Rentvesting has become a popular strategy amongst Gen Z and Millennials seeking to get a foot onto the property ladder. But experts say changes to capital gains tax and negative gearing in the budget mean the benefits of the strategy have now “weakened” and the pathway for young Aussies to build housing wealth is “narrowing”.
Rentvesting is where you rent a home in the location you want to live in, while owning an investment property and renting it out in an area that you can afford. The area is often one with high growth potential, with the idea being that you can build up equity over time and could eventually sell to buy a home you want to live in yourself.
Ravi Sharma is a property investor and buyer’s agent who has long advocated for rentvesting first. The 32-year-old is a rentvestor himself, with more than 20 properties under his belt, and is now building his own home in Sydney.
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“The initial feedback is obviously a lot of frustration because rentvesting is really that strategy for you to get ahead, and what the budget’s really suggesting is maybe it’s not the most fruitful way to go about it,” Sharma told Yahoo Finance.
Sharma said existing investors would still be “loving life”, given negative gearing will be grandfathered. But he believes there will still be a place for rentvesting.
“Many people can’t just go, hey, I’m just going to go buy my own home now. That was the whole issue that we had from the beginning,” he said.
“So I think a lot of people might go, it’s actually not as attractive to go and buy and do a rentvesting strategy, which makes sense on paper, but what’s the alternative?”
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Landscape will change for young investors
Rentvestors still make up only a small portion of first-home buyers.
Since July 2019, ABS lending data shows nearly 53,000 Aussies entered the housing market by buying an investment property.
The proportion of first-home buyers taking out investment loans was around 5.4 per cent in the 12 months to December 2025, with the highest proportion seen in NSW at 7 per cent.
But it’s a strategy Aussies are open to, with Westpac finding more than half of Gen Z buyers (55 per cent) were considering rentvesting back in September.
Findex wealth adviser Sosha Jay says the tax changes will ‘change the landscape’ for rentvestors moving forward. · (Source: Supplied)
Findex wealth adviser Sosha Jay said she expects the tax changes will “deter a big portion of investors” who planned to get into the property market through rentvesting.
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“A lot of times when you are rentvesting, you are negative gearing that property that you own and you’re renting out,” Jay told Yahoo Finance.
“Tax-wise, it is a very attractive strategy for a lot of people because it does ultimately mean more money in their pockets.
“The fact that that is not possible now for established homes will be something that I think does deter a lot of investors going forward and it will change the landscape.”
Ray White chief economist Nerida Conisbee says rentvesting will become harder for young buyers. · (Source: Ray White)
Ray White chief economist Nerida Conisbee said limiting negative gearing to new builds “weakens one of the few pathways younger buyers still use to enter the market”.
“This is where the policy risks worsening intergenerational inequity. Older Australians have been able to build wealth through established property over decades, with the support of the existing tax system,” she said.
“Restricting negative gearing to new builds means younger buyers are increasingly locked out of the same pathway. They are being asked to enter the market later, with higher prices, larger deposits and fewer investment options.
“A policy designed to improve fairness could end up narrowing one of the few remaining ways younger Australians can build housing wealth.”
While rentvesting is “not perfect”, Conisbee said it had become a practical way for young Aussies to start building equity in a market where ownership was “increasingly out of reach”.
The government expects the tax reforms will open the door to 75,000 more first-home buyers over the coming decade and slow house price growth by 2 per cent over two years.
Still opportunities for young Aussies
Sharma said he still recommends rentvesting as a strategy.
He noted that investors would still be able to carry forward losses to offset property income in future years.
The inflation indexation system for the capital gains tax discount could also be beneficial for those whose property only grows just above or at inflation levels, he said.
“Obviously, if you go out there and you buy a property that’s going to grow by 15, 20 per cent a year, then that’s going to have a negative effect. But I don’t think anyone’s complaining if they’re going to buy a property that’s making that sort of return,” he said.
Sharma purchased his first property when he was 21, a $190,000 investment property in Dubbo. · (Source: Ravi Sharma/Instagram)
Jay also doesn’t think “it’s the end of the world” and noted there were still opportunities for young Aussies to get ahead, with negative gearing on shares untouched in the budget and first home owner schemes available.
“Obviously, negative gearing is still applicable for new builds. So people that can find a new home and still want to go ahead with that, it is still there. But then the question becomes, how quickly are you supplying these new builds?” she said.
Rentvestors will also have to factor in potential increases to their own rent, Jay noted, with Treasury expecting a $2 per week increase to median rents from the tax changes.
Sharma plans to continue investing in residential properties “as long as the numbers make sense” and settled on two properties in the last week.
He had already been purchasing under a bucket company, so he wasn’t receiving negative gearing benefits.
“My plan doesn’t change. If anything, it probably goes, okay, well, there might be a few more opportunities while there’s confusion and uncertainty. So you just continue building.”
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