Follow the money through a year

A property’s rent may cover its operating costs but still fall short of its mortgage payments. That shortfall has to come from savings or other income.

Annual cash flow before tax
Rent collected−Running costs−Loan payments−Capital spending
From rent to a cash contribution
Rent collected$32,500After two weeks of vacancy
Running costs$10,000Leaves $22,500 before the loan
Cash shortfall$12,034About $231 a week to contribute

Example: $480,000 P&I loan at 6% over 30 years costs about $34,534 in the first year. No capital spending or tax adjustment included.

Principal is a cost to your cash budget

Principal repayments reduce the debt you owe. They still leave your bank account, so they belong in cash flow. They are different from interest, which is the cost of borrowing.

With the example loan above, the first year’s payments include roughly $28,640 of interest and $5,894 of principal. Ignoring the principal would make the property look almost $113 a week easier to hold.

A yearly average does not pay a surprise bill

Rates, insurance and repairs rarely arrive in equal monthly amounts. A yearly cash-flow estimate helps you budget, but you also need enough accessible money when a bill falls due. Test a longer vacancy and one large repair together.

Separate routine maintenance from major replacements or improvements. Advanced lets you enter annual capital spending without treating that cash as an automatic tax deduction.

Add tax after understanding the cash position

The optional tax scenario uses the marginal rate and deductions you enter. Interest and principal are treated separately. Rental-loss benefits are applied only when you turn that assumption on.

A tax benefit can reduce the effective holding cost, but its amount and timing depend on your circumstances. You still need to fund the property before a refund arrives. Loan purpose, ownership, deductibility and eligibility matter.

Check the tax position for your purchase.

Australian property-tax rules changed during 2026, with further implementation details announced. The calculator does not determine eligibility. Use your adviser’s figures for the tax scenario. Treasury update, 4 August 2026.

Three figures worth keeping

Keep the annual shortfall, the weekly contribution and the rent needed to break even. Together they show the size of the commitment and how far the current rent is from covering it. Save your scenario, then use Test a tougher year to see how it changes.

Give each estimate a source

Use current bills and quotes where possible. For costs you have not confirmed, keep an allowance and a note of what needs checking. Our rental expense checklist helps organise the records; the negative-gearing guide explains why a taxable loss differs from a cash shortfall.