Rentvesting Calculator
Compare three strategies: rentvesting (rent where you live, own an investment property elsewhere), buying your home, or just renting. See which builds more wealth over time.
Expected annual capital growth
Annual gross rent as % of property value
Expected annual capital growth
As % of property value pa
Net Wealth Over Time
All 3 scenariosScenario A (blue) = buy to live | Scenario B (amber) = rentvest | Scenario C (grey dashed) = just rent + invest deposit
Year 10 Net Wealth (after CGT if sold)
Buy to Live
Ahead$837,079
Equity (no CGT — PPOR)
Rentvest
$497,734
Equity after CGT
Just Rent
$237,482
Share portfolio (8% pa)
Year 20 Net Wealth (after CGT if sold)
Buy to Live
Ahead$2,166,187
Equity (no CGT — PPOR)
Rentvest
$1,228,129
Equity after CGT
Just Rent
$512,705
Share portfolio (8% pa)
Annual Cost Summary
| Item | Scenario A: Buy to Live | Scenario B: Rentvest |
|---|---|---|
Mortgage repayment P&I, 30-year term | $62,651 | $35,042 |
Rent cost (where you live) Annual rent outgoing | — | $31,200 |
Rental income (investment) Received from tenant | — | -$24,750 |
Neg. gearing tax saving (yr 1) At 30% marginal rate | — | -$4,059 |
Stamp duty (upfront, est.) Estimated at 4% — check your state | $36,000 | $22,000 |
Loan amount Property price − deposit + stamp duty | $826,000 | $462,000 |
Negative Gearing Tax Saving (Year 1)
Your marginal tax rate
30%
Annual tax saving (yr 1)
$4,059
Net cost of inv. property
$14,483
After rent received + tax saving
Negative gearing occurs when investment property costs (interest + rates/maintenance) exceed rental income. The net loss is deductible against your salary income, reducing your tax bill by your marginal rate × the loss. This makes high-income earners the primary beneficiaries.
Buying to live stays ahead over this horizon
With these assumptions, buying where you live builds more equity than rentvesting over your selected horizon. The main reason is usually the CGT-exempt primary residence advantage and/or strong growth in the owner-occupied area. Try increasing the investment property's growth rate or yield, or reducing the home price in your preferred area.
When Rentvesting Makes Sense
You want to live in an expensive city area
Renting in a high-value suburb while investing in a more affordable area with stronger yields.
You're on a high income (37–47% marginal rate)
Negative gearing is most valuable when your marginal rate is high — maximising the tax deduction.
You value lifestyle flexibility
Renting lets you move cities for work or lifestyle without the friction of selling a home.
Investment market has stronger growth prospects
If the affordable investment area has better capital growth than your preferred area, rentvesting wins.
You want PPOR CGT exemption on your home
Investment properties don't qualify for the main residence CGT exemption — 50% discount still applies after 12 months.
You're on a low-to-mid income (below 37% rate)
Negative gearing provides less tax benefit. Positive gearing (high yield, low borrowing) may be better suited.
Rentvesting Summary
What is rentvesting?
Rentvesting is owning an investment property (often in an affordable suburb or regional area) while renting in the suburb or city where you actually want to live. It lets you enter the property market without compromising on lifestyle.
CGT exemption vs investment
Your primary place of residence (PPOR) is fully exempt from Capital Gains Tax when sold. An investment property attracts CGT on the capital gain — though a 50% discount applies if held for more than 12 months. This calculator applies that discount.
Negative gearing
When your investment property costs exceed rental income, the net loss reduces your taxable income. The saving is your marginal tax rate × the loss. This benefit increases the higher your income.
Disclaimer
Property returns are not guaranteed. Past performance is not an indicator of future growth. This calculator uses simplified assumptions (linear growth, constant interest rate, single depreciation model). Always seek independent financial advice before making property investment decisions.What is rentvesting in Australia?
Rentvesting is a popular property strategy in Australia where an investor rents in their preferred suburb — usually an expensive inner-city area — while purchasing an investment property in a more affordable location with strong rental yields or capital growth prospects. Popularised as inner-city property prices rose beyond the reach of many first-home buyers, it allows people to maintain their lifestyle while still building property wealth and taking advantage of negative gearing tax deductions.
Rentvesting vs buying your home: which wins?
The answer depends on several factors: the price difference between your preferred area and the investment market, rental yields, your marginal tax rate, and holding period. Buying your home benefits from the CGT main residence exemption. Rentvesting benefits from negative gearing, the ability to invest in higher-growth markets, and flexibility. This calculator shows the break-even year for your specific numbers so you can make an informed comparison.
How is negative gearing calculated for rentvestors?
For a rentvesting investor, negative gearing applies when your investment property expenses — primarily mortgage interest and maintenance costs — exceed the rental income received. The net loss is deductible against your salary, reducing your taxable income. The annual tax saving equals the net loss multiplied by your marginal tax rate. At the 37% marginal rate, a $10,000 net loss saves $3,700 in income tax.
Capital gains tax on an investment property in Australia
When you sell an investment property, you pay Capital Gains Tax (CGT) on the profit. If you've held the property for more than 12 months, the 50% CGT discount applies — meaning only half the capital gain is added to your taxable income. The tax is then calculated at your marginal rate for that year. This calculator applies the 50% discount when estimating your after-tax proceeds at Years 10 and 20.