Key takeaways
- Rentvesting means renting where you want to live and buying an investment property where the numbers work.
- Buying an investment first ends your eligibility for the NSW first home duty exemption and the First Home Super Saver Scheme.
- You may keep the $10,000 First Home Owner Grant, and the 5% Deposit Scheme opens again after 10 years without owning property.
- For established homes bought after 12 May 2026, rental losses won’t reduce your wage income from 1 July 2027. New builds keep negative gearing.
- Living in your first home for 12 months before renting it out is an alternative that keeps the first home duty benefit.
Rentvesting means renting a home where you want to live in Sydney and buying an investment property somewhere you can afford. It can get you into the property market years sooner. It also changes your access to first home buyer help in NSW, and the 2026 tax changes affect the numbers. Here’s how rentvesting works, the pros and cons, and what to check before you buy.
How rentvesting works
You keep renting close to work, family or the beach, and buy a property in a suburb or city where prices and rents make sense. A tenant’s rent helps cover the loan, and the property can grow in value while you save for the home you eventually want to live in.
Lenders treat you as an investor. They count your own rent as an expense, and they usually count only part of the expected rent from the property (APRA’s guidance says at least 20% less). Investment loans can also be priced differently from owner-occupier loans. See how we help with investment property loans.
The pros and cons of rentvesting
| Pros | Cons |
|---|---|
| Live where you want without paying that suburb’s prices | You pay rent and a mortgage at the same time |
| Start building equity sooner | You lose most first home buyer concessions (see below) |
| Rent and tax deductions help with holding costs | Rental losses on established homes bought now won’t reduce wage income from 1 July 2027 |
| Choose a property on its numbers, not your lifestyle | No main residence exemption from capital gains tax |
| Keep the flexibility to move | Land tax, strata, repairs, vacancies and a landlord’s responsibilities |
How rentvesting affects first home buyer help in NSW
This is the part most people miss. Each program defines a first home buyer differently, so buying an investment first affects them differently:
| Program | What it gives | If you buy an investment first |
|---|---|---|
| First Home Buyers Assistance Scheme (NSW) | No transfer duty up to $800,000; a concession up to $1 million | Lost. You must never have owned residential property in Australia. |
| First Home Owner (New Homes) Grant (NSW) | $10,000 on a new home up to $600,000, or $750,000 for land and a build | May be kept, if you never lived in a home you owned for six continuous months. |
| 5% Deposit Scheme (federal) | Buy with a 5% deposit and no LMI | Not available until you’ve gone 10 years without owning property or land in Australia. Owner-occupiers only. |
| First Home Super Saver Scheme (federal) | Save a deposit inside super | Lost. You must never have owned property in Australia, including an investment. |
Hypothetical example: the duty you give up
You later buy an $800,000 home to live in. As a first home buyer meeting the rules, you’d pay no transfer duty. Because you already own an investment, you pay the general rate: $30,187 at the 2026–27 rates.
For the full rules, read our guides to first home buyer duty exemptions and the First Home Owner Grant, or check any price with our transfer duty calculator.
Rentvest now or buy a home first?
Phillip can run both paths with your numbers, including the concessions you’d keep or give up, before you commit.
Another path: live in it first, then rent it out
Some buyers do it the other way round: buy a first home, use the first home buyer help, live there, then rent it out and rent somewhere else.
- Duty scheme: for contracts from 1 July 2023 you must move in within 12 months of settlement and live there for at least 12 continuous months. If you can’t, you must tell Revenue NSW and pay the duty.
- First Home Owner Grant: the same 12-month move-in and 12-month occupancy rule applies.
- 5% Deposit Scheme: the guarantee depends on you living there as an owner-occupier. If you move out, it may no longer apply, and your lender may require lenders mortgage insurance. Talk to your lender first.
- Capital gains tax: once it has been your home, the ATO’s 6-year rule (opens in a new tab) can let you treat it as your main residence for up to six years while it’s rented, if you don’t treat another property as your main residence.
You’d also need to tell your lender the property is now an investment, which may change your loan. Our first home buyer page explains how we help from the start.
Rentvesting and tax after the 2026 Budget
Rent is taxable income, and interest and other costs of the rental are generally deductible. The 2026–27 Budget changes, now law, change how a loss is used:
Land tax also applies to an investment property in NSW once your combined taxable land value is above $1,075,000. If you’re considering lower repayments while you rent, read our guide to interest-only investment loans.
Is rentvesting right for you?
- You’re happy renting for the long term, including moving if your lease ends.
- You can pay rent, the mortgage gap and a vacancy or two from your income.
- You’ve compared the concessions you’d give up with the head start you’d get.
- You know whether the property is a new build or established for the new tax rules.
- You’ve spoken to an accountant about your tax position.
Frequently asked questions
Possibly. Revenue NSW says that if you’ve owned an interest in residential property since 1 July 2000 that was only ever used for investment, you may still be eligible for the $10,000 grant on a new home. You lose eligibility if you or your partner have lived for six continuous months in a home you owned, owned residential property before 1 July 2000, or received a grant before.
Yes. The First Home Buyers Assistance Scheme requires that you and your partner have never owned or co-owned residential property in Australia. Once you buy an investment property, you won’t qualify when you later buy a home. At the 2026–27 rates, that means paying $30,187 in transfer duty on an $800,000 home that would otherwise have been exempt.
No. The Australian Government 5% Deposit Scheme is only for people who will live in the home as owner-occupiers, and you must keep living there to keep the guarantee. Owning an investment also affects later eligibility: you need to be a first home buyer, or not have owned property or land in Australia in the last 10 years, when you apply.
Generally, yes. The main residence exemption can’t cover a period before a property first becomes your home, so a property you have only ever rented out is taxed on the gain when you sell. For gains made from 1 July 2027, the 50% discount is replaced by inflation indexation and a 30% minimum tax, except that new build investors can choose the old discount.
It can be, but the numbers change. If you buy an established property now, any rental loss from 1 July 2027 can only offset residential property income, so you’ll fund the shortfall without a tax refund on your wages. A new build keeps full negative gearing. A property whose rent covers most of its costs is less affected either way.
Sources
- Revenue NSW: First Home Buyers Assistance Scheme (opens in a new tab)
- Revenue NSW: First Home Owner (New Homes) Grant (opens in a new tab)
- Housing Australia: 5% Deposit Scheme for first home buyers (opens in a new tab)
- ATO: Eligibility for the FHSS scheme (opens in a new tab)
- ATO: Treating former home as main residence (opens in a new tab)
- Budget 2026–27: Negative Gearing and Capital Gains Tax Reform explainer (opens in a new tab)
This article is general information only and doesn't take your objectives, financial situation or needs into account. Figures and eligibility rules change; check the official sources above or talk to us before you act. Keystone Home Loans Pty Ltd ATF BEMA Family Trust, Credit Representative Number 564704 is authorised under Australian Credit Licence Number 384704.
Written by
Phillip Bui
Founder and Principal Mortgage Broker at Keystone Home Loans, based in Arncliffe, NSW. Accredited Mortgage Broker and Full Member of the Mortgage & Finance Association of Australia (MFAA).
