Rentvesting Calculator Australia
Rentvesting means renting where you want to live and buying an investment property somewhere you can afford. This calculator runs the full numbers side-by-side: buy your home vs rent + invest, over your chosen horizon, with negative gearing, CGT (with 50% discount), and the PPOR exemption all built in.
Shared Assumptions
Used for stamp duty (PPR rate for your home, investor rate for the rental)
MTR is auto-derived each year (incl. Medicare). Bracket used:
Used as deposit + purchase costs in both scenarios
Scenario A: Buy Your Home (PPOR)
Scenario B: Rent + Invest
Div 43 base
Div 40 DV
After 15 years, net wealth:
Buying your home wins
by $161,424
Breakeven: rentvest ties PPOR if investment growth ≈ 6.10% p.a. (at home growth 4.00%)
Scenario A: Buy Your Home
Stamp duty$34,912
Loan amount$737,412
Home value (end)$1,620,849
Loan balance (end)-$528,422
Gross equity$1,092,428
Cumulative out-of-pocket-$887,351
CGT on salePPOR exempt
Net wealth$205,076
Scenario B: Rent + Invest
Stamp duty$21,412
Loan amount$423,912
Investment value (end)$1,247,357
Loan balance (end)-$423,912
Gross equity$823,445
Total depreciation claimed$137,488
Total tax benefit$79,036
Cumulative cashflow (after tax)-$627,664
CGT on sale (50% discount)-$152,129
Net wealth$43,653
Year-by-year wealth comparison
| Year | Own home | Rentvest | Delta |
|---|---|---|---|
| 1 | $149,114 | $161,976 | +$12,862 |
| 2 | $137,516 | $156,777 | +$19,261 |
| 3 | $127,883 | $143,539 | +$15,656 |
| 4 | $120,311 | $132,906 | +$12,595 |
| 5 | $114,898 | $122,964 | +$8,067 |
| 6 | $111,746 | $113,821 | +$2,074 |
| 7 | $110,966 | $105,282 | -$5,684 |
| 8 | $112,670 | $97,449 | -$15,221 |
| 9 | $116,980 | $90,407 | -$26,572 |
| 10 | $124,021 | $84,233 | -$39,788 |
| 11 | $133,926 | $78,999 | -$54,927 |
| 12 | $146,834 | $74,778 | -$72,056 |
| 13 | $162,891 | $71,644 | -$91,247 |
| 14 | $182,251 | $46,226 | -$136,025 |
| 15 | $205,076 | $43,653 | -$161,424 |
Next step: Model just the investment-side numbers in more detail with our Investment Property Calculator, or project multi-property portfolios with Portfolio Projection.
How the Calculator Thinks
Both scenarios start with the same cash (for deposit + purchase costs) and both assume interest-only loans. Each year we track:
- Scenario A: home value grows at your assumed rate (CGT-free PPOR). You pay mortgage interest + ownership costs out of pocket. No rent, no rental income.
- Scenario B: you pay rent to a landlord. The investment property earns rent and incurs expenses + loan interest. Any rental loss is refunded at your marginal tax rate (negative gearing); rental profit is taxed. On notional sale, CGT with the 50% discount is subtracted from equity.
The "winner" is whichever scenario leaves you with more net wealth at the end of the hold, counting equity + cumulative cashflow minus CGT.
Worked Example: Sydney Renter, 15-Year Horizon
You have $200,000 saved. You'd like to own a $900,000 Sydney home, but you could rent it for $650/week. Alternatively, you could buy a $600,000 investment in Brisbane ($500/week rent) while renting in Sydney.
- Scenario A — buy Sydney home: 4% growth p.a. → home value $1.62M after 15 years. Mortgage interest ~$43k/yr. No tax deductions, no CGT.
- Scenario B — rentvest: Brisbane investment at 5% growth → $1.25M after 15 years. Negative gearing gives ~$4k/yr tax refund at 34.5% MTR. CGT on sale ~$60k.
- Likely outcome: The higher investment growth rate combined with tax deductions typically makes rentvesting win by $50-150k in this scenario. Change the growth assumptions to see how sensitive the result is.
The answer is highly sensitive to the growth-rate assumption. Run the numbers with conservative (3% home, 4% investment) and optimistic (5% home, 7% investment) to stress-test your decision.
What's Included vs What Isn't
Included
- State-aware stamp duty — PPR (principal residence) rate for PPOR, investor rate for rental, FHB concessions where applicable.
- FHOG — First Home Owner Grant credited to the PPOR leg when eligible (new home, under price cap).
- Div 43 + Div 40 depreciation — capital works at 2.5% p.a. and plant & equipment on a diminishing-value basis. Second-hand residential restriction enforced.
- Auto MTR — derived from taxable income each year, incl. Medicare Levy and optional MLS.
- Loan structure — P&I or Interest-Only per leg; P&I pays down principal, IO keeps balance flat.
- CGT — on sale at the final-year MTR with 50% discount for holds of 12+ months.
- Breakeven search — binary search on investment-growth rate.
Not modelled
- LMI — if your deposit gives LVR >80% you'll pay Lenders' Mortgage Insurance. Add $5-15k to costs manually.
- Moving costs — renters typically move more often; $2-5k per move.
- Rental insecurity and lifestyle — forced moves, rent-increase shock, landlord selling.
- Depreciation clawback — Div 40 written off reduces CGT cost base on sale. Conservative omission here.
- Div 293 — on income >$250k, an extra 15% super contribution tax applies; not modelled.
Frequently asked questions
What is rentvesting?
Rentvesting is buying an investment property (often in a cheaper, higher-yielding area) while continuing to rent where you want to live. You get lifestyle flexibility, tax-deductible property expenses (negative gearing + depreciation), and a foot in the property ladder — but you forfeit the PPOR capital gains exemption on the investment.
What tax advantages does rentvesting have?
Three main levers: (1) negative gearing — loan interest, rates, insurance and management fees are deductible against your salary, giving a tax refund; (2) Div 43 capital works (2.5% p.a. of building cost for 40 years) and Div 40 plant & equipment depreciation — non-cash deductions that can be $5k-$12k/yr on a new build; (3) 50% CGT discount on sale (12+ months hold). Your home isn't tax-deductible and gets no depreciation.
Watch out — you lose the PPOR CGT exemption if you later move in
If you eventually move into the investment property, the CGT exemption only applies proportionally for the period it was your main residence. Years rented out count as taxable CGT, with a pro-rata apportionment of any growth. This can cost tens of thousands at sale — the 6-year absence rule only helps if you've first established it as your main residence before renting it out.
What is the 6-year absence rule?
Section 118-145 ITAA 1997: if you establish a property as your main residence and then rent it out, you can continue to treat it as your PPOR (CGT-free) for up to 6 years of absence — but only one PPOR at a time. For rentvesters who never lived in the investment, this rule doesn't help: the investment is fully CGT-assessable.
When does rentvesting win?
Rentvesting beats buying your PPOR when (1) the investment is a new/substantially-renovated build unlocking full Div 40 depreciation, (2) the rent where you want to live is cheap relative to the mortgage on that home, (3) your income is high enough for meaningful negative gearing refunds (37%+ bracket), and (4) the investment area has higher expected growth. Use the breakeven search to see what growth rate is required.
When does buying your PPOR win?
Buying wins when (1) you plan to hold for 15-25+ years in a high-growth location, (2) you're a first home buyer unlocking FHOG + stamp duty concessions worth $30k-$80k, (3) you're in a low tax bracket so negative gearing is weak, (4) you value owning where you live emotionally, or (5) rent growth in your preferred area outpaces property growth in the investment region.
Why does the second-hand warning matter?
The Housing Tax Integrity Act 2017 (effective 9 May 2017) removed Div 40 plant & equipment depreciation on previously-used residential property for individual investors. This is why a new build typically wins a rentvest scenario by thousands per year — the second-hand version claims Div 43 capital works only. The calculator flags this automatically when you select 'established / second-hand'.
How is my marginal tax rate derived?
Enter your taxable salary — we apply 2025-26 ATO brackets plus the Medicare Levy (and optional MLS) each year to find the bracket that applies to the rental loss or profit. Income grows at your assumed rate each year, so if you cross into a higher bracket mid-projection the tax benefit scales accordingly. You don't need to manually enter an MTR.
What does the breakeven search tell me?
Holding your PPOR assumptions fixed, we binary-search the investment-growth rate where both scenarios tie. If that number is lower than what you can realistically expect in the investment area, rentvesting looks robust. If it's higher than typical historical growth, the PPOR is safer.
Does FHOG apply to the investment property?
No — FHOG is only available on a property you'll live in as your PPOR. The calculator credits FHOG to the PPOR leg only (when you tick 'first home buyer' and the property is new). The investment leg pays full investor stamp duty and gets no grant.
Tax Accuracy & Sources
This calculator models state-aware stamp duty (incl. FHB concessions), FHOG, foreign-buyer surcharge, Div 43 (2.5% p.a.) and Div 40 (diminishing value) depreciation with the Housing Tax Integrity Act 2017 restriction, negative gearing holistically (tax-with vs tax-without), P&I and interest-only loan amortisation, and CGT at your final-year marginal rate with 50% discount for 12+ month holds. It does not model LMI, Div 293, depreciation clawback on cost base, moving costs, or PPOR CGT exemption apportionment if you later move into the investment. Growth rates are assumptions.