Rentvesting guide
Is rentvesting worth it? How to run the numbers
The short answer
Rentvesting is worth it only if the property's long-term outcome outweighs what it costs to hold, after rent and tax, plus what you give up. That depends on the price, rent, vacancy, interest, your tax rate and how long you hold. Running a best case and a worst case is the clearest way to see the range.
“Worth it” is a numbers question. This page shows how to break a rentvesting property into the numbers that matter, how the tax side works as at 6 November 2026, and how to read the best case and worst case in the calculator above.
It’s general information. The figures that matter are your own, and a registered tax agent and lender can check them for you.
The three numbers that decide it
- The holding cost. What it costs you each week or month to own the property, after rent and after tax.
- Your own rent. You keep paying it. It’s not deductible.
- The long-term outcome. What the property is worth when you sell or refinance, minus the costs of selling and any tax. This is the uncertain part.
Rentvesting is worth it, financially, when number three is bigger than the total of number one over the years you hold, plus whatever first home buyer benefits you gave up. Nobody can know number three in advance.
Step 1: the investment’s costs
| Cost | Typically | Deductible? |
|---|---|---|
| Loan interest | The biggest cost | Generally yes |
| Council rates and water | Annual | Generally yes |
| Landlord insurance | Annual | Generally yes |
| Property management and letting fees | A share of rent | Generally yes |
| Repairs and maintenance | Varies | Generally yes |
| Strata or body corporate | If applicable | Generally yes |
| Land tax | Depends on state and land value | Generally yes |
| Depreciation | Non-cash | Yes, larger on new builds |
| LMI and borrowing costs | Once, spread | Generally over five years |
The ATO’s residential rental properties guide covers each.
Step 2: the income
Rent, less any weeks vacant. National rental vacancy was 2.4% in October 2026, a five-year high (Cotality). Vacancy varies a lot between suburbs.
If there’s a rental guarantee, the property management company pays a guaranteed rent for its term, typically three years, whether the property is tenanted or not. It ends at the end of the term and depends on that company paying.
Step 3: the tax effect
If deductible costs (including depreciation) are more than the rent, the property makes a tax loss. What happens to that loss depends on when you bought and what you bought:
- New residential dwelling, bought after 7:30pm AEST 12 May 2026: the loss can generally still be offset against salary, subject to the definition in the Treasury Laws Amendment (Tax Reform No. 3) Bill 2026, which is before Parliament.
- Established dwelling, bought after that time: from 1 July 2027, the net loss is quarantined to residential property income and gains and carried forward. It doesn’t reduce tax on salary in that year.
- Held before Budget night: grandfathered.
Sources: Pitcher Partners, Baker McKenzie.
Where the loss is deductible, it reduces tax at your marginal rate. For 2026-27:
| Taxable income | Marginal rate | Plus Medicare | Tax effect of each $1,000 of loss |
|---|---|---|---|
| $45,001 to $135,000 | 30% | 2% | About $320 |
| $135,001 to $190,000 | 37% | 2% | About $390 |
| $190,001 and over | 45% | 2% | About $470 |
Rates from the ATO. These are simple illustrations of how a deduction works, not estimates of anyone’s refund. Notice that the tax effect never covers the whole loss. The rest comes out of your pocket.
Why depreciation matters
Depreciation is a deduction that doesn’t cost you cash each year. On a brand-new property it is generally much larger. BMT Tax Depreciation’s data for FY22-23 showed an average first full year deduction of about $15,234 for brand-new residential properties compared with about $5,126 for older ones. Averages aren’t your property. A quantity surveyor’s schedule gives the actual figures. See new build rentvesting.
Step 4: best case and worst case
The calculator above shows both for an example property.
Best case. The property is tenanted every week. Your holding cost is the costs minus the rent, adjusted for the estimated tax effect.
Worst case. The property is empty for every week of the year. Without a rental guarantee, that means no rent at all and the full costs. With a rental guarantee, the property management company pays the guaranteed rent for its term, so the worst case is the gap between the guaranteed rent and your costs. The calculator shows that monthly shortfall.
Two things to keep in mind:
- After a rental guarantee ends, the worst case changes. A vacancy then means no rent. It’s worth running the numbers for year four as well as years one to three.
- Neither case includes a change in the property’s value. That could add to or subtract from the outcome.
Step 5: what has to happen for it to be worth it
Once you know the holding cost range, you can ask what the property would need to do over your holding period to come out ahead. Then ask how realistic that is.
Some honest context for late 2026:
- National values fell 1.2% in October and were 6.7% below the March 2026 peak (Cotality).
- The capital gains tax rules also changed. From 1 July 2027 the 50% CGT discount is replaced by indexation plus a 30% minimum tax for most assets, while owners of new dwellings can choose the 50% discount instead (Baker McKenzie).
- Selling costs, such as agent fees and legal fees, come off the top.
Property has historically been held for long periods by people who did well from it. Some people have also lost money, particularly when they had to sell in a downturn. Growth is never guaranteed.
Step 6: what you give up
- Your own rent keeps going, and it’s not deductible.
- First home buyer benefits: usually lost on an investment purchase, and possibly affected for up to 10 years under the 5% Deposit Scheme rules. See first home buyer grants and rentvesting.
- Flexibility in your cash: money tied up in a property isn’t available for other things.
Putting it together
| Question | Where to find the answer |
|---|---|
| Can I carry the worst case? | The calculator’s worst case, plus your own rent and a buffer |
| What’s my real tax effect? | A registered tax agent |
| What can I borrow? | A lender or broker, after a credit assessment |
| Is the price fair? | An independent valuation |
| Is the rent realistic? | An independent rental appraisal |
| What does it need to do to be worth it? | Your own numbers, held over a realistic period |
Whether rentvesting is worth it depends on your circumstances. The numbers make the trade-offs visible. They don’t make the decision.
Watch the numbers worked through
If you’d like to see a best and worst case worked through live, with questions answered as you go, join a free WPF GO webinar with Peter Khoury. General information only, not personal advice.
Rentvesting calculator
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Frequently asked questions
How do I work out if rentvesting is worth it?
Start with the weekly holding cost: the investment's costs minus rent, then the estimated tax effect at your marginal rate. Add your own rent. Then look at the worst case, with vacancy and higher costs. Compare that against what the property would need to do over your holding period. A tax agent and lender can check it for your circumstances.
What is the worst case for a rentvesting property?
The worst case is the property sitting empty while all the costs continue. If there's a rental guarantee, the property management company pays the guaranteed rent during its term, typically three years, so the shortfall is the gap between that rent and your costs. After the guarantee ends, a vacancy means no rent at all.
Does the calculator include capital growth?
No. The calculator shows the cost of holding the property, after rent and estimated tax effects, in a best and a worst case. It doesn't forecast values, because values can rise or fall and no one can promise either. National values fell 6.7% from March to October 2026, according to Cotality.
Is rentvesting worth it on a $100,000 salary?
It can be for some people and not others. At $100,000 taxable income the 2026-27 marginal rate is 30% plus the 2% Medicare levy, so deductions reduce tax by about 32 cents per dollar. Whether that's enough depends on the property's numbers, your rent, your savings buffer and your plans.
Is a new build more likely to be worth it than an established property?
Not automatically. New builds generally have higher depreciation and remain eligible for negative gearing, subject to legislation before Parliament. Established properties bought after 12 May 2026 have losses quarantined from 1 July 2027. But price paid, location and rent matter just as much, and new builds can carry a premium.