The short answer
Rentvesting is renting where you want to live and buying an investment property where you can afford to buy. The property is an investment from day one, so lenders and the ATO treat it as one. You pay rent and a loan at the same time, and Moneysmart warns that the rent you earn may not cover the loan and the costs.
How rentvesting works
You keep renting the home you live in. You buy a property somewhere else and rent it out. The tenant’s rent goes towards the loan and the running costs. Any growth in value over time isn’t certain, and values can fall.
People usually look at it when the suburb they want to live in costs more than they can borrow, or when they want to stay near work, family or school but still own property.
What it can do for you
- Get into the market sooner. Buying where prices are lower may mean a smaller deposit and loan, but you still pay rent where you live.
- Keep your lifestyle. You can keep living where you want to live.
- Rent helps with the loan. The property earns rent, which a home you live in doesn’t.
What to weigh up
- Two housing costs. You pay rent where you live as well as the loan on the investment. Moneysmart notes that property owners have to manage ongoing costs, vacancies and loan repayments.
- Rent may not cover it. If the property sits empty, or rates rise, the gap comes out of your pocket. Use our investment property calculator to see the weekly cash flow before tax.
- Investment loan pricing. Investment loan rates can differ from owner-occupier rates. Compare the comparison rate as well as the rate. See investment loan rates by lender.
- First home buyer help may not apply. Many first home grants and stamp duty concessions require you to live in the home for a set time. An investment purchase may miss out, so check your state’s rules.
- You’re a landlord. Tenants, repairs, insurance and property management come with it.
How lenders look at it
A lender assesses you the same way as any investor. Lenders usually count the rent you pay as a living expense. They usually count only part of the property’s expected rent as income, to allow for vacancies and costs. Each lender sets its own approach. That’s why borrowing power for a rentvestor can vary a lot between lenders. Our borrowing power calculator gives a rough guide.
The tax side
Because the property is an investment, its costs and income are part of your tax return. Two things are worth raising with a registered tax agent before you buy:
- Negative gearing and capital gains tax are changing. The ATO says that from 1 July 2027 negative gearing for residential property is limited to new builds, with properties held at 7:30pm AEST on 12 May 2026 exempt, and the 50% CGT discount is replaced for gains that accrue after that date. See our negative gearing guide.
- The main residence exemption. A property you’ve never lived in generally isn’t your main residence for capital gains tax. If you move in later, the ATO has rules for how the exemption applies. If you move out of a home you lived in and rent it out, you can choose to treat it as your main residence for up to six years while it’s rented. A property you never lived in doesn’t get this. How these apply depends on your situation.
This is general information, not tax advice.
Before you start
- Work out what you can borrow with your rent counted as an expense.
- Set a buffer for vacant weeks, repairs and rate rises.
- Check the area’s rent, vacancy and the property’s rental yield.
- Talk to a registered tax agent about the tax side.
- Read our guide to buying an investment property.
Mortgage broker at My Finance Consultants. Daniel compares home loan options from a panel of 40+ lenders for refinancers, investors and home buyers, by phone, evenings included. About Daniel
General information only. It doesn’t consider your objectives, financial situation or needs, and it isn’t tax, legal or financial product advice. Lending criteria, fees and charges apply.