How Negative Gearing Works in Australia
Negative gearing is one of the most discussed tax settings in Australian property. Budget 2026-27 changed the forward planning question: investors now need to separate pre-Budget-night holdings, established properties acquired after 7:30pm AEST on 12 May 2026, and eligible new builds.
This page still lets you test legacy broad-offset maths, but those results are not a complete post-1 July 2027 tax model. The announced reforms require acquisition date, new-build status, carried-forward residential property losses, and personal tax advice.
What Expenses Can You Claim?
Deductible expenses include mortgage interest (not principal repayments), council rates, water rates, landlord insurance, property management fees (typically 6-10% of rent), repairs and maintenance, pest inspections, advertising for tenants, legal fees, and travel to inspect the property under limited circumstances. Depreciation of the building structure (Division 43) and plant and equipment (Division 40) are non-cash deductions that increase your paper loss without costing you actual money.
Australian Tax Brackets (2024-25)
Understanding your marginal tax rate is essential because it determines how much you save per dollar of property loss. The current brackets are: 0% on income up to $18,200, 16% on $18,201-$45,000, 30% on $45,001-$135,000, 37% on $135,001-$190,000, and 45% on income above $190,000. The 2% Medicare levy applies on top.
Is Negative Gearing a Good Strategy?
Negative gearing reduces your tax bill, but it does not eliminate losses entirely. You are still out of pocket -- just less so than without the tax benefit. The strategy makes sense when you expect strong capital growth that more than compensates for the ongoing cash loss. It is less attractive in flat or declining markets where you lose both cash flow and equity.
Use our Depreciation Calculator as an estimate only, and the Cash Flow Calculator to see your weekly out-of-pocket position before relying on any tax benefit.