Last reviewed October 2026 by Megan Birot, Content Editor, OurTop10. Figures checked against the sources named in the article.Rentvesting means renting where you want to live and buying an investment property where you can afford to. This guide works through the numbers on a real example, the first home buyer concessions and tax exemption you give up, who the strategy suits, how lenders treat rentvestors, and what happens when you want to turn the investment into a home. The calculator further down compares your own rent-and-invest position against buying the place you live in.
What rentvesting is
Rentvesting is renting the home you live in while owning an investment property somewhere else. You keep living where your job, friends and life are, usually a suburb you cannot afford to buy into, and you buy in a suburb you can afford, then rent it to someone else. The tenant’s rent and the tax deductions help carry the loan, and the property does the wealth-building that a home would have done, only in a cheaper market.
It is a strategy born of the gap between where people want to live and what they can borrow. A couple earning $180,000 between them can borrow roughly $900,000, which buys very little within 10 kilometres of the Sydney or Melbourne CBD but buys a house in Adelaide, Perth or regional Queensland with money left over. Rentvesting lets them keep the inner-city lifestyle and still get onto the property ladder.
How the numbers work
Take a couple renting a two-bedroom apartment in Sydney’s inner west for $850 a week. Buying an equivalent apartment would cost about $1.1 million, with a repayment of around $6,200 a month on a $990,000 loan, more than double the rent. Instead they buy a $650,000 house in Adelaide’s north, put down $130,000 plus costs, and borrow $520,000 at 6.4% interest-only.
- Rent they pay in Sydney: $44,200 a year
- Rent they receive in Adelaide at $560 a week: $29,120 a year
- Interest on the investment loan: $33,280 a year
- Running costs on the investment: $7,500 a year
- Shortfall on the investment before tax: $11,660 a year, or about $224 a week
- Total housing cost: $44,200 plus $11,660, so $55,860 a year
Buying the Sydney apartment instead would cost $74,300 a year in repayments plus about $8,000 in strata, rates and insurance, so roughly $82,300. The rentvestor is about $26,000 a year better off in cash, owns an appreciating asset, and can claim the shortfall at tax time under whatever negative gearing rules apply to when they bought. What they do not have is a home of their own, and that is the trade.
Rentvesting calculator: rent and invest, or buy where you live
Enter what you pay in rent, what it would cost to buy where you live, and the investment property you would buy instead. The calculator compares yearly cash cost, the upfront cost including any first home buyer help you would forgo, and a rough ten-year position.
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What you give up
First home buyer help
This is the cost most rentvestors underestimate. Almost every first home buyer concession in Australia requires you to live in the property. The federal 5% deposit guarantee, which since October 2025 has had no income cap and no place limit, is for owner-occupiers only. State stamp duty exemptions, which are worth up to $30,000 or more on a first purchase, require you to move in within twelve months and stay for a set period. The First Home Owner Grant on new builds has the same rule. A rentvestor pays full stamp duty, full lenders mortgage insurance if under 20% deposit, and gets no grant. If you later buy a home to live in, some states still let you claim the concessions on that purchase as long as you never lived in the investment, so the help is deferred rather than lost, but the rules differ by state and are worth checking before you buy.
The capital gains tax exemption
Your own home is exempt from capital gains tax. An investment property is not. When a rentvestor sells, tax is payable on the gain, at the 50% discount for properties owned before the May 2026 budget or bought as new builds, and under the new indexation method with a 30% minimum rate for gains after 1 July 2027 on established properties bought after 12 May 2026. On a $200,000 gain that can be $30,000 to $45,000 in tax that an owner-occupier would not pay. There is a partial way around it: if you live in the property first, even briefly, and then move out and rent it, the six-year absence rule can keep it exempt while you rent elsewhere. Rentvestors who never live in the property cannot use it. The investment property tax guide sets out the full capital gains calculation.
Security of tenure
You are a tenant. Rent reviews, lease renewals, inspections and the landlord’s right to sell all apply to you, and in a 1.7% vacancy market the landlord holds the cards. Some rentvestors accept this for a few years and then sell the investment to fund a home; some accept it indefinitely. It is a lifestyle decision as much as a financial one, and it is worth being honest about which you are.
Who rentvesting suits
- Someone whose work ties them to an expensive city but whose borrowing capacity buys nothing there.
- Someone who moves often for work and does not want to buy and sell a home every few years.
- Someone who already owns, or has decided to skip, the first home buyer concessions, and is investing purely for growth.
- Someone who can carry a weekly shortfall on top of their rent without strain. The calculator above puts a figure on it.
It suits less well anyone who wants the security of their own home in the next few years, anyone whose deposit is below 20% and who would otherwise qualify for the deposit guarantee, and anyone who cannot stomach a landlord’s phone call about a broken hot water system at the same time as their own landlord’s rent increase.
Where rentvestors buy
The point is to buy where the numbers work, which usually means a different city from the one you live in. In 2026 that has meant Perth, Adelaide, Brisbane’s outer ring and larger regional centres, where prices are lower relative to rents and yields sit between 4% and 5% for houses. Buying interstate means buying somewhere you cannot easily inspect, in a market whose streets you do not know, which is why buyer’s agents do a large share of their work for rentvestors. The rental yield guide covers how to compare cities, and the investment property guide covers choosing the property itself.
The loan
A rentvestor applies for an investment loan, with everything that implies: a rate 0.1 to 0.5 points above owner-occupier rates, the rent counted at 80% in the servicing test, and the repayment assessed at 3 points above the actual rate. The rent you pay for your own home also counts as a living expense in that test, and lenders treat it seriously; $850 a week of rent is $44,200 a year off your capacity before the investment loan is considered. Many first-time rentvestors are surprised to find they can borrow less as a rentvestor than they could as an owner-occupier for the same purchase. The investment property loan guide has a servicing calculator that includes your rent.
Turning the investment into a home later
A common plan is to rentvest for five to ten years, then either sell the investment to fund a deposit on a home, or move into it. Selling triggers capital gains tax on the growth. Moving in stops further gains being taxed from that point, but does not undo the gain that accrued while it was rented, which is apportioned when you eventually sell. Moving in also ends the deductions. Neither route is wrong; both need to be in the plan from the start rather than discovered at the point of sale.
Frequently asked questions about rentvesting
What is rentvesting?
Renting the home you live in while owning an investment property elsewhere. You live where you want and buy where you can afford, and the tenant’s rent plus tax deductions help carry the loan.
Do rentvestors get first home buyer concessions?
Generally no. The federal 5% deposit guarantee, state stamp duty exemptions and the First Home Owner Grant all require you to live in the property. Some states let you claim them later on a home you buy to live in, provided you never lived in the investment property.
Is rentvesting cheaper than buying?
Usually in cash terms, because rent in an expensive suburb is far below the mortgage on the same property, and the investment shortfall is partly offset by rent and tax deductions. Over the long term the answer depends on the growth of the property you buy versus the one you would have lived in.
Do I pay capital gains tax as a rentvestor?
Yes. An investment property is not covered by the main residence exemption. Tax applies to the gain when you sell, at the 50% discount for properties owned before the May 2026 budget or bought as new builds, and under the new indexation method for later gains on established properties bought after 12 May 2026.
Can I borrow as much as a rentvestor?
Often less. Lenders count the rent you pay as a living expense, count only 80% of the rent you receive, and price the loan as an investment loan. Someone paying high rent in a capital city can find their borrowing capacity is lower than it would be as an owner-occupier.
Can I move into my rentvesting property later?
Yes. Moving in ends the deductions and stops further capital gains being taxed from that date, but the gain that built up while it was rented is still taxed when you sell, apportioned across the two periods.
MANSOUR SOLTANI
Mansour has spent more than two decades involved in the purchase and sale of real estate, acquiring both investment and commercial properties throughout Australia, including in major cities and smaller regional locations.
He is the proprietor of a finance brokerage firm, overseeing a portfolio worth in excess of 200 million in loans and serving a diverse clientele across Australia and a regular contributor to money.com.au. This has equipped him with extensive knowledge in various investment tactics, allowing him to offer significant insight.