In this guide 8 sections
- What is rentvesting?
- How does rentvesting work?
- What are the trade offs?
- How do the 2027 tax changes affect rentvesting?
- What is the six year rule, and does it apply?
- Can a rentvestor get first home grants or duty savings?
- What does it cost to own an investment property?
- Questions to ask before you rentvest
Rentvesting means renting the home you live in while owning an investment property somewhere else. People choose it to live where they want and buy where the numbers suit them, but it changes how tax, grants and costs work, and the tax rules change from 1 July 2027.
- You rent where you live and buy where your budget and research point you.
- Rent may not cover every cost, so plan for empty weeks.
- From 1 July 2027, losses on established homes bought after budget night only offset property income.
- Check first home grants before buying an investment first.
What is rentvesting?
Rentvesting means you rent the home you live in and buy a property that you rent out to someone else. The rent you receive goes towards the costs of the property you own, and you pay rent on your own home.
People are often drawn to it because the suburb they want to live in and the property they can afford to buy are not in the same place. Rentvesting lets them keep their lifestyle, close to work, family or school, while still owning property.
How does rentvesting work?
- You keep renting the home you live in.
- You buy an investment property where your budget and research point you.
- The property is rented to a tenant, usually through a property manager.
- You receive the rent, pay the property's costs and loan, and declare the income in your tax return.
What are the trade offs?
| What can work for you | What to weigh up | |
|---|---|---|
| Where you live | You choose your home by lifestyle, not by what you can afford to buy there. | Your lease can end, and you may need to move. |
| What you can buy | You can buy anywhere your budget and research allow. | You may be buying somewhere you know less well, so research matters more. |
| Costs | The rent you receive goes towards the property's costs. | Rent may not cover the mortgage and costs, and there may be times with no tenant. |
| Tax | Rental expenses can generally be claimed against rental income. | For established homes bought after budget night, losses can only offset property income from 1 July 2027. |
| First home help | You can still buy a home to live in later. | First home grants and duty savings have their own rules. Check them before buying an investment first. |
How do the 2027 tax changes affect rentvesting?
Properties held before 7:30pm AEST on 12 May 2026 keep negative gearing. New builds can still be negatively geared before and after 1 July 2027.
For an established home bought after budget night, from 1 July 2027 rental losses can only offset residential property income, including capital gains, and extra losses carry forward. They cannot reduce tax on your wages.
For capital gains, gains from 1 July 2027 on every property use cost base indexation and a 30% minimum tax, while gains before that date keep the 50% discount. Whether you buy a new build or an established home can therefore change your numbers, so speak to a registered tax agent before you buy.
See our 2026 Federal Budget guide →
What is the six year rule, and does it apply?
The six year rule is about a former home. The ATO says you can treat a former home as your main residence for up to 6 years if you rent it out, as long as you do not treat another property as your main residence at the same time.
It applies to people who lived in a property and then rented it out. A property you buy as an investment and never live in is not your main residence, so the rule does not apply to it.
Can a rentvestor get first home grants or duty savings?
Each state sets its own rules. In Victoria the First Home Owner Grant helps first home buyers buy or build a new home, and first home buyer duty savings apply to homes up to $750,000. Check each grant and concession with your state revenue office, including whether you must live in the home, before buying an investment as your first property.
What does it cost to own an investment property?
- Upfront: stamp duty and legal fees.
- Ongoing: council and water rates, insurance, strata fees, land tax, property management and repairs.
- Periods with no tenant, when you cover the costs yourself.
- Selling costs, such as agent fees.
You also keep paying rent on your own home. Even where expenses are tax deductible, you pay them up front.
Work out stamp duty → · Check the cashflow →
Questions to ask before you rentvest
- Can I cover the loan and costs if the property is empty for a while?
- Is it a new build or established, and how does that affect tax from 1 July 2027?
- Will buying an investment first affect a first home grant or duty saving later?
- Who will manage the property and the tenants?
- Have I spoken to a registered tax agent and a licensed broker about my situation?
General information only. It does not take your objectives, financial situation or needs into account and is not financial, tax, credit or legal advice. Citadel Agency is a licensed buyers agency (licence 092247L) and does not hold an Australian Financial Services Licence.