Rent vs Buy vs Rent-vest

Rent-vesting means renting the home you live in (often in a city you couldn't afford to buy in) while simultaneously owning an investment property somewhere cheaper. You keep a foot in the property market, benefit from negative gearing, and maintain lifestyle flexibility — but you also pay two lots of rent and mortgage costs.

There's no universal answer — it depends on property price growth, share market returns, how long you stay, and your personal tax situation. This calculator models all three scenarios with your actual numbers so you can see which comes out ahead over your chosen time frame.

If the investment property costs more to hold (mortgage interest + expenses + depreciation) than the rent it earns, the shortfall is a tax-deductible loss — your marginal tax rate is applied to that loss, reducing your annual out-of-pocket cost. This is "negative gearing". The calculator models this automatically based on your income.

Yes. Stamp duty is auto-calculated by state for both the PPOR and the investment property (you can override it). CGT is applied at the end of the projection using 2026-27 rules. For assets acquired after 12 May 2026, the 50% discount is replaced by inflation indexation with a 30% minimum rate. For pre-budget assets held past 1 July 2027, gains are split at that date. Your owner-occupied home remains CGT-exempt.

The May 2026 Federal Budget made three significant changes that affect this calculator:

• New tax brackets — effective 1 July 2026. The 19% rate drops to 17%, 32.5% drops to 32%, and new 39% and 47% rates apply from $190,000+.
• Negative gearing restriction — from 1 July 2027, deductions on established investment properties purchased after 12 May 2026 are capped at rental income. Excess losses are carried forward (not deductible against salary). New builds remain fully deductible.
• CGT discount replaced — for assets acquired after 12 May 2026, the 50% CGT discount is replaced by inflation indexation of the cost base plus a 30% minimum tax rate. Exception: new builds may apply whichever method produces the lower CGT — the calculator shows both outcomes side-by-side when a new build is selected. Pre-budget assets are grandfathered under a split-gain regime.

The new brackets reduce the tax cost of negative gearing and CGT for most income levels — but by less than you might expect. The 17% rate (was 19%) applies between $18,201–$45,000; the 32% rate (was 32.5%) applies from $45,001–$135,000. At a $120,000 income, your marginal rate is 32% vs the old 34.5% (including Medicare levy). The calculator uses the 2026-27 brackets automatically — no action needed.

If you buy an established investment property after 12 May 2026, deductions are capped at rental income from 1 July 2027 onwards. This means losses can't offset your salary — they carry forward and reduce future rental income or the capital gain on sale. The calculator models this using the IP Property Type field:

• Established (after 12 May 2026) — restriction applies. Losses carry forward internally but cannot shelter salary income.
• New build (after 12 May 2026) — exempt from the restriction. Full negative gearing deductions remain available.
• Pre-12 May 2026 — grandfathered. Old rules apply for the life of the loan.

If the restriction applies, rent-vesting becomes less tax-effective in the early years when properties are typically most negatively geared.

The old 50% CGT discount — which halved taxable gains on assets held more than 12 months — is replaced for assets acquired from 12 May 2026:

• New rules (post 12 May 2026): The cost base is indexed by inflation each year. Only the real gain above the indexed cost base is taxable, at a minimum rate of 30%. If your marginal rate is higher than 30%, that applies instead.
• Pre-budget assets (split-gain): Gains accrued up to 1 July 2027 still get the 50% discount. Gains after that date use indexation. The calculator asks for the purchase month/year to apportion this split correctly.
• New build investment properties: See below — new builds retain the choice between the 50% discount and indexation.

New rules are better when inflation is high and the gain is large (indexation shelters more). Old rules are better in low-inflation, high-growth environments.

Yes. According to the Treasury factsheet, investors in newly built properties can choose either the 50% CGT discount or indexation — whichever results in lower tax. When you select New build (after 12 May 2026) as the IP property type, this calculator shows the Rent-vest net wealth outcome under both methods side-by-side in the results card, with the better outcome highlighted in green.

In high-growth scenarios indexation usually wins; in lower-growth or shorter-hold scenarios the 50% discount may produce a lower bill. The chart also splits into two Rent-vest lines — solid for 50% discount, dashed for indexation — so you can see the divergence visually.

Source: Treasury factsheet — Negative Gearing and Capital Gains Tax Reform (budget.gov.au)

The crossover depends on inflation vs nominal growth. As a rough guide:

• At 2% inflation, the new indexation rules match the old 50% discount when your real return is around 2% p.a. — i.e., roughly a 4% total return. Above that, the old discount was better.
• At 4% inflation, the new rules match at roughly a 4% real return (8% total). Below that total return, new rules are better.
• For short holding periods (under ~5 years), indexation provides limited benefit regardless of inflation.

In most realistic property and share scenarios, the old 50% discount was more generous. The new rules are primarily designed to slow speculative gains.

The CGT and negative gearing rules are based on the official Treasury factsheet: Negative Gearing and Capital Gains Tax Reform, published by the Australian Government in May 2026. The worked examples in that document were used to verify this calculator's outputs. You can read the factsheet at budget.gov.au.