Common Negative Gearing Mistakes (and a Better Way)

Updated 18 July 2026 · Property and home loans

A Negative Gearing Calculator gives a fast answer, but the answer is only as good as what goes in. These are the mistakes we see most often with negative gearing calculations in Australia, and how to avoid them.

1. Comparing headline rates only

Fees, offset accounts and flexibility on extra repayments can matter as much as the rate.

2. Assuming prices always rise

Property growth varies by location and period. Plan for flat or falling prices too.

3. Borrowing the maximum

Lenders test you at a higher rate, but your budget still needs room for rate rises, repairs and life changes.

4. Forgetting purchase costs

Stamp duty, conveyancing, inspections and moving can add several percent to the price.

5. Overlooking the detail that matters most here

A tax saving never fully covers a loss. Negative gearing only pays off if capital growth exceeds the after-tax cost.

How the net rental loss changes with annual expenses incl. interest

A common mistake is getting one input slightly wrong. Here is what happens to the net rental loss when “Annual expenses incl. interest ($)” is off by up to 20% in either direction, with everything else held steady.

Annual expenses incl. interest ($)	Net rental loss
33,600	$3,600.00
37,800	$7,800.00
42,000	$12,000.00
46,200	$16,200.00
50,400	$20,400.00

At 33,600 the result is $3,600.00; at 50,400 it is $20,400.00. If a small change in this input moves the answer a lot, it is worth double-checking that figure before you rely on the result.

A quick sense check

Loss = rent − expenses. Tax saving = loss × marginal rate. After-tax cost = loss − tax saving. With typical inputs the calculator returns net rental loss of $12,000.00. If your own result looks wildly different, check that each figure is in the right unit and period (weekly, monthly or yearly) before drawing conclusions.