Estimate the weekly cost of holding an investment property — before and after the tax effect of negative gearing. Help investor clients see the real out-of-pocket number.
The investment
After-tax holding cost
Estimates only, not tax advice. The tax effect assumes any rental loss is fully deductible against your other income at the marginal rate entered (excludes Medicare levy and other factors). Depreciation is a non-cash deduction. Always refer clients to a qualified accountant for tax matters.
How brokers use this
- Make the real cost concrete. Investors think in weekly out-of-pocket dollars. Showing the after-tax figure turns an abstract purchase into a decision they can weigh.
- Test the buffer. Nudge the rate up to show what a client needs to comfortably hold the property if rates rise or it sits vacant — great serviceability evidence.
- Frame IO vs P&I. Toggle repayment type to show the cash-flow difference, then discuss the trade-off honestly under Best Interest Duty.
- Stay in your lane. Use it to illustrate cash flow, then hand the tax detail to the client’s accountant — you’re the finance expert, not the tax adviser.
How investment property cash flow works
Holding an investment property is a balance between the rent coming in and the costs going out — loan repayments, property management, rates, insurance, strata and maintenance. When those costs exceed the rent, the property is “negatively geared”, and the resulting loss can usually be offset against the investor’s other taxable income, reducing the tax they pay. That tax saving softens the real, out-of-pocket cost of holding the property.
This calculator estimates the annual rent, subtracts the loan repayment and running costs to find the pre-tax cash flow, then applies the tax effect. For the tax calculation it treats the deductible loss as the rent minus the loan interest, deductible expenses and depreciation, and applies your marginal rate. Depreciation is a non-cash deduction, so it improves the tax position without affecting actual cash flow. The headline figure is the estimated after-tax weekly cost (or surplus) of holding the property.
Frequently asked questions
What is negative gearing?
Negative gearing is when the costs of an investment (including loan interest) exceed the income it produces, creating a loss. In Australia that loss can generally be deducted against your other income, reducing your tax. It’s a cash-flow strategy that relies on capital growth over time — and it carries risk if values or rents fall.
Is interest-only better for investors?
Interest-only lowers the repayment and maximises deductible interest, improving short-term cash flow — which is why many investors use it. But you’re not reducing the debt, repayments jump when the IO period ends, and it isn’t right for everyone. A broker weighs it against your goals under Best Interest Duty.
Can you give me tax advice?
No — this tool is a cash-flow estimate only, and mortgage brokers don’t provide tax advice. Depreciation, deductibility and your personal tax position should always be confirmed with a registered tax agent or accountant.
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Disclaimer: This calculator provides estimates for general information only and is not credit assistance, financial advice, or taxation advice. Tax outcomes depend on individual circumstances and current law; the Medicare levy and other factors are excluded. Clients should obtain advice from a registered tax agent or accountant and confirm loan figures with the lender or a licensed mortgage broker.