Negative Gearing & Cash Flow Calculator
Gross & Net Rental Yields • Deductible Interest & Outgoings • Div 40 & 43 Depreciation Tax Shields
Property & Financial Details
Model rental returns against mortgage costs, outgoings, and tax deductions.
Net out-of-pocket holding cost: -$6,136 per year after ATO tax refund.
10-Year Equity & Growth Forecast
Assuming 5.5% annual capital growth vs cumulative out-of-pocket holding costs.
| Year | Property Value | Loan Balance | Net Equity | Net Wealth Gain |
|---|
How Negative Gearing Works in Australia
What is Negative Gearing?
In Australia, an investment property is negatively geared when the tax-deductible expenses of owning the asset (including mortgage interest, council rates, insurance, maintenance, and capital depreciation) exceed the gross rental income generated. Under the Australian tax system, this net rental loss can be legally offset directly against your other income (such as your PAYG salary), reducing your total taxable income and triggering a significant tax refund from the ATO.
Division 40 vs Division 43 Depreciation
Depreciation is a powerful non-cash tax deduction that creates substantial paper losses without requiring out-of-pocket cash:
- Division 43 (Capital Works): 2.5% deduction per year over 40 years on the structural construction costs of residential properties built after September 1987.
- Division 40 (Plant & Equipment): Diminishing value depreciation on removable items such as hot water systems, carpets, air conditioning, and kitchen appliances.
Next Steps & Related Australian Calculators
Strengthen your financial plan with these interconnected statutory computational models.
Capital Gains Tax (CGT)
Model the 50% CGT discount when selling an investment property.
Australian Mortgage & Offset
Compare investment loan interest rates and deductible interest.
Stamp Duty Calculator
Factor state investor stamp duty tiers and surcharges into costs.
Sole Trader & ABN Tax
Understand personal tax brackets and negative gearing write-offs.