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Negative Gearing Calculator

The Negative Gearing Calculator is designed to give residential property investors an estimate of the net income effect of owning an investment property.

To learn more about the calculator click here.
General Income AND Expenditure
1. What is your annual taxable income from sources other than your investment property?
2. How much interest do you pay each month on your investment property mortgage?
3. What weekly rent do you charge on your investment property?
4. How much did you pay for your investment property?
5. Estimated rental growth per annum:
6. Estimated operating expenses growth per annum:
Cash Operating Costs
7. Provide estimates for the amount you spend, per year, on the following tax deductible
cash operating costs:
Accounting Fees
Advertising
Bank Charges
Council Rates
Gardening
Government Charges
Insurances
Land Tax
Postage
Property Management
Repairs AND Maintenance
Water Rates
Other
Non - Cash Operating Costs
8. On what date did construction commence on your investment property?

9. Estimated construction cost of property
10. Provide purchase dates AND price estimates, where applicable, for the following items which form part of your investment property:;

Note: Add the relevent items one at a time by selecting the item, specifying the year of purchase, initial value AND number of items before clicking "Add". You will not loose any data pre - entered in the form.
Add item Purchased in financial year ending
June 30
Initial value * $ Quantity
* Initial value is purchase price, if bought new for property, or estimated value when added to property.
Display results for years, in lots of

About the Negative Gearing Calculator

The Negative Gearing Calculator is designed to give residential property investors an estimate of the net income effect of owning an investment property. The calculator combines the cash operating revenue, rent, and the cash operating expenses, with the change in the amount of income tax paid to measure the net change in the investor's income due to the investment property.

Assumptions
When calculating the “Change in tax paid” only the marginal tax rates applicable to Australian residents are used. The calculator does incorporate the Medicare Levy of 1.5 percent but does not take any other factors which can influence the amount of tax paid, such as HECS contributions, any rebates, deductions or levies into account. Building allowance is calculated for investment properties constructed after 18 July 1985. For buildings where construction began between 19/7/1985 and 15/9/1987 the building allowance is 4 percent of the construction cost, for 25 years after construction. For investment properties where construction began after 15/9/1987 the building allowance is 2.5 percent of the construction cost, for 40 years after construction. Depreciation is calculated using the prime cost method. The following effective lives and depreciation rates are used:

Item Effective Life in Years Depreciation Rate if purchased pre 27/2/92 Depreciation Rate if purchased post 26/2/92
Carpets 10 12 17
Curtains and drapes 7 18 20
Electric heater 10 12 17
Furniture and fittings 15 9 13
Hot water service 20 6 13
Linoleum and similar floor coverings 10 12 17
Microwave ovens 7 18 20
Refrigerators 15 9 13
Stoves 20 6 13
Washing machines 7 18 20

The calculator does not take any additional laws relating to depreciation into account. For example, it is possible to treat items under $300 as expenditure and claim the full amount in the year of purchase. However, the calculator does not apply this rule, it depreciates the asset over its effective life.

Explanation of Terms

Annual Rental Income: Annual Rental Income is the rental income you receive for the year. It increases each year by the growth rate input in Potential Rental Growth per annum.
Annual Loan Repayments: Annual Loan Repayments is the total of loan interest payments for the year. It is assumed the loan has interest only payments.
Annual Cash Operating Expenses: Annual Cash Operating Expenses is the total of the tax deductible expenses associated with the property for the year. It increases by the growth rate input in Estimated Operating Expenses Growth per annum.
Cash Flow: is the cash revenues less the cash expenses. That is Annual Rental Income less the Annual Loan Repayments and Annual Cash Operating Expenses. This measures the amount of cash you will receive, if it is a positive number, or the amount you will have to pay over the year if it is a negative number.
Annual Depreciation: Annual Depreciation is the sum of the depreciation for the year based on the depreciable items entered. It is calculated using the prime cost method rather than the diminishing value method. For more information about how depreciation is calculated see the about page.
Building Allowance: Building Allowance is the tax deduction which can be made for this property. The rate at which building allowance can be claimed is determined by when the property was built.
Annual Tax Profit/Loss on Property: Annual Tax Profit/Loss on Property combines the cash flow generated by the property with the tax deductions to determine the profit or loss for accounting purposes. As depreciation and building allowance reduce taxable income, the profit or loss for accounting purposes will be lower than the cash flow generated.
Change in Tax Paid: The Change in Tax Paid measures the change in the amount of income tax the investor pays due to owning the investment property, compared to if they did not own the property. This is calculated based on the annual taxable income from other sources entered by the user. If the Change in Tax Paid is negative it means the user pays less tax. If it is positive it means the user pays more tax, relative to if they had not owned the investment property.
After Tax Profit/Loss on Investment = The After Tax Profit/Loss on Investment combines the cashflow associated with the investment property with the tax effect of owning the investment property to measure the net effect of the investment. A positive number indicates a profit, a negative amount indicates an after tax loss.

Note: the Negative Gearing Calculator is a guide only and should not be considered investment advice. Before taking out a margin loan you should consult your financial advisor.

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