Rentvesting means buying an investment property while continuing to rent in the area where you actually want to live.
The strategy can appeal to people who want to enter the property market without compromising on location or lifestyle. Instead of purchasing a property in an area simply because it fits your budget, you can continue renting somewhere that suits your work and lifestyle while purchasing an investment property in a location that better aligns with your investment goals.
With changes to negative gearing and capital gains tax now legislated, there are also some important tax considerations for anyone considering rentvesting from 2026 onwards.
Why Rentvesting Appeals to Brisbane Buyers
Rentvesting separates where you live from where you invest. You retain the flexibility to move suburbs or even cities without needing to sell your investment property, while being able to consider investment opportunities outside the areas where you personally want to live.
For example, consider someone who works in Brisbane's CBD and wants to live close to South Bank or Fortitude Valley. Purchasing in their preferred area may be outside their borrowing capacity or may not provide the rental return they are looking for from an investment.
Instead, they might rent a unit close to work for $600 per week while purchasing a three-bedroom house or unit in another location where the purchase price, rental demand and expected rental return better suit their investment strategy.
The investor maintains their preferred lifestyle while owning a property that generates rental income. Expenses such as eligible loan interest, property management fees, landlord insurance, council rates and depreciation may also be tax deductible depending on the property and the investor's circumstances. The rental income can help cover part of the loan repayment, with the investor responsible for funding any remaining shortfall.
How the New Negative Gearing Rules Affect Rentvesting
From the 2027–28 income year, negative gearing on residential investment property is generally limited to eligible new builds.
Properties held before 7:30pm AEST on 12 May 2026 are grandfathered under the previous rules. This means eligible losses on those properties can continue to be deducted against other assessable income, including salary and wages.
For established residential properties purchased after 12 May 2026, losses can generally only be deducted against other residential property income from the 2027–28 income year. If there is not enough residential property income available to absorb the loss, the excess can be carried forward and used against eligible residential property income in future years.
Eligible new builds continue to receive access to negative gearing, meaning eligible rental property losses can generally continue to be deducted against other assessable income.
For someone considering rentvesting, this means the tax treatment of an established property purchased after 12 May 2026 may be different from an eligible new build or an investment property acquired before the changes.
Tax outcomes depend on your individual circumstances, so independent tax advice should be obtained before making an investment decision.
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How the Capital Gains Tax Rules Changed from 1 July 2027
For eligible assets held for at least 12 months, gains that accrue before 1 July 2027 remain subject to the existing CGT discount rules. For gains accruing from 1 July 2027, the 50% CGT discount is generally replaced by cost-base indexation, with a minimum 30% tax rate applying to real capital gains.
This means the cost base is adjusted for inflation so tax is applied to the real gain rather than the inflation component of the increase in value.
Eligible new residential builds receive different treatment. Investors in eligible new builds can choose between the existing 50% CGT discount and the new indexation and minimum-tax arrangements when the property is eventually sold.
For properties that span both periods, the capital gain may need to be apportioned between the period before and after 1 July 2027.
Again, this is a tax consideration rather than a lending consideration, so you should obtain advice from your accountant or tax adviser regarding how these changes may affect your circumstances.
How Lenders Assess Rentvesters
Rentvesting does not remove your own rental expense from a lender's borrowing capacity assessment.
If you are paying $600 per week in rent, that amount will generally be included as an ongoing living expense. At the same time, the lender may recognise a portion of the rental income generated by your investment property.
Lenders generally do not use 100% of the expected rental income when calculating borrowing capacity. Many apply a rental-income shading factor to account for expenses such as vacancies, property management and maintenance. For example, if a lender recognises 80% of rental income and the property generates $500 per week, $400 per week may be included in the serviceability assessment.
The exact treatment of rental income varies between lenders, which means lender selection can have a meaningful impact on your borrowing capacity.
APRA-regulated banks also assess new home lending using a serviceability buffer of at least 3 percentage points above the actual loan interest rate. APRA also limits the proportion of new investor lending these banks can write at a debt-to-income ratio of six times or greater.
Your borrowing capacity will therefore depend on a combination of your income, personal rent, existing debts, living expenses, rental income from the investment property and the lender's individual assessment policies.
You can learn more about how lenders assess your position on our borrowing capacity page.
How Much Deposit Do You Need?
The deposit required for an investment property will depend on the lender, property and borrower's financial position.
Many investors aim for a 20% deposit because borrowing up to 80% of the property's value will generally avoid lenders mortgage insurance. However, some lenders may allow investment lending at higher loan-to-value ratios, potentially including loans up to 90% LVR, subject to lending criteria and lenders mortgage insurance.
You also need to allow for purchase costs on top of the deposit.
These can include transfer duty, conveyancing or legal fees, building and pest inspections and lender-related costs.
For example, standard Queensland transfer duty on a $500,000 investment property is currently approximately $15,925. Home and first home buyer transfer duty concessions generally require the property to be occupied as your home and therefore do not usually apply where the property is purchased purely as an investment.
If you already own another property and have sufficient equity available, you may also be able to use that equity towards the deposit and purchase costs rather than contributing the entire amount from cash savings.
Choosing the Right Investment Loan Structure
The way your investment loan is structured can have a significant impact on your cash flow and flexibility.
Some investors choose interest-only repayments for an initial period. During an interest-only period, you pay the interest charged on the loan without reducing the principal balance. This results in lower required repayments during the interest-only period compared with principal and interest repayments on the same loan amount.
Interest-only periods commonly run for between one and five years, depending on the lender. Once the interest-only period ends, repayments generally convert to principal and interest over the remaining loan term unless another arrangement is approved.
Interest-only loans can also be assessed differently by lenders because the principal still needs to be repaid over the remaining term after the interest-only period finishes.
Another option is to split the loan between variable and fixed interest rates. A variable portion may provide greater repayment and refinancing flexibility, while a fixed-rate portion provides repayment certainty for a set period.
The appropriate structure will depend on your cash flow, investment strategy, risk tolerance and longer-term plans.
What Are the Benefits of Rentvesting?
Rentvesting can allow you to enter the property market without waiting until you can afford to purchase in the exact area where you want to live.
This gives you an opportunity to start building equity through loan repayments and potentially benefit from capital growth if the investment property increases in value over time, while continuing to live in an area that suits your lifestyle.
You also maintain greater flexibility around where you live. If your work, relationship or lifestyle changes, moving rental properties can be considerably simpler than selling your home and purchasing another property.
Rentvesting also allows you to assess potential properties based more heavily on their investment characteristics rather than whether you personally want to live in them. Factors such as rental demand, vacancy rates, purchase price, rental yield and longer-term plans for the area can form part of the decision.
Many expenses associated with holding an investment property, including eligible loan interest, property management fees, council rates and certain other costs, may also be tax deductible to the extent the property is rented or genuinely available for rent.
What Are the Benefits of Rentvesting?
Rentvesting can allow you to enter the property market without waiting until you can afford to purchase in the exact area where you want to live.
This gives you an opportunity to start building equity through loan repayments and potentially benefit from capital growth if the investment property increases in value over time, while continuing to live in an area that suits your lifestyle.
You also maintain greater flexibility around where you live. If your work, relationship or lifestyle changes, moving rental properties can be considerably simpler than selling your home and purchasing another property.
Rentvesting also allows you to assess potential properties based more heavily on their investment characteristics rather than whether you personally want to live in them. Factors such as rental demand, vacancy rates, purchase price, rental yield and longer-term plans for the area can form part of the decision.
Many expenses associated with holding an investment property, including eligible loan interest, property management fees, council rates and certain other costs, may also be tax deductible to the extent the property is rented or genuinely available for rent.
What Are the Downsides of Rentvesting?
One of the biggest considerations is that you may be paying rent and funding an investment loan at the same time.
While the investment property generates rental income, that income may not cover the full cost of the loan and other property expenses. Any shortfall will need to be funded from your other income while you continue paying rent on the property where you live.
You also do not build equity in the property you personally occupy. Your rent is paid to your landlord, and you remain subject to the conditions of your lease, potential rent increases and the possibility that you may need to move at the end of a tenancy.
There is also a cash-flow risk if your circumstances change. If your income falls, you take extended unpaid leave or your investment property is vacant for a period, you may still need to cover your personal rent, mortgage repayments and investment property expenses.
The changes to negative gearing are another consideration. If you purchase an established investment property after 12 May 2026 and it generates a tax loss, you may no longer be able to use that loss to reduce the tax payable on salary or wages from the 2027–28 income year. Instead, the loss may need to be carried forward or offset against other eligible residential property income.
Who Does Rentvesting Suit?
Rentvesting may suit buyers who value flexibility, expect to move suburbs or cities in the future, or want to enter the property market without purchasing in an area simply because it is where they can currently afford to live.
It may also suit someone who can identify an investment property with suitable rental demand and cash flow characteristics while continuing to rent in an area that would either be outside their purchasing budget or less attractive to them from an investment perspective.
For example, someone working in Brisbane's CBD who expects a potential interstate transfer in several years may prefer to continue renting close to work while owning an investment property elsewhere. This allows them to begin building a property portfolio without committing to a permanent place of residence before their longer-term plans are clear.
Rentvesting may be less suitable if your primary goal is security of tenure, you have school-aged children and place a high value on stability, or you want the freedom to renovate and personalise your own home.
In those circumstances, purchasing a home to live in may align more closely with your priorities, even if that means considering a smaller property or a different location.
Working Out Whether Rentvesting Is Affordable
Start by considering how much you are comfortable paying in rent for your own home and how much additional cash flow you could contribute towards an investment property each month.
The investment property's expected rent should then be compared with the loan repayments and ongoing costs, including property management, landlord insurance, council rates, body corporate fees where applicable, maintenance and an allowance for vacancy.
Understanding the potential shortfall is important when setting your budget, although your maximum borrowing capacity will also depend on your income, existing debts, living expenses and the lender's serviceability assessment.
A property that appears cash-flow positive based purely on the mortgage repayment and rental income can quickly become cash-flow negative once all ownership costs are included.
Established Property or New Build?
The choice between an established property and a new build has become more important following the changes to negative gearing and capital gains tax.
Eligible new builds retain access to negative gearing under the new rules and also provide investors with a choice between the existing 50% CGT discount and the new indexation arrangements when the property is eventually sold.
Established properties may offer different price points, locations, rental returns and property characteristics. However, established residential properties acquired after 12 May 2026 are generally subject to the new negative gearing restrictions from the 2027–28 income year.
Tax treatment should not be the only factor used to choose an investment property. Purchase price, rental demand, vacancy rates, ongoing costs, property condition and your longer-term investment objectives should also be considered.
Getting Your Rentvesting Strategy Right
Before purchasing, it is worth understanding both sides of the strategy: what it will cost you to continue renting your own home and what the proposed investment property will cost to own.
A broker can compare investment loan options across different lenders and assess how rental income, interest rates, loan structures and LVRs affect your borrowing capacity and cash flow.
Different lenders can treat the same application differently, particularly when it comes to rental income, existing debts and living expenses. Understanding these differences before making an offer can help you establish a realistic property budget and choose a lending structure that suits your circumstances.
Ready to Explore Rentvesting?
Whether you're looking to enter the property market while continuing to rent, purchase your first investment property or build an existing property portfolio, Wealthcove can assess your borrowing capacity, compare lenders and help structure an investment loan based on your circumstances. Book an appointment with Liam Pahl, Finance & Mortgage Broker at Wealthcove or call Liam directly on 0452 646 192 to discuss your rentvesting options.
