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Azure Home Loans · Negative gearing calculator

Negative gearing calculator — the 2026 rules, sketched

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Powered by Azure Home Loans tools · ACR 538895, auth. under ACL 390261 · Estimates only, not tax, credit or legal advice · What you type stays in your browser and is not sent to us.

What this calculator shows

See what an investment property costs to hold before and after tax, and how the outcome differs across the eligible new build, grandfathered and quarantined pathways. An educational sketch — confirm the rules with a registered tax agent.

Speak to a broker →Call 0400 77 77 55

ACR 538895, auth. under ACL 390261 · General information only; not tax advice.

Pre-tax cashflow by rental yield — before any tax effect

$700,000 property, 20% deposit, $560,000 loan at 6.59%. Rent is reduced by two vacant weeks and 7% management, plus $4,000 a year of rates, insurance and maintenance. The same cashflow function the investor tools use.

Monthly pre-tax investment property cashflow by rental yield, on interest-only and principal-and-interest repayments.
Loan type3.5% yieldmonthly cashflow4.0% yieldmonthly cashflow4.5% yieldmonthly cashflow5.0% yieldmonthly cashflow
Interest-only$3,075 / month-$1,583$471 / wk-$1,322$538 / wk-$1,061$606 / wk-$800$673 / wk
Principal & interest$3,573 / month-$2,081$471 / wk-$1,820$538 / wk-$1,559$606 / wk-$1,298$673 / wk

At a 4% yield the interest-only repayment of $3,075 still leaves a pre-tax shortfall of about -$1,322 a month. Switching the same loan to principal and interest deepens that to -$1,820. Tax can narrow a shortfall; it cannot turn a property that does not cover its holding costs into a free one. Confirm the 12 May 2026 pathway that applies — eligible new build, grandfathered or quarantined — with a registered tax agent before you treat any after-tax figure as yours.

Full deal model, including lender rent shading: Investor Deal Analyser. Rules explainer: restricted negative gearing losses.

Educational sketch only — not tax advice, not a rental appraisal and not a credit assessment. Yields, vacancy, management and holding costs vary by property and suburb. After-tax outcomes depend on your marginal rate and which 2026 pathway the property sits on.

This is not tax advice

The negative gearing rules announced for post–12 May 2026 acquisitions distinguish between new builds and established dwellings, with transitional treatment for existing arrangements. Legislation can change during passage and the ATO determines how it applies in practice. Every figure here is an educational sketch built on published information, not a projection of your tax position.

Confirm current rules at ato.gov.au and with a registered tax agent before making a decision. Azure Home Loans is a mortgage broker, not a tax agent.

How it works

  1. Set the property and the loanValue, loan amount, rate and whether the loan is interest only or principal and interest. Interest is usually the largest deductible cost, so the structure matters.
  2. Add rent, expenses and depreciationWeekly rent and annual holding costs give the pre-tax cashflow. Depreciation is a non-cash deduction, which is why the after-tax figure can look very different.
  3. Compare the pathwaysSet your marginal rate and dwelling type to see eligible new build, grandfathered and quarantined outcomes side by side, and how much of the loss is actually usable.

What this covers

  • Pre-tax and after-tax cashflow on a single property
  • Eligible new build, grandfathered and quarantined pathways side by side
  • Depreciation as a non-cash deduction
  • Interest-only versus principal-and-interest structures
  • LVR and annual debt service on the sketch

What it does not do

  • It is not tax advice and not a projection of your tax position
  • It does not model capital gains tax, land tax or ownership structures
  • It does not model a portfolio, only a single property
  • It does not confirm eligibility for any pathway
  • It assumes a depreciation figure rather than preparing a schedule

Need the full deal, not the sketch?

This page answers one question: what does holding this property cost, before and after tax. For yield, purchase costs, cash-on-cash return and a longer projection across a whole deal, use the investor deal analyser, which is built for that job.

The rest of the investor picture

Negative gearing — frequently asked questions

What is negative gearing?

A property is negatively geared when the deductible costs of holding it — loan interest, agent fees, rates, insurance, maintenance and depreciation — exceed the rent it earns. Under long-standing Australian rules that net loss could be deducted against other income, such as salary, reducing tax payable. The strategy relies on the after-tax cost being manageable and on capital growth over time; it is not a way of making a property free to hold.

What changed with negative gearing in 2026?

Announced changes distinguish between new builds and established dwellings, with transitional treatment for existing arrangements and quarantining of losses in some cases. This calculator sketches those pathways side by side so you can see the difference in outcome. Because the detail sits with the ATO and legislation can change during passage, treat every figure as a sketch and confirm the current rules before making a decision.

Is negative gearing worth it?

It depends on your marginal tax rate, the size of the shortfall, your capacity to fund it from other income, and what you expect from capital growth. A tax deduction returns only a portion of a loss — you are still out of pocket for the rest. Deliberately running a loss makes sense only if the after-tax cost is affordable and the expected growth justifies it, and neither is guaranteed.

Does depreciation count as a deduction?

Yes, and it is significant because it is a non-cash deduction: it reduces taxable income without money leaving your account in that year. Newer properties generally carry larger depreciation entitlements. Rules on plant and equipment for second-hand residential property changed some years ago, so entitlements differ between new and established dwellings. A qualified quantity surveyor prepares the schedule.

Is this tax advice?

No. This is an educational sketch, not tax advice and not a projection of your tax position. Negative gearing outcomes depend on your full circumstances, the final form of the legislation, and ATO interpretation. Confirm with a registered tax agent or accountant before acting, and verify current rules at ato.gov.au. Azure Home Loans — ACR 538895, auth. under ACL 390261.

How does negative gearing affect my borrowing power?

Lenders assess rental income at a shaded rate — commonly around 70 to 80 per cent — to allow for vacancy and costs, and they count the full loan repayment as a commitment. So a negatively geared property usually reduces your capacity to borrow again, even where the tax outcome looks favourable. Investors building a portfolio often hit a servicing wall well before they run out of deposit.

Working out whether the lending side stacks up?

Tax treatment is one half; servicing is the other. Rental income is shaded and the full repayment counts as a commitment, so a geared property changes what you can borrow next. Bishnu Adhikari can map that before you commit.

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