Rentvesting guide
Rentvesting pros and cons
The short answer
The main pros of rentvesting are living where you want, getting into the market sooner and the tax treatment of an investment property. The main cons are paying rent and investment costs at once, losing first home buyer benefits, less security in your own home, and the risk that values fall or the property sits vacant.
Rentvesting has real advantages and real drawbacks. This page lists both, with the same amount of space for each. It reflects the rules as at 6 November 2026 and is general information only.
Pros and cons at a glance
| Pros | Cons |
|---|---|
| Live where you want | Pay rent and investment costs at once |
| Get into the market sooner | Usually lose first home buyer benefits |
| Choose the investment on its numbers | Less security in your own home |
| Investment costs are generally deductible | Tax effect never covers the full loss |
| New builds remain negatively gearable, subject to legislation | Established homes bought after 12 May 2026 lose it against salary from 1 July 2027 |
| Higher depreciation on new builds | New builds carry construction and supply risk |
| Flexibility to move without selling | Values can fall; you may owe more than it’s worth |
| Can use 100% of the purchase price plus LMI, subject to assessment | Bigger loan, more interest, LMI cost |
| Rental guarantee can cover vacancy for its term | Guarantee ends and depends on the provider |
The pros
Living where you want
Rent near work, family or the lifestyle you want, often for less than a mortgage on the same home.
Getting into the market sooner
A property in a lower-priced area can be within reach years before a home in the area you live in.
Choosing on numbers, not lifestyle
You can focus on rent, vacancy, supply and price, not on whether the kitchen suits you.
Tax treatment of investment costs
Interest, rates, insurance, management fees, repairs and depreciation are generally deductible against rental income (ATO). For new residential dwellings, net losses can generally still offset salary, subject to legislation before Parliament.
Depreciation on new builds
BMT Tax Depreciation reported average first full year deductions of about $15,234 for brand-new properties against about $5,126 for older ones in FY22-23 (BMT).
Flexibility
Changing jobs, cities or relationships doesn’t mean selling the property.
Lower upfront cash, for some
With finance of 100% of the purchase price plus LMI, through licensed lending partners including Empower Money (ACL 561207), the main upfront cost is stamp duty. Subject to eligibility and credit assessment.
The cons
Two housing costs at once
Your own rent isn’t deductible and keeps rising. The investment has its own costs. Both hit your budget every week.
First home buyer benefits
Grants, stamp duty concessions and the 5% Deposit Scheme are generally for owner-occupiers. Buying an investment first can affect 5% Deposit Scheme eligibility for up to 10 years. See what you give up.
Less security where you live
Leases end. Landlords sell. Rents rise. Some people find that harder than any financial cost.
The tax effect only goes so far
A deductible loss reduces tax at your marginal rate. On 30% plus Medicare, you still bear about 68 cents of each dollar of loss.
Established homes and the 2026 changes
For established dwellings bought after 7:30pm AEST 12 May 2026, net losses are quarantined from 1 July 2027 (Pitcher Partners). The CGT discount also changes from 1 July 2027.
Construction and supply risk on new builds
Delays, builder insolvency and many similar homes competing for tenants in new estates.
Market risk
National values fell 1.2% in October 2026 and were 6.7% below the March peak, with vacancy at a five-year high of 2.4% (Cotality).
Bigger loans with 100% finance
More debt, more interest, LMI added to the loan, and more exposure if values fall.
Rental guarantees end
Where there’s a rental guarantee, it’s provided by the property management company, typically for three years. It ends, and it depends on that company paying.
Rules can change again
The new dwelling definition is still before Parliament. Future governments can change tax rules again.
Weighing them
The pros and cons don’t carry the same weight for everyone. Someone on a 37% marginal rate who’s happy renting long term will weigh them differently from someone on a lower income who’d give up a large first home grant. It depends on your circumstances, and the calculator on our is rentvesting worth it page can show the best and worst case for an example property.
See both sides worked through
For an honest walk-through of the pros and cons with real numbers, join a free WPF GO webinar with Peter Khoury. General information only, not personal advice.
Frequently asked questions
What is the biggest downside of rentvesting?
For many people it's carrying two housing costs at once: rent on their own home and the holding cost of the investment. If rent rises, rates rise and the investment is vacant in the same year, the pressure adds up. Losing first home buyer benefits is another significant cost for some.
What is the biggest advantage of rentvesting?
Most people say it's getting into the property market without moving away from where they live, work or have family. The investment can be bought where the numbers fit, while the home is chosen for lifestyle.
Do the 2026 tax changes affect the pros and cons?
Yes. For established homes bought after 7:30pm AEST on 12 May 2026, net rental losses can't offset salary from 1 July 2027. New residential dwellings remain eligible for negative gearing, subject to legislation before Parliament. So the tax pros now depend on whether the property is new or established.
Is rentvesting riskier than buying a home?
It carries different risks. A home buyer has a mortgage and no landlord. A rentvestor has a mortgage, a landlord and a tenant, plus tax rules that can change. Both are exposed to falling values. Which feels riskier depends on income, savings and circumstances.