For many younger Australians, buying a home in the suburb they actually want to live in feels out of reach. Rentvesting is one answer: buy an investment property somewhere more affordable, rent it out, and keep renting where you’d rather live. It’s become popular over the past decade, but in 2026, the maths and the tax rules are changing. Here’s the plain-language guide.
How Rentvesting Works
You buy a property as an investment, often in a cheaper suburb, regional town or different city, and rent it to tenants. You keep renting your own home where it suits your job, family or lifestyle. The rent you receive helps cover the mortgage, and you build equity as the investment grows in value over time.
How It Compares
The Upsides
Rentvesting gets you into the property market sooner, in a location you can afford, without giving up the lifestyle where you live. Interest and other property costs are generally tax deductible against rental income, and depreciation can add further deductions. With values falling and rents still rising, gross rental yields have climbed to 3.85 per cent nationally, the highest since 2019, which helps cash flow.
The Trade-Offs
You’re a landlord and a tenant at the same time, with all the responsibilities of both. An investment property doesn’t get the main residence exemption, so capital gains tax applies when you sell. And most first home buyer concessions, including the 5 per cent deposit scheme and many stamp duty concessions, require you to live in the property, so rentvesters often miss out on them.
What’s Changing in 2027
This is the big one. From 1 July 2027, for established residential properties bought after 7:30pm on 12 May 2026, net rental losses, including those from depreciation, can only be offset against residential property income, not your wage. For a rentvester whose property runs at a loss, that removes much of the tax benefit that made negative gearing attractive.
Properties bought before that date keep the current rules, and eligible new builds are generally treated more favourably. The capital gains tax discount is also being replaced by indexation and a 30 per cent minimum tax from the same date. Our guide to what’s changed for investors in 2026 covers these changes in detail.
Is It Still Worth It?
It depends on the numbers for your situation. Rentvesting tends to work best when the investment property pays for itself or close to it, so the strategy doesn’t rely on tax losses. Run the full cash flow at today’s 4.60 per cent cash rate and at a higher rate, including vacancy, management fees, insurance and maintenance. Compare buying an established home with an eligible new build, given the different tax treatment. And get personal tax and financial advice before committing.
The Bottom Line
Rentvesting lets you buy where you can afford and rent where you want to live, building equity sooner. But you lose the main residence tax exemption, usually miss first home buyer concessions, and from 1 July 2027, losses on established properties bought after 12 May 2026 can no longer reduce tax on your wage. With yields improving, it can still work, but only if the numbers stand up without relying on tax breaks. This is general information, not financial or tax advice.
Epik Wire covers the property market in plain language for buyers, renters, owners and investors. Subscribe to our newsletter to stay informed.
