How it works
The calculator starts with rent after vacancy, takes off management and running costs, then subtracts your loan repayments to get cash flow before tax. It then estimates the tax effect:
- If the property makes a loss on paper (after interest and depreciation), the loss can reduce tax on your other income, if you are allowed to negatively gear.
- If it makes a profit, tax is payable on it.
The result is cash flow after tax: what the property really costs or earns you each week.
Worked example
The default figures: a $650,000 property renting for $600 a week, 80% loan at 7% interest-only, $3,000 a year depreciation.
| Per year | Per week | |
|---|---|---|
| Net income before loan | $22,600 | $435 |
| Interest | -$36,400 | -$700 |
| Cash flow before tax | -$13,800 | -$265 |
| Taxable loss (after $3,000 depreciation) | -$16,800 | |
| Tax saving at 37% + 2% Medicare | $6,552 | $126 |
| Cash flow after tax | -$7,248 | -$139 |
At a 30% marginal rate the after-tax cost is about $162 a week. At 45% it is about $114. Switching to principal and interest lifts the before-tax shortfall to about $364 a week in year one, because about $5,280 of loan principal is repaid. That builds equity, but it is not a tax deduction.
The 2027 negative gearing changes
Laws passed in June 2026 limit negative gearing on residential property to new builds from 1 July 2027. Properties already held at the 2026 Budget are grandfathered. For established properties bought after that, losses from 1 July 2027 can only be used against residential property income and gains, and are carried forward otherwise. Choose No under “Can losses reduce your other income?” to model that. Read negative gearing explained for details and get tax advice before relying on any tax figure.
Tips for using it
- Get a depreciation estimate from a quantity surveyor. See rental property depreciation.
- Test a higher interest rate. A 1 point rise on a $520,000 loan costs about $100 a week. See interest rates and rental yield.
- Rent and costs change every year. This is a year-one estimate.
Frequently asked questions
What is rental cash flow?
The money left after rent comes in and all costs and loan repayments go out. Negative cash flow means you top it up from your own income.
Is depreciation included in cash flow?
Depreciation is not a cash cost, so it does not reduce cash flow before tax. It does increase the tax loss, which can increase your tax saving.
Which tax rates does the calculator use?
2026-27 resident rates: 0%, 15%, 30%, 37% and 45%, plus the 2% Medicare levy. It ignores offsets and other deductions.
Can I still negatively gear in 2026?
Yes, until 1 July 2027 for most investors. From then, new purchases of established residential property cannot use losses against other income. Check with a tax adviser.
General information only. This calculator and content do not consider your personal circumstances and are not financial, tax or legal advice. Speak to a licensed professional before making investment decisions.