Rentvesting for First home buyers who rent
Rentvesting for first home buyers who are renting now
The short answer
If you rent now and want to buy, there are two main paths: buy a home to live in, often with first home buyer support, or keep renting and buy an investment. Rentvesting gives up most first home buyer benefits for that purchase but lets you keep your location. Which fits depends on your circumstances.
If you’re renting and thinking about buying, rentvesting is probably one of the options you’ve heard about. This page is for first home buyers weighing it up against buying a home to live in. It explains the trade-offs as at 6 November 2026, with the same space for the downsides as the upsides.
General information only. It doesn’t take your circumstances into account.
The two paths
| Buy a home to live in | Rentvest | |
|---|---|---|
| Where you live | Where you can afford to buy | Where you choose to rent |
| First home owner grant | May be eligible (state rules) | Generally not on the investment |
| Stamp duty concession | May be eligible (state rules) | Generally not on the investment |
| 5% Deposit Scheme | May be eligible | Not eligible (owner-occupier only) |
| Deductions | None on your home | Investment costs generally deductible |
| Negative gearing | No | New dwellings yes, subject to legislation; established bought after 12 May 2026 quarantined from 1 July 2027 |
| CGT on sale | Main residence generally exempt | Applies |
| Security | Your home, no landlord | Lease ends, rent rises |
| Housing costs | Mortgage, rates, upkeep | Your rent plus the investment’s costs |
Why renters consider rentvesting
The home they want isn’t affordable
Many renters can afford a property, but not in the suburb they live in. Buying a home would mean moving further from work, family or friends.
Location and lifestyle
Rentvesting keeps the life they have now, while getting into the market.
It’s widely talked about
Westpac found 54% of first home buyers were considering rentvesting in February 2025, rising to 61% in NSW. PropTrack found around 5.5% of first home buyer searchers showed investment intent in February 2026, and ABS lending data puts about 5.4% of first home buyer loans as investor loans. Considering it is common. Doing it is not.
What you give up
This is the part most often skipped.
- First home owner grants are run by each state and generally require you to live in the home.
- Stamp duty concessions for first home buyers generally require you to live in the home.
- The 5% Deposit Scheme, expanded on 1 October 2025, is owner-occupier only. It’s for first home buyers or people who haven’t owned property in Australia in the previous 10 years, so buying an investment first can remove eligibility for up to 10 years (firsthomebuyers.gov.au).
How much that’s worth depends on your state and price range. See first home buyer grants and rentvesting.
What renters commonly consider
- How long they’ll keep renting. If it’s many years, the investment has longer to work, and the first home buyer benefits are further off anyway.
- Their rent. It’s not deductible, and it rises.
- Their buffer. For vacancies, repairs and rent rises happening at once.
- New or established. Since 2026, this affects the tax treatment.
- Finance. Some lending partners offer 100% of the purchase price plus LMI, through licensed lenders including Empower Money (ACL 561207), subject to eligibility and credit assessment. The main upfront cost is then stamp duty. See 100% finance.
The example property at a $95,000 salary
The calculator above uses an example salary of $95,000, chosen for illustration.
At that salary the 2026-27 marginal rate is 30% plus 2% Medicare (ATO). The calculator shows:
- Best case: the example property tenanted every week.
- Worst case: vacant every week, with any rental guarantee from the property management company paying the guaranteed rent for its term, typically three years.
Results are estimates after rent and estimated tax effects, excluding changes in value. Remember your own rent sits on top.
The 2026 tax changes in brief
- Established dwellings bought after 7:30pm AEST 12 May 2026: net losses quarantined from 1 July 2027.
- New residential dwellings remain eligible for negative gearing, subject to legislation before Parliament.
Sources: Pitcher Partners, Baker McKenzie.
Work deductions
Your work-related deductions depend on your job and the ATO’s rules, set out in the occupation and industry guides. They’re separate from an investment property.
The risks
- Two housing costs. Your rent plus the investment’s costs.
- Lost first home buyer benefits. Possibly for years.
- Less security. Your lease can end.
- Values can fall. National values were 6.7% below the March 2026 peak in October 2026 (Cotality).
- Vacancy. National vacancy at a five-year high of 2.4%.
- Rental guarantees end. Where offered, provided by the property management company for a fixed term, dependent on that company paying.
Questions to take to a tax agent and lender
Registered tax agent
- How would an investment loss be treated for me, new versus established, under the 2026 changes?
- What’s the CGT difference between a home and an investment for me?
Lender or broker
- What could I borrow as an owner-occupier versus an investor?
- Would I be eligible for the 5% Deposit Scheme now, and what if I buy an investment first?
- Would I be assessed for 100% of the purchase price plus LMI?
State revenue office
- What grant and stamp duty concession would I give up?
Join a webinar
To see the two paths compared with an example, join a free WPF GO webinar with Peter Khoury. General information only, not personal advice.
Rentvesting calculator
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Frequently asked questions
Is it better for a first home buyer to rentvest or buy a home?
There's no general answer. Buying a home gives security and access to grants, stamp duty concessions and the 5% Deposit Scheme. Rentvesting keeps your location and flexibility and may carry tax deductions, but usually gives up those benefits. It depends on your state, budget, plans and circumstances.
How many first home buyers rentvest?
Many think about it, fewer do it. Westpac found 54% of first home buyers were considering rentvesting in February 2025. PropTrack found around 5.5% of first home buyer searchers showed investment intent in February 2026, and ABS data shows around 5.4% of first home buyer loans are for investment.
Can I rentvest and still buy my first home later?
Yes, but you may not be treated as a first home buyer. Owning an investment can affect state grants and concessions and the 5% Deposit Scheme, which is for people who haven't owned property in Australia in the previous 10 years. Check current rules on official sites.
What tax bracket is someone on $95,000 in?
On the 2026-27 rates, taxable income from $45,001 to $135,000 is taxed at 30%, plus the 2% Medicare levy. That means a deductible investment loss reduces tax by about 32 cents per dollar, and the rest is still your cost.
Do I need a deposit to rentvest?
It depends on the loan. Some lending partners offer 100% of the purchase price plus LMI, so the main upfront cost is stamp duty. It means a bigger loan and more interest, and it's subject to eligibility and the lender's credit assessment.