Australian Property Investment Cashflow Calculator

Negative gearing occurs when your rental property expenses (mortgage interest, rates, management fees, depreciation) exceed the rental income. The shortfall is deductible against your other income, reducing your tax. For example, if you lose $10,000 on a property and your marginal rate is 37%, you save $3,700 in tax, making the net loss only $6,300.

Gross rental yield = (Annual Rent ÷ Property Value) × 100. For example, a property worth $700,000 renting for $550/week has a gross yield of ($550 × 52 ÷ $700,000) × 100 = 4.09%. Net yield subtracts expenses like management fees, council rates, insurance and maintenance.

The ATO allows property investors to claim depreciation on the building structure (2.5% of construction cost per year) and fixtures/fittings. This is a non-cash deduction that reduces taxable income without requiring any actual cash outlay, making investment properties more tax-efficient.

A cashflow positive property generates more rental income than all expenses (including mortgage), meaning it puts money in your pocket. A cashflow negative property costs more than it earns but may provide capital growth and tax benefits through negative gearing.