Rentvesting explained: renting where you live and owning an investment property

Rentvesting means renting the home you live in and owning an investment property somewhere else. Reasons people give include buying in a cheaper area, living in a suburb they could not afford to buy in, or keeping the freedom to move. It changes the tax, the stamp duty and the risks compared with buying the home you live in. This guide puts numbers on the first year.

The same property, two ways

Take a $650,000 property bought with a $520,000 interest-only loan at 6.25%. In the first case the buyer lives in it. In the second the buyer rents it out for $500 a week and rents a home for $600 a week for themselves. The buyer earns $100,000 a year.

In this example rentvesting costs $2,310 a year more after tax. The result depends entirely on the rents and the loan, so the point is the method rather than the answer. A different rent, price or loan gives a different result.

The July 2027 change

The tax saved in the table depends on the rental loss being deducted from salary. Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, an established home bought after 7:30pm on 12 May 2026 can be negatively geared until 30 June 2027. From 1 July 2027 its loss can be used only against residential property income, including a capital gain, and unused losses carry forward. In this example the cost after tax would then be $46,730, and $15,530 of loss would carry forward each year. New builds that add to housing supply are not limited. See negative gearing explained for the rules and the numbers.

Stamp duty and first home buyer concessions

Many duty concessions for first home buyers are tied to living in the property for a minimum period, and the conditions differ by state. A rentvestor buying an investment property generally pays duty at the standard rate. The duty on the $650,000 purchase in 2026–27 is:

The other states and the full set of rules are in stamp duty by state. The state revenue office sets the conditions for any concession.

Other differences

• Capital gains tax. A home you live in is generally exempt from capital gains tax. An investment property is not, so a gain is taxed when it is sold. Today, held for 12 months or more, only half the gain is taxed. See the capital gains tax discount. The Act above replaces the discount for gains that accrue from 1 July 2027.
• Land tax. Most states charge land tax on investment land above a threshold, and exempt the main residence. It is not included in the table, because the thresholds and rates differ by state.
• Rent can rise. The rent paid for the home you live in can rise, or the lease can end.
• Money is tied up either way. The table counts interest and costs, not the principal. Equity in the investment property builds only through repayments and growth.

The catches

• Two sets of risk. The rentvestor carries vacancy and repairs on the investment property and rent increases on the home they live in.
• The loss is a cost. Cash goes out each week and the tax saved comes later.
• Borrowing capacity. A new loan is assessed on existing debts and living costs, which can include rent.
• Growth is not certain. The cost above is before any change in value, which can be positive or negative.

Assumptions behind the numbers

• Tax uses 2026–27 resident rates and the 2% Medicare levy on a salary of $100,000, with no other income. The only other deduction is the $1,000 standard deduction for work-related expenses that applies automatically from 2026–27, so taxable income before the rental loss is $99,000. Tax saved is the tax on that less the tax after the $15,530 rental loss. Amounts are rounded to the nearest dollar.
• The property costs $650,000 with a $520,000 interest-only loan at 6.25%. Rates are $2,200, insurance $1,500 and repairs 0.5% of value ($3,250). The management fee is 8% of the $26,000 rent. Rent is constant, and the property is let all year.
• The two cases are compared on the same property and loan. Loan repayments of principal, selling costs, land tax, deposit and purchase costs are left out.
• Duty uses the 2026–27 tables in the planner's engine for the $650,000 price, as an owner-occupying first home buyer and as an investor. Eligibility for any concession is set by each state.
• The law described for 1 July 2027 is a summary. The ATO and a registered tax agent can confirm how it applies to a particular property.