Negative Gearing Strategy Calculator

Compare the financial outcomes of using an offset account versus investing your savings with a negatively geared property.

Your Property & Financial Details

Property Purchase Price*

Enter the total purchase price of the property.

Loan Amount*

The total amount borrowed for the property.

Interest Rate (%)*

Loan Term (Years)*

Total duration of the loan in years.

Annual Rental Income*

Total rental income expected per year.

Annual Property Expenses*

Total annual expenses (e.g., rates, maintenance, management fees).

Marginal Tax Rate (%)*

Investment Growth Rate (%)*

Offset Account Interest Rate (%)*

Comparative Financial Outcomes

Offset Savings Scenario

Total Interest Saved:

150000

Total Tax Refund:

195000

Net Benefit (Offset):

345000

Invest Savings Scenario

Total Investment Gains:

661225.504

Total Tax Refund:

243750

Net Benefit (Invest):

904975.504

Based on your inputs, the 0 scenario appears to be more beneficial.

Made with Minform

How to calculate Negative Gearing Strategy Calculator?

This calculator estimates the annual net loss from a rental property and the resulting tax benefit to help you compare using an offset account versus investing those savings.

Key formula: annual_net_loss = (annual_deductible_interest + annual_property_expenses) - annual_rental_income

Using the Negative Gearing Strategy Calculator calculator: an example

Example inputs: property $500,000; loan $400,000; interest 5%; rental income $20,000; expenses $25,000; marginal tax rate 32.5%.

Step-by-step calculation:

Calculate annual deductible interest: 400,000 × 5% = $20,000.
Compute annual net loss: (20,000 + 25,000) − 20,000 = $25,000.
Estimate tax refund: 25,000 × 32.5% = $8,125; after-tax cost = 25,000 − 8,125 = $16,875.
Compare to offset outcome: interest saved on $25,000 at 5% = $1,250; consider expected investment growth versus immediate tax benefit.

Frequently Asked Questions

What does negative gearing mean?

Negative gearing occurs when a property's deductible costs exceed rental income, producing a loss that can reduce your taxable income.

How is the tax benefit calculated?

Multiply the annual net loss by your marginal tax rate to estimate the tax refund; the calculator uses this to show the net after-tax cost.

Should I choose an offset account or invest the savings?

There is no single correct choice. Consider cash flow, risk tolerance, expected investment returns, and your tax position, or consult a qualified financial adviser.