Negative gearing with real numbers: what your property actually costs you per week

People debate negative gearing in the abstract: policy, politics, fairness. We've covered that ground in our explainer on what negative gearing is and where the policy is heading.

This article does something narrower and more useful if you own a rental or want to. It prices one, because a negatively geared property costs you a specific number of dollars every week and surprisingly few owners have calculated theirs.

We'll build one worked example from the ground up, showing every step, so you can rebuild it with your own figures. All the numbers are illustrative, including the 6.00% p.a. loan rate, which is an example rate rather than a quote of today's market.

What does "negatively geared" actually mean in dollars?

A property is negatively geared when the costs of holding it exceed the rent it earns, so it runs at a loss that you fund from your other income. Australia's tax system then lets you deduct that loss against your salary, which refunds part of it at your marginal tax rate.

So the weekly cost has two layers. There's the cash shortfall, meaning what leaves your pocket during the year, and the after-tax cost, meaning what's left of that shortfall once the deduction comes back.

Owners who quote only the first number overstate their pain. Owners who quote only the second forget they front the cash all year.

What does the example property cost before tax?

Our worked example: a $650,000 property bought with a $520,000 interest-only loan (that's an 80% LVR) at an example rate of 6.00% p.a., rented at $550 a week. Here's the full year, income against cash costs:

Total cash costs are $31,200 + $7,200 = $38,400, against rent of $28,600. That leaves a shortfall of $9,800 a year.

Divide $9,800 by 52 and the property costs $188 a week before tax. That's what hits your bank account through the year, about the price of a decent grocery shop every week to hold this asset.

How does the tax deduction change the weekly cost?

The tax deduction refunds part of the loss at your marginal rate, and a non-cash deduction usually makes the deductible loss bigger than the cash shortfall.

Suppose a quantity surveyor's schedule gives our example property $8,000 a year of depreciation. That's a paper deduction, so no cash leaves your pocket, and the taxable loss becomes $9,800 + $8,000 = $17,800.

Now apply a marginal tax rate. For 2025-26, the ATO's resident tax rates put income between $135,001 and $190,000 in the 37% bracket, and the Medicare levy adds 2%, so a taxpayer in that bracket keeps 39 cents of every dollar of deduction.

The tax saving is $17,800 × 39% = $6,942 a year. Subtract that from the cash shortfall and you get $9,800 − $6,942 = $2,858 a year, which is $55 a week.

So the after-tax price of our example property is $55 a week. You front $188 a week through the year, and about $133 of it comes back at tax time.

What happens in a lower tax bracket?

The same property costs more per week for someone on a lower marginal rate, because the deduction refunds less.

Take the 2025-26 bracket covering $45,001 to $135,000, taxed at 30%, plus the 2% Medicare levy. The same $17,800 loss returns $17,800 × 32% = $5,696, so the net cost is $9,800 − $5,696 = $4,104 a year, or about $79 a week.

Same house, same loan, same tenant, and it costs $55 a week for one owner and $79 for another. That's why negative gearing has historically appealed most to people on higher incomes, and why copying a colleague's strategy without their tax bracket is a mistake.

One brief note on current affairs. The ATO's guidance states that the negative gearing changes announced in the 2026-27 Federal Budget do not apply in the 2025-26 tax return, and at the time of writing the announced reform is before Parliament rather than law.

The arithmetic above reflects the rules as they currently apply. Our negative gearing explainer tracks the policy detail.

Which numbers move the weekly cost most?

The interest rate moves it most, by a distance. In our example, a rise from 6.00% to 7.00% adds $5,200 a year of interest, which is exactly $100 more a week before tax, more than any other line in the table.

What about vacancy and repairs?

Vacancy comes second. Two empty weeks cost $1,100 of rent, about $21 a week spread across the year. Repairs are the unpredictable one, small most years and then suddenly a hot water system.

The point is that a weekly cost calculated once, at purchase, goes stale. Re-run the figure whenever the rate, the rent or the tenancy changes.

What is the weekly cost actually buying you?

You are paying that weekly cost to hold a borrowed position in the property's future value. Pay $55 a week for ten years and you've spent roughly $29,000, plus the opportunity cost of your deposit, betting that the property's value rises by comfortably more than that plus your buying and selling costs.

That bet has often paid in Australia historically. Nothing guarantees it for a given property or decade, and we're not advising you either way.

We will say one thing without hedging: know your own number. Owners who assume "the tax refund covers most of it" are usually off by a multiple in one direction or the other.

How do you keep this number current?

Kleev keeps that calculation live for you. Add your property and it reads your real transactions: rent landing, interest charged (separated from principal automatically), and rates, insurance and repairs as they occur.

You then see the actual gearing position rather than the estimate from the day you bought, updated as new statements arrive. See what your property actually costs each week in Kleev →

Common questions

How do I work out what a negatively geared property costs per week?

Add up the year's cash costs (loan interest, rates, insurance, management fees, repairs), subtract the year's rent, and divide by 52: that's the pre-tax weekly cost. Then add non-cash deductions like depreciation to the shortfall to get the taxable loss, multiply the loss by your marginal tax rate (plus Medicare levy) to estimate the tax saving, subtract that from the cash shortfall and divide by 52 again for the after-tax weekly cost.

What does a typical negatively geared property cost per week after tax?

There is no typical number, because it depends on the rent, the loan, the rate and your tax bracket. In our worked example ($650,000 property, $520,000 interest-only loan at a 6% example rate, $550 a week rent, $8,000 depreciation, 37% tax bracket), the cost is about $188 a week before tax and roughly $55 a week after the tax benefit.

Does depreciation reduce the weekly cost of a negatively geared property?

Yes, indirectly. Depreciation is a non-cash deduction: no money leaves your pocket, but it increases the taxable loss you deduct against your other income, which increases the tax saving. In our worked example, $8,000 of depreciation adds roughly $3,100 to the annual tax benefit at a 39% marginal rate including Medicare levy.

Do the 2026-27 Budget negative gearing changes affect my current tax return?

The ATO's guidance states that the negative gearing changes announced in the 2026-27 Federal Budget do not apply in the 2025-26 tax return. The announced reform is aimed at future arrangements and, at the time of writing, remains before Parliament rather than enacted law. Check ato.gov.au or ask a registered tax agent for the current status before acting.

Is negative gearing worth the weekly cost?

That's a judgement, not an arithmetic answer: the weekly cost buys exposure to any capital growth, and the strategy only pays off if the property's value rises by more than the accumulated shortfalls and transaction costs. Knowing the true weekly figure is what lets you weigh that bet honestly, and it's a decision to make with a licensed adviser, not a blog post.