Investment property loans in Australia: how they differ (2026)

How investor loans differ from home loans

The Reserve Bank publishes average rates on new loans each month. For loans funded in July 2026, the averages were¹:

Good to know: Averages from RBA statistical table F6 (published 7 September 2026, data for July 2026). Interest rates change constantly and these are not rates any lender is offering you.

How lenders assess an investor

Banks follow APRA's guidance on residential lending (APG 223). For investors, it describes³:

• Rent is discounted. APRA expects a minimum haircut of 20% on expected rental income, to allow for vacancies and costs³.
• Interest-only loans are tested as if you were paying principal too. The assessment uses principal and interest repayments over the remaining term after the interest-only period ends³.
• Future tax benefits are not relied on. APRA describes good practice as not relying on a borrower's potential ability to access tax benefits from a loss-making rental property³.
• The 3 percentage point buffer applies to investor loans as it does to home loans²³.
• Debt-to-income limits bite harder. Since 1 February 2026, banks can make no more than 20% of new investor lending at six times income or more, tracked separately from owner-occupier lending⁴. APRA said investors typically borrow at higher DTI ratios⁴.

Good to know: No official source publishes a minimum deposit for investment loans. It is set by each lender's policy. The general rules on deposits, LVR and lenders mortgage insurance are in our guide to how much you can borrow.

Interest-only loans

Moneysmart says many people buy investment property with interest-only loans, and that repayments rise once the interest-only period ends⁵. On an interest-only loan, the rate could be higher than on a principal and interest loan, you pay nothing off the principal, and an investor could claim higher tax deductions⁹. If the property does not rise in value, you will not build equity⁹.

Rental deductions and negative gearing

The ATO groups rental expenses into three categories⁶:

• Claim now, in the year you pay them: for example interest on loans, council rates, repairs and maintenance, and depreciating assets costing $300 or less⁶.
• Claim over several years: for example capital works, borrowing expenses, and depreciating assets costing more than $300⁶.
• Cannot claim: for example the purchase cost, conveyancing and advertising costs. These usually go into the property's cost base, which reduces capital gains tax when you sell⁶.

1. Positively geared: the property's deductible expenses are less than its rental income, and the net rent is taxed⁶.
2. Negatively geared: deductible expenses are more than the rental income. Under the current rules you can claim the loss against other income such as salary or wages, and carry forward any loss your other income cannot absorb⁶.

Good to know: The ATO says the negative gearing changes announced in the 2026-27 Federal Budget do not apply in the 2025-26 tax return⁶. The ATO's annual Rental properties guide sets out every rule in detail⁸.

The 2026 negative gearing and CGT changes

On 12 May 2026 the Government announced reforms to negative gearing and capital gains tax, and the ATO says these measures are now law⁷. From 1 July 2027 they limit negative gearing for residential property to new builds, and replace the 50% CGT discount for individuals, trusts and partnerships with cost base indexation and a 30% minimum tax rate on capital gains⁷.

The Budget's own explainer sets out the transitional rules¹¹. Losses on established residential property that cannot be deducted will be able to be carried forward against residential property income in later years¹¹. Knock-down rebuilds and renovations that do not add dwellings are not treated as new builds¹¹. The main residence remains exempt from CGT¹¹.

Good to know: This is a summary of how the ATO and Treasury describe the changes. How they apply to a particular property depends on its facts, and the ATO is the authority. A registered tax agent can apply them to your situation.

Capital gains tax basics

CGT is not a separate tax. The ATO says it is part of your income tax, and a net capital gain is taxed at your individual income tax rate¹². Moneysmart notes you may have to pay CGT when you sell an investment property that has risen in value⁵.

Under the rules that apply until 1 July 2027, an Australian resident individual who has owned an asset for at least 12 months can reduce the capital gain by 50%¹³. Australian trusts can also discount by 50%, complying super funds by 33.33%, and companies cannot use the discount¹³. Your main residence is generally exempt¹¹.

Land tax: a state cost that varies a lot

Land tax is charged by the states and territories, generally on land that is not your home. Moneysmart lists it as an ongoing cost of an investment property⁵. Thresholds and rates differ widely. Each state's revenue office says the following:

Good to know: In most states the threshold applies to the combined value of all the land you own, not each property separately (Revenue NSW states this explicitly¹⁴). Trusts and companies often have different thresholds. Check the revenue office for the state where the land is.

Stamp duty

Stamp duty (transfer duty) is a one-off state government tax on buying property, and Moneysmart says it is typically payable within 30 days of settlement¹⁰.

As a worked example from the Queensland Revenue Office: a house with a dutiable value of $850,000 that does not qualify for a home concession attracts $17,325 plus $4.50 per $100 over $540,000, which comes to $31,275²². Foreign buyers of residential land in Queensland pay an additional 8%²². Each state publishes its own calculator, linked from Moneysmart¹⁰.

Using equity in your home

Equity is the value of your property less any money owing on it²³. Some lenders let you borrow to invest using your home as security²⁴. Moneysmart warns that if you do this, you could lose your home if the investment turns bad or you cannot keep up repayments²⁴. It suggests checking whether you could still afford repayments if rates rose by 2% or 4%²⁴.

What a mortgage broker does

A mortgage broker must act in your best interests when suggesting a loan²⁵. A broker can help work out what you can afford to borrow, find options, explain costs and manage the application to settlement, and should present more than one option²⁵. Brokers usually receive commission from the lender and must tell you about it²⁵.

Moneysmart cautions that property developers, accountants, lawyers and mortgage brokers might recommend each other's services⁵. A broker arranges the loan. Tax questions about gearing, CGT and the 2026 changes belong with a registered tax agent.

You can check a broker's credit licence or credit representative number on ASIC Professional Registers Search²⁵. FIZO checks the brokers it lists against those registers and shows a verified badge on each one that matches.