Cash Flow Calculator

Understanding Investment Property Cash Flow

Cash flow is the difference between the rent you receive and all the costs of holding the property — including loan repayments, council and water rates, insurance, property management fees, maintenance, and any other expenses. A property with positive pre-tax cash flow generates more income than it costs to hold. A negatively geared property costs more than the rent it produces, but may still deliver a net benefit after accounting for the tax deduction on the loss.

Cash Flow Positive vs Negatively Geared

A cash flow positive property pays for itself entirely from rental income — you pocket the surplus each week. A negatively geared property means you subsidise the shortfall out of pocket, but you receive a tax deduction that offsets part of the loss against your salary or other income. In Australia, most capital city investment properties start out negatively geared and become cash flow positive over time as rents increase while loan repayments stay fixed (particularly on interest-only loans). The after-tax cash flow figure shown above reflects your true out-of-pocket position once the ATO refund is factored in.

Whether you target positive cash flow or accept negative gearing depends on your strategy, tax bracket, and investment horizon. Higher-income earners receive a larger tax benefit from negative gearing, which can make a loss-making property more affordable to hold while it appreciates in value.