Negative gearing tax calculator — rental property after tax

Worked example

The default property collects $32,786 of rent and has $7,795 of running costs, $36,000 of interest and a $6,250 capital works deduction (2.5% of a $250,000 construction cost). The net rental result is -$17,259.

In 2026–27 that loss reduces the tax on a $110,000 salary: a tax effect of -$5,523 including the 2% Medicare levy.

In 2027–28, for an established home contracted after the 12 May 2026 cut-off, the loss can no longer be used against salary. It is quarantined — $16,509 carried forward — and the tax effect is $0. A property bought before the cut-off, or a qualifying new build, would still get the deduction. Compare all three side by side in the negative gearing calculator.

What the new law says

New section 26-155 of the Income Tax Assessment Act 1997 (Treasury Laws Amendment (Tax Reform No. 1) Act 2026) applies from the 2027–28 income year. If your deductions for using or holding residential dwellings exceed your income from them, the excess is not deductible. It becomes a quarantined amount that can reduce capital gains from residential property, and anything left is treated as a deduction for residential property in the next year.

Excluded from the quarantine: an interest in a dwelling you last acquired before 7:30pm (ACT time) on 12 May 2026 — and for a purchase under contract, you are treated as owning it from when you entered the contract — and a dwelling that is a new residential dwelling for you. The ATO confirms on its reform page that "these measures are now law".

Which properties count as a "new residential dwelling" is left by the Act to a ministerial determination (s.26-160(4)) that had not been made when we last checked. Results for new builds assume the property will qualify.

Rates, Medicare and capital works

A rental result is added to your salary, so it is taxed at your marginal rate; KeptOffer shows what the salary alone leaves you. Income tax uses the ATO resident rates for 2026–27 (15% from $18,201, 30% from $45,001, 37% from $135,001, 45% from $190,001), plus the 2% Medicare levy. The 14% bottom rate legislated for 2027–28 is used for that year. Capital works deductions are 2.5% of the construction cost a year for residential buildings started after 15 September 1987 (ATO); plant and equipment is deductible only for brand-new assets.

What this calculator does not include

• Other rental properties: under s.26-155(6), net income from grandfathered or new properties reduces the quarantined excess. Enter a single property.
• The Medicare levy surcharge, the low-income Medicare reduction and tax offsets such as the new working Australians tax offset.
• Deductions for travel, borrowing costs spread over five years, or prepaid interest.
• Companies, trusts and super funds.

Questions landlords ask

Is negative gearing being abolished?

Not entirely. From 1 July 2027 losses on established homes bought after 7:30pm on 12 May 2026 are quarantined. Properties held before then keep negative gearing until sold, and new residential dwellings are exempt.

What happens to a quarantined loss?

It carries forward. It first reduces capital gains from residential property, then is treated as a deduction for residential property income in the next year (s.26-155(1)(b)–(c)).

Does the cut-off use the contract date or settlement?

The contract date: s.26-155(3) treats you as owning the dwelling from when you enter the contract.

What counts as a new build?

Which properties count as a "new residential dwelling" is left by the Act to a ministerial determination (s.26-160(4)) that had not been made when we last checked. Results for new builds assume the property will qualify.