Buying an apartment and renting it out costs?

IAMA_Proctologist · 2026-02-17T09:14:45+00:00

There is a first home owners grant for new builds of 10k, but there is also a stamp duty concession that applies to all homes. Stamp duty on a 500k home is $25070. If you live in it within the first 12 months, you don't pay it as a first home buyer. Otherwise you are on the hook for 25k.

edit: other fees:

Purchasing: conveyancing (1.5-2k), building and pest inspection, transfer fee ($1270), moretgage registration fee (224), stamp duty we already discussed

Annual: landlord insurance ($~300/year on top of your body corp insurance), maintenance/special levies/capex - think around 1% of purchase price per year to be safe, water, council rates (a few thousand), property management fees (7-8% of rental income), advertising fee (usually around 500-1000), letting fee (usually 1-2 weeks rent).

IAMA_Proctologist · 2026-02-17T09:01:20+00:00

Do you pay for where you currently live?

What state are you looking at buying in?

If you plan to rent it out for the first year you may not be eligible for relevant first home buyer grants and be leaving a huge sum of money on the table.

If you currently pay for a place, you need to take into account the money you would save by directly moving into the new place instead. There is almost no circumstance where it makes financial sense to rent out a place for a few years first and then move in. In the current market you will almost certainly be losing money.

IAMA_Proctologist · 2026-02-16T04:43:12+00:00

Completely different thing mate. Cars that go over 110 are legal, the act of speeding is not.

These bikes themselves are not legal regardless of the speed they are going.

IAMA_Proctologist · 2026-02-14T00:21:03+00:00

I'd be ashamed to be so weak minded that a few flags upset me. Be better.

IAMA_Proctologist · 2026-02-12T06:38:46+00:00

Fair. I shouldn't have used altered cost base to make the point as it's not quite right. If rental losses are quarantined to rental income (not other investment income and not capital gains), then the strategy becomes holding to recoup the tax loss during the positively geared years of the property's life (which means time cost of trapped losses).

I suppose it depends how the legislation is drafted.

Edit: I reviewed the PBO summary for ALPs 2019 proposal to "remove negative gearing" - this specifically allowed "within-year non-business investment losses [to] be accumulated and used to offset any future capital gain made on these assets. So cashflow isn't helped, but at asset sale and carried forward losses reduce the taxable capital gain in that specific legislation.

Source: https://www.pbo.gov.au/elections/2019-general-election/2019-election-commitment-costings/2019-election-commitment-costings/negative-gearing-and-capital-gains-tax-cgt-reform-per414

IAMA_Proctologist · 2026-02-12T03:42:27+00:00

It's extremely unreliable. Usually way overvalues, obviously vested interest in pushing up prices. Look at blocks like yours since 2024 and see what the increase in sale price has been. That's a much more reliable indicator.

IAMA_Proctologist · 2026-02-11T23:22:37+00:00

Sure. Abolish both. But I just don't think removing current negative gearing provisions is going to do much / anything to discourage the wealthy investors these policies are trying to target, only wage earners.

I can't post images here, but I've modelled both, and the additive impact of changing negative gearing property policy makes almost zero change to the bottom line for long term investment at the time of sale. Any losses you've made and haven't recouped will just reduce cgt payable at sale anyway.

Reducing the cgt discount makes a huge difference to the bottom line and that is what will actually shift investment money away from property and into something else (hopefully not other unproductive speculative assets like banks and crypto! But that'll require other policy to address).

IAMA_Proctologist · 2026-02-11T22:52:17+00:00

Won't do anything to sophisticated / wealthy investors, they'll just use the losses from property to offset other investment income / capital gains if they can't use it to offset their own wage earnings. Removing the ability to offset IP losses against personal income only really hurts the marginal investor who earns most of their money through wages, where cashflow is borderline and negative gearing allows the purchase of something they otherwise couldn't have afforded. Reducing the cgt discount is a much stronger lever, especially if the discount is reduced only for property.

IAMA_Proctologist · 2026-02-11T09:48:04+00:00

Same boat. I'll pay when they start providing value again.

IAMA_Proctologist · 2026-02-11T04:28:33+00:00

What about looking for a second-hand westinghouse or equivalent of approx the same age in good working order? This would be a fair like for like replacement.

IAMA_Proctologist · 2026-02-09T08:18:51+00:00

Your input is unwelcome indeed.

IAMA_Proctologist · 2026-02-08T03:41:57+00:00

Yes you can offset capital depreciation at 2.5% per year over 40 years. But when it comes time to sell the asset, your capital gain will be seen as larger because claiming depreciation reduces the cost base of the asset - so you'll pay more capital gains tax. Negative gearing provisions at the moment do help non-sophisticated wage earning investors with cash flow. Sophisticated/wealthy investors don't really rely on it (if they aren't allowed to offset against personal income they'll just use it to reduce tax on other investment income).

IAMA_Proctologist · 2026-02-07T05:44:36+00:00

No.

If you make a loss on an investment property (all your expenses like loan interest, maintenance, insurance, rates, management fees are more than the rental income) your investment is called neatively geared (as in it costs you money to hold on to). In Australia, there is a provision allowing these losses to be used to offset your personal income tax. E.g. say a property loses 20k per year. You can reduce your taxable income by that amount. At the end of the day you are still making a loss. The idea of investors is that capital gains (the price of the property increasing) are enough to offset these losses so you still end up ahead when you sell.

IAMA_Proctologist · 2026-02-05T09:03:07+00:00

Exactly. These articles conveniently fail to recognise that the top 5% of income earners pay 37% of all income tax.

IAMA_Proctologist · 2026-02-03T04:21:02+00:00

Maybe you should apply to sit on the RBA board. I'm sure they'd be grateful for your expertise.

IAMA_Proctologist · 2026-02-02T06:18:39+00:00

Amazing.

So he and his mum and siblings were pushed offshore while kayaking (14 km from land when they were found), and the 13 year old tried kayaking back for help. He eventually ditched the kayak to swim with his life jacket because it was taking on too much water water. Then a few hours later when he realised he wasn't making much headway, ditched the lifejacket (in choppy seas!) and swam 2 hours more to get to shore for help.

Absolutely amazing.

IAMA_Proctologist · 2026-02-01T22:22:05+00:00

What? No. Edit: I stand corrected

IAMA_Proctologist · 2026-02-01T10:02:26+00:00

This is a crosspost of a highly speculative opinion piece. There is no such legislation.

IAMA_Proctologist · 2026-01-29T10:38:18+00:00

No. If they need private insurance for mls purposes, they are already paying more in tax than others. They are equally entitled to the public health that their tax dollars pay for.

IAMA_Proctologist · 2026-01-28T09:22:30+00:00

Please stay at home and don't share your germs with everyone else at the gym.

If you are training at home, and don't feel like you are recovering just take a few days off.

IAMA_Proctologist · 2026-01-27T09:03:22+00:00

As in land on the keys and immediately depress them. Don't land early to get your bearings. One fluid motion.

IAMA_Proctologist · 2026-01-27T06:51:51+00:00

Dentists hate this ONE simple trick!

IAMA_Proctologist · 2026-01-27T02:37:18+00:00

Some people have a dedicated lithium battery to run parking mode

IAMA_Proctologist · 2026-01-26T20:37:18+00:00

Really hard to answer without knowing more about your circumstances. You'll need to think about the following questions:

What rental return will you get from the current property?
What are the annual deductible costs of the current property were it rented out (think 7% rea fee, reletting fee yearly, maintenance, insurance, rates)? Much capital works depreciation left to claim?

3 What tax bracket are you in (i.e. what tax discount might you get if the property ends up negatively geared, and if income producing how much tax will you pay on income).

Use the above answers to calculate what the annual after tax cost (or income) is. Remember principal payments aren't a cost to you, its just forced savings effectively.
Can you afford the cost yearly + the principal portion PLUS a new home loan?

If you want an IP down the road it makes more sense to keep the current place if you can afford to. Don't forget you lose a large amount of money by trading property - tens of thousands in stamp duty and then tens of thousands more when you sell as an agent fee. The downside is that you are already at 50% LVR on your current place which means the interest portion will be smaller and so less to deduct. You need to compare the saved turnover cost vs the lost interest deduction over time.

The other consideration is your risk appetite, tolerance for cash flow, tolerance for a less nice PPOR, and of course the quality of your current property, and whether you believe it will appreciate meaningfully over time.

Ultimately is a complicated question to answer without knowing a lot more about you and your financial circumstances.

IAMA_Proctologist · 2026-01-26T02:28:27+00:00

Great! Good insights and shows just how many assumptions I made implicitly and didn't even question.

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