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Estimate the income tax saving from an eligible rental loss and compare the rules from 1 July 2027.
Your estimated rental loss is $10,800, with $3,240 of income tax saving under 2026/27 rules and a weekly cost of $49.23 under current rules.
Example: illustrative $100,000 salary.
Rates as of
A rental loss and a cash shortfall are different figures. Interest and running expenses are money leaving your account, but depreciation on eligible assets or capital works can increase the tax loss without another cash payment that year. The calculator separates the two before estimating the income tax effect.
Enter rent weekly; interest, other expenses and depreciation are annual. Keep interest and depreciation out of other expenses so nothing is counted twice. Salary is annual taxable salary after employment deductions. Entering an amount does not establish that it is deductible.
Using 2026/27 Australian resident income tax bands, the calculator works out tax on salary alone, then on salary plus the rental profit or loss; any reduction is the current saving. This handles a loss crossing tax bands. Taxable income is never taken below zero, so the saving cannot exceed the tax on salary.
With a profit, the loss and saving are zero, but the extra tax still counts in the weekly cost; a negative weekly cost is a surplus. Depreciation is left out of the cash cost because it is a deduction, not money spent.
For the example, take $100,000 taxable salary, $600 weekly rent, $30,000 annual interest, $7,000 other annual expenses and $5,000 eligible depreciation. Annual rent is $31,200. Cash expenses including interest are $37,000, leaving a $5,800 cash shortfall before tax. The additional depreciation deduction takes the tax loss to $10,800.
The future comparison assumes the established property was acquired at or after 7:30pm AEST on 12 May 2026, so from 2027/28 the loss gives no salary offset in this one-property model and the $5,800 cash shortfall remains $111.54 a week. Earlier qualifying ownership and eligible new builds follow the continuing-deduction comparison.
Income, rent and expenses are held constant between years, with no forecast of rent growth, interest rates, property values or future purchases. The future tax bands include the legislated reduction of the first taxable band to 14%.
This estimate covers one property held by an individual Australian resident, and salary only. It excludes other residential income or gains that could absorb restricted losses, carried-forward losses, ownership shares and special transfer situations. The purchase-timing choice is an assumption about acquisition of the ownership interest; it cannot resolve contracts, inheritances, changes in ownership or other legal questions.
Income tax excludes offsets, the Medicare levy and surcharge, student loan repayments and benefits, which can change the after-tax cost, particularly at lower incomes. Principal repayments, improvements and acquisition costs are not included. The weekly result is an annual average, not the timing of an ATO refund.
The ATO rental guide covers current loss treatment. Treasury's Budget explanation and Schedule 2 of the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 support the future restriction and the announcement cutoff. The core reform received assent on 26 June 2026, so it is labelled future law here, not an announced scenario awaiting legislation.
New-build treatment depends on meeting the tax definition. The Treasury consultation includes draft definition and exemption details, so choosing new build does not confirm eligibility; the figure shows the continuing salary deduction if the property qualifies. Restricted losses are not assumed to disappear, but their use against qualifying residential income or gains, or in later years, is outside this calculation.
Speak to an accountant or tax adviser about new-build qualification, a disputed acquisition date, mixed personal and rental borrowing, depreciation eligibility, a jointly owned property, a non-resident owner, trust or company ownership, or other properties with income or losses.
A rental property is negatively geared when deductible rental costs, including borrowing interest, exceed rent. An eligible loss can reduce taxable income, but the income tax saving is only part of that loss. Depreciation is a non-cash deduction, so the tax loss and the cash needed to hold the property can differ.
Under the 2026/27 treatment modelled here, eligible rental losses can reduce an individual resident's salary income. The estimate uses resident income tax bands only and excludes Medicare levy and offsets. The calculator cannot decide whether every expense or depreciation amount qualifies for a deduction.
From 1 July 2027, the enacted core reform limits salary offsets for losses on established properties acquired at or after the announcement cutoff. Losses may instead offset qualifying residential income and gains or carry forward. The future comparison models one property and salary, with no other residential income or carried losses. New-build qualification remains conditional.
The core reform preserves the existing treatment for ownership interests acquired before 7:30pm AEST on 12 May 2026. Interests acquired exactly at that time belong in the later category. Confirm your acquisition circumstances and any later transfer with a tax adviser; the before-or-after selection is an assumption, not an eligibility ruling.
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