New build rentvesting: house and land investment explained

New builds, and house and land packages in particular, have become central to rentvesting in 2026. Partly that’s depreciation, which has always favoured new property. Mostly it’s the 2026 tax changes, which keep negative gearing for new residential dwellings but not for established ones bought after Budget night.

This page explains how house and land investment works, how depreciation works, and the risks. General information as at 6 November 2026.

What a house and land investment is

A house and land package is usually two contracts:

1. A land contract to buy a vacant block, often in a new estate.
2. A building contract with a builder to construct a home on it.

You settle on the land first, then the builder builds, usually with progress payments funded by the loan in stages. Once the home is finished and handed over, it can be rented.

Some packages are sold as a single contract for a completed home. The structure affects stamp duty and finance.

Stamp duty on split contracts

With separate land and build contracts, stamp duty is charged on the land component in many states, not on the full package price. That can make the upfront cost noticeably lower than buying an established home at the same total price. Each state’s rules differ, and the state revenue office is the place to check.

Depreciation: why new builds differ

Depreciation is a non-cash deduction. You don’t pay it each year, but you can generally claim it against the rental income. There are two types.

Division 43: capital works

• Covers the building structure and fixed items like walls, roofing, built-in cupboards and driveways.
• Generally 2.5% of the construction cost each year for 40 years for residential buildings built after 15 September 1987.
• Applies to new and established buildings, based on the original construction cost and the building’s age.

Division 40: plant and equipment

• Covers removable or mechanical items, such as ovens, dishwashers, hot water systems, carpets, blinds and air conditioning.
• Depreciated over each item’s effective life, as set by the ATO.
• For second-hand residential property bought after 9 May 2017, previously used plant and equipment generally can’t be claimed. New property isn’t affected by this.

The ATO’s residential rental properties guide covers both.

How big is the difference?

BMT Tax Depreciation’s data for FY22-23 showed average first full year deductions of about $15,234 for brand-new residential properties and about $5,126 for older ones. These are averages across BMT’s schedules, not a prediction for any property. A quantity surveyor’s depreciation schedule gives the real figure.

The 2026 tax treatment of new builds

Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, passed 25 June 2026:

• New residential dwellings remain eligible for negative gearing. Net rental losses can generally still offset salary.
• Established dwellings bought after 7:30pm AEST on 12 May 2026 have net losses quarantined from 1 July 2027.
• For CGT from 1 July 2027, owners of new dwellings can choose the 50% discount instead of indexation plus a 30% minimum tax.

Sources: Pitcher Partners, Baker McKenzie.

The definition of “new residential dwelling” is in the Treasury Laws Amendment (Tax Reform No. 3) Bill 2026, which is before Parliament, with the Senate Economics Committee due to report on 13 November 2026. The exposure draft covers a dwelling newly built on vacant land. Everything here is subject to legislation before Parliament, and no specific property can be said to qualify until it passes. See negative gearing in 2026.

New build versus established, side by side

	New house and land	Established home bought after 12 May 2026
Negative gearing against salary from 1 July 2027	Yes, subject to legislation	No, quarantined
Division 43	Full 40 years ahead	Remaining years only
Division 40	Yes, on new items	Generally not on previously used items
Stamp duty	Often on land only for split contracts, in many states	On full price
Maintenance early on	Usually low, with builder warranties	Can be higher
Rent available from	Completion	Settlement
Construction risk	Yes	No
Track record of rents in the street	Often none	Usually some

The risks of house and land investment

Construction risk

Builds can run late. Builders can become insolvent. Home warranty insurance requirements vary by state. Delays mean interest on the land and progress payments before any rent.

Variations and site costs

Unexpected site costs, such as rock or slope, can add to the price after you sign. Fixed-price contracts and clear inclusions reduce this risk.

Supply in new estates

Many similar homes can finish at the same time, all looking for tenants. That can push rents down and vacancy up. National vacancy was already at a five-year high of 2.4% in October 2026 (Cotality).

Paying a premium

New property can be priced above what a valuer would put on it, especially when the package includes extras such as a rental guarantee. An independent valuation is the check.

Values can fall

Cotality reported national values 6.7% below the March 2026 peak in October 2026. New estates on the urban fringe can be more volatile in a downturn.

Rental guarantees

Some packages include a rental guarantee. Here it’s provided by the property management company, typically for three years. It ends, and depends on that company paying. See our rental guarantee guide.

Questions people work through

• Who is the builder, how long have they traded, and what does their licence and insurance history show?
• Is the build contract fixed price, and what’s excluded?
• What does an independent valuation say compared with the package price?
• What will it rent for, according to an independent local property manager?
• How many similar homes are finishing nearby?
• Would it be a new residential dwelling under the Bill, as a registered tax agent reads it?
• How will the loan fund progress payments, and what’s the interest before completion?

Watch a new build example

To see a house and land example worked through, including depreciation, the 2026 tax changes and the risks, join a free WPF GO webinar with Peter Khoury. General information only, not personal advice.