Updated for the enacted May 2026 reform
Negative Gearing Calculator - 2026 rules
Negative gearing is when an investment property costs more to hold than it earns in rent, and the loss reduces the tax on your other income. Since 12 May 2026 that second part depends on when you contracted and what you bought: grandfathered and new-build purchases keep the yearly refund; established purchases have losses quarantined from 1 July 2027. This calculator models all three - including the quarantined loss pool nobody else charts.
Your numbers
Other costs use QLD-typical defaults (rates, insurance, management, maintenance, depreciation estimate). Refine every assumption in the full Deal Auditor.
Year-one outcome
$26,612 rental loss
FY ending 30 June 2027 still deducts normally ($8,516 refund). From 1 July 2027: $0 against your salary - the loss is quarantined and carries forward.
After-tax holding cost: −$364/wk in year one under established treatment.
The carried-forward loss pool
Peaks at $183,848 - not absorbed during the hold; it offsets the capital gain at sale.
The same deal as a new build
Bought as an eligible new build, this property would hold for −$248/wk after tax - full negative gearing kept, and (first owner only) the choice of the 50% CGT discount or the new indexation treatment. See the full comparison →
Negative gearing is one line of the deal. The full audit runs it inside the whole purchase, against your own criteria.
How negative gearing works after the May 2026 reform
A property is negatively geared when it costs more to hold than it earns in rent. Say the rent is $34,000 a year, but interest, rates, insurance, management, maintenance and depreciation add up to $50,000: the property runs a $16,000 rental loss. (The mortgage figure is the interest only - principal repayments are not deductible, because paying down the loan builds your equity rather than costing you money.) Under the traditional rules that loss came straight off your taxable income, so at a 32% marginal rate (the 30% bracket plus the 2% Medicare levy) the tax office returned $5,120 - about $98 a week. That yearly refund is what made a loss-making property affordable to hold, and it is exactly what the reform changed - but only for some buyers.
The 12 May 2026 cutoff creates three classes
Grandfathered - contracted before 7:30pm AEST on 12 May 2026. Nothing changes for negative gearing. The loss keeps deducting against your salary at your marginal rate for as long as you hold the property.
Established - contracted after the cutoff. One last normal year: the loss still deducts in the financial year ending 30 June 2027. From 1 July 2027 it is quarantined - the loss stops touching your salary entirely, and in the example above the $5,120 refund becomes $0.
New build - you are the first owner of a dwelling never previously sold. Exempt from the quarantine: negative gearing keeps working exactly as it always did. This is the reform's deliberate incentive to add new housing supply.
What "quarantined" actually means
A quarantined loss is deferred, not destroyed. It joins a single pool across your residential portfolio, and that pool pays out in a set order: first against rental profits from any residential property you own in later years; anything unused carries forward indefinitely; and whatever is left when you sell offsets your residential capital gain. What you lose is timing - the refund that used to land every July now arrives years later, so until rent grows past costs your weekly holding cost is the full pre-tax amount, roughly $98 a week more in the example above. The chart on this page tracks exactly that pool: how big it gets and the year it is absorbed.
The separate CGT change grandfathering does not cover
Grandfathering protects negative gearing only. A second part of the same reform changes CGT for every owner: gains accrued up to 30 June 2027 are banked under the old 50% discount (the law deems each asset sold and re-acquired at that date), and gains after it use CPI indexation with a 30% minimum tax instead. Only first-owner new builds keep the discount for later gains, with the option to choose indexation. This calculator stays on income-year cash flows and the loss pool; check where you stand on the cutoff with the grandfathering checker.
Figures here use the FY2026-27 resident tax brackets and QLD-typical holding costs; every rate is sourced and dated (see the Treasury materials and the assumptions in the full auditor). The reform is enacted law, but parts of the detail - like the new-build eligibility determination - were still pending as at August 2026, so confirm your own position with your accountant.
Frequently asked questions
What does negative gearing mean?
Negative gearing means the costs of holding an investment property - loan interest, rates, insurance, management, maintenance and depreciation - exceed the rent it earns, so the property runs at a tax loss. Traditionally that loss came off your taxable income, returning cash worth the loss multiplied by your marginal tax rate: a $16,000 loss at a 32% marginal rate (30% bracket plus 2% Medicare levy) is a $5,120 refund, about $98 a week. Since the May 2026 reform that refund survives for grandfathered and new-build purchases, but is quarantined for established properties contracted after 12 May 2026.
Can I claim my mortgage repayments against the rental income?
Only the interest portion. Loan interest is deductible against rental income - on a typical investment loan it is the largest single deduction - but principal repayments are not deductible, because paying down the loan builds your equity rather than costing you money. On an interest-only loan the entire repayment is interest. This calculator amortises the loan and deducts only the interest component each year. Deducting expenses against the rental income itself is untouched by the 2026 reform: the quarantine only applies to the net loss left over after the rent is used up.
What changed for negative gearing in May 2026?
Under the reform - now law, with Royal Assent on 26 June 2026 - established residential properties contracted after 7:30pm AEST on 12 May 2026 lose access to traditional negative gearing from the 2027-28 income year. Net rental losses on those properties can no longer be deducted against salary or other income - they are quarantined, deductible only against residential rental income, with unused losses carried forward indefinitely and usable against future rental income or residential capital gains.
Who keeps full negative gearing?
Two groups. Properties contracted before 7:30pm AEST on 12 May 2026 are grandfathered: rental losses keep deducting against salary for as long as they are held. Eligible new builds - dwellings never previously sold as residential premises - are exempt from the quarantine for their first owner, and are the only class that also keeps the 50% CGT discount going forward (with the option to choose the new indexation treatment instead). Grandfathering covers negative gearing only - the separate CGT changes apply to everyone.
What happens to losses I can no longer deduct?
They accumulate in a carried-forward pool. The pool offsets any positive residential rental income across your portfolio in later years, and whatever remains can be applied against a residential capital gain when you sell - quarantined amounts are excluded from your CGT cost base, so there is no double-count. The losses are deferred, not destroyed - but the cash-flow benefit arrives years later than it used to.
Does the reform change my marginal tax rate or the main residence exemption?
No. Income tax brackets are unchanged by the reform, and the main residence CGT exemption is untouched. What does change, for every owner, is the CGT treatment of gains accruing from 1 July 2027: the law deems each asset sold and re-acquired at that date, banking the earlier gain at the 50% discount, while later gains use CPI indexation plus a 30% minimum tax instead. Only first-owner new builds keep the discount for post-July-2027 gains.
Is this calculator financial advice?
No. It is general information based on the assumptions you enter and legislation current as at the date shown. It does not consider your objectives, financial situation or needs. Consider seeking advice from a licensed adviser before acting.