelling acquired at or after 7:30pm AEST on 12 May 2026 can no longer reduce tax on salary or other income. This is now law. For a purchase, the date that counts is the date of the contract, not settlement. The loss can be used only against residential rental income and residential capital gains, and any excess carries forward to be used the same way in later years. Dwellings acquired before the cut-off, and new dwellings, are not affected, although what counts as a new dwelling has not yet been defined in law. Some dwellings acquired later keep an earlier owner's treatment, such as one inherited from a spouse or transferred on a relationship breakdown. Treat any result that uses this rule as an estimate, and confirm the position with your accountant.
Does the tax effect mean the property is making money?
No. In the tool, the tax effect can reduce what a loss costs you; it does not remove it. A dollar of loss may cost you less than a dollar after tax, but it still costs you, so the question is whether the rest of the investment justifies that cost.
Which option do I choose if I am not sure when I bought, or whether it is a new build?
The cut-off is 7:30pm AEST on 12 May 2026, and for a purchase it turns on the date you signed the contract, not settlement. A home inherited from a spouse or co-owner, or transferred to you on a relationship breakdown, can keep the earlier owner's treatment; your accountant can confirm which option fits. What counts as a new build has not yet been defined in law, so in the meantime, run the tool on each option to see how far apart the results sit.
Why does the loss carried forward keep growing in the projection?
Each year the property makes a loss under the new rules, that loss is added to the running total. The tool takes it back off only in a later year when the property makes a rental profit. Under the rules, a carried-forward loss can also be used against other residential property income or a capital gain on a residential dwelling, which this tool does not model.
Why are the tax rates the same in every year after 2027-28?
Future tax scales are not known, so the tool holds the latest rates already legislated for every later year. If the scales change, the results will too.
Does the projection forecast what will happen?
No. It shows what follows from the growth rates you enter, not what the market will do, and rents and costs can grow faster, slower or not at all. Past performance is not a guarantee of future results. Individual results vary.
Where to next
If the after-tax cost is part of your decision, we can run it on a real property with you, alongside your accountant.
This calculator gives general information only. The results are estimates built from the inputs you enter, at resident tax rates with the Medicare levy, for one owner in their own name, and the projection holds tax rates at the latest legislated year. It is not tax, credit or financial advice, and apart from the figures you enter, it does not take into account your objectives, financial situation or needs. The rules from 1 July 2027 are law, but what counts as a new build has not yet been defined. Past performance is not a guarantee of future results. Individual results vary. CHAD Property coordinates with brokers, accountants and planners and does not give tax, credit or financial advice, so speak with your accountant before you act.
The tools on this page give general information only. Each result is an estimate, worked out from the figures you enter and the assumptions shown, using rates and rules as at the date shown. It is not a quote, and it is not intended to be relied on to make a decision about a financial product, a loan or your tax. It is not personal financial, tax, credit or legal advice, and apart from the figures you enter, it does not take into account your objectives, financial situation or needs. Rates, thresholds and laws change, and some details of recent changes are not yet final. CHAD Property is a buyer's agency. It does not hold an Australian financial services licence or an Australian credit licence, and it is not a registered tax agent. We do not advise on tax, lending, financial products or how to structure ownership, including through a self-managed super fund, a company or a trust; we work alongside the brokers, accountants and financial planners who do. Before you make a financial decision, consider getting advice from a licensed financial adviser, and check any figure here with a licensed or registered professional who knows your situation.