In short: This calculator estimates what an investment property costs or earns you each week after rent, loan interest, running expenses, land tax and the tax effect of any loss. The Melbourne rule of thumb: at 6% interest and 80% lending, a property yielding under about 6% gross will be negatively geared, and the tax deduction refunds only your marginal rate (usually 32% or 39% including Medicare) of the shortfall.
- Gross rent (after vacancy)$26,000
- Interest$32,760
- Cash expenses incl. management$6,320
- Pre-tax cash position (annual)-$13,080
- Taxable loss / profit-$19,080
- Tax saving (negative gearing)$6,106
- After-tax position (annual)-$6,974
- Gross yield4.16%
Uses 2026–27 resident tax rates plus Medicare levy. Depreciation needs a quantity surveyor schedule. Not tax advice.
Cost to hold per week (after tax): $134
That is a general estimate on standard assumptions. Every lender applies its own expense benchmarks, income shading and policy, so the real figure moves from lender to lender. Gorakh spent years as a senior credit officer deciding exactly these questions. Send him the numbers above and he will tell you what is realistic and which lenders fit — at no cost to you for home loans.
- A former senior credit officer reads itGorakh assessed loan applications on the lender side before he became a broker.
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Investors often buy on yield alone and are surprised by the weekly top-up, so this tool shows yield, cashflow and gearing together.
How this calculator works
Income
Annual rent is weekly rent multiplied by 52, less a vacancy allowance. Gross yield is annual rent divided by price; net yield deducts running expenses first.
Loan interest
The loan defaults to 80% of the price on interest-only repayments, the common investor structure. Switching to principal and interest adds the principal component to your cash outlay but not to your tax deduction.
Expenses
Typical inputs are property management (7–8% of rent), council rates, water, landlord insurance, owners corporation fees, maintenance and Victorian land tax. Land tax uses the 2024–2033 scale: nil under $50,000 of site value, $500 from $50,000, $975 from $100,000, then $1,350 plus 0.3% over $300,000, and so on. See the land tax calculator for the full scale.
Tax
The pre-tax loss (or profit) plus any depreciation is applied at your marginal rate under the 2026–27 resident brackets plus 2% Medicare levy.
How to use the result
The after-tax weekly figure is what actually leaves or enters your bank account. Test it against your budget under a 3% rate rise, because lenders will. A negative result is not automatically bad: many investors accept a shortfall for capital growth, which is taxed with a 50% discount after 12 months. Run the exit on the capital gains tax calculator, and read positive vs negative gearing if the shortfall worries you.
Worked example
A $550,000 two-bedroom unit in Wollert rented at $500 a week, bought with a 20% deposit. For illustration, at 6.00% p.a. interest-only. The owner earns $110,000 (32% marginal rate including Medicare) and claims $4,000 a year in depreciation on a near-new build.
| Item | Annual |
|---|---|
| Rent ($500 × 52, gross yield 4.7%) | $26,000 |
| Loan interest ($440,000 × 6.00%) | −$26,400 |
| Property management (7%) | −$1,820 |
| Council rates and water (indicative) | −$2,400 |
| Landlord insurance (indicative) | −$1,200 |
| Owners corporation (indicative) | −$1,500 |
| Maintenance allowance | −$1,000 |
| Land tax (site value $100k–$300k) | −$975 |
| Pre-tax cashflow (about −$179 a week) | −$9,295 |
| Depreciation (non-cash deduction) | −$4,000 |
| Taxable loss | −$13,295 |
| Tax saving at 32% | +$4,254 |
| After-tax cashflow (about −$97 a week) | −$5,041 |
Net yield is 3.1%. The property costs roughly $97 a week to hold. On principal-and-interest repayments the outlay rises by about $5,250 a year, though that portion builds equity.
What this calculator doesn't include
- Capital growth, usually the main reason to hold a negatively geared property.
- Vacancy beyond the allowance, or rent increases.
- Loan fees, LMI above 80% LVR and stamp duty. Use the upfront costs calculator.
- The 4% absentee owner surcharge and vacant residential land tax.
- A quantity surveyor's depreciation schedule, needed to claim accurately.
Tips to improve the outcome
- Keep spare cash offset against your home loan, not the investment loan.
- Shop the investor rate at 80% LVR or below; investor rates run higher than owner-occupier rates, so the spread between lenders is wide.
- Get a depreciation schedule, especially on new builds in Donnybrook, Kalkallo or Clyde North.
- Lodge a PAYG withholding variation so the tax benefit arrives in each pay rather than at tax time. Details at ato.gov.au.
Frequently asked questions
What is a good rental yield in Melbourne?
Gross yields in Melbourne's growth suburbs typically sit around 4–5% for houses and 4.5–5.5% for units at the time of writing, with regional areas higher. A yield above the interest rate is rare, which is why most leveraged investors are negatively geared. Judge yield alongside growth prospects, land content and vacancy rather than chasing the highest figure.
Is negative gearing worth it in 2026?
It depends on your marginal tax rate and growth expectations. A $13,000 loss saves a 32% taxpayer about $4,200, so you are still out of pocket $8,800. Negative gearing only pays off if the property grows by more than the after-tax shortfall each year. Higher earners in the 37% or 45% brackets get a larger refund. Our negative gearing explained guide walks through the arithmetic.
How much do I need to earn to hold an investment property?
Lenders assess the investment loan at your rate plus a 3% buffer and usually count only 70–80% of the rent. On a $440,000 loan assessed at 9%, repayments are about $3,540 a month against roughly $1,730 of shaded rent, so you need around $1,800 a month of surplus after living costs and your own mortgage. Test it on the borrowing power calculator.
Do I pay land tax on an investment property in Victoria?
Yes. Your home is exempt, but each investment property is assessed on its site value at 31 December. Most units fall in the $100,000–$300,000 band and pay $975; a house on a $450,000 block pays $1,350 plus 0.3% of the excess over $300,000, which is $1,800. Holdings are aggregated, so a second property pushes you up the scale.
Talk to GNT Finance
Gorakh Timilsina assessed investor applications as a senior credit officer and knows how each lender treats rent, expenses and buffers. GNT Finance structures investment loans for cashflow and tax efficiency, usually at no cost to you. Book a free consultation or call 0426 403 703.
This page is general information only and not legal, tax or financial advice. Laws change — confirm current rules with the State Revenue Office, the ATO or a licensed professional.
Written by Gorakh Timilsina
Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.