The right time to buy an investment property depends more on your finances and the tax rules than on trying to pick the market.
For Karrinyup residents, the timing question has a new angle. Negative gearing rules changed in 2026, and the date you buy now affects how any rental loss can be used. This article covers the rules that matter most to your timing and how your loan structure fits in.
When Is the Best Time to Buy an Investment Property?
The best time to buy is when your borrowing capacity, your cash buffer and the tax rules all support the purchase, not when the market looks cheapest. Market timing is hard to get right, so your own position is the more reliable guide.
Start with what you can borrow. You can test this with our borrowing capacity calculator before you look at any listings. Lenders look at your income, your existing debts and your living costs, and they assess you at a rate well above the actual loan rate.
How Negative Gearing Changes Affect Your Timing
The date you acquire a property now determines how a rental loss can be used. Properties held at 7:30pm AEST on 12 May 2026 keep full negative gearing, and so do eligible new builds acquired after that date.
For an established residential property acquired after that time, the rule changes from the 2027-28 income year. Net rental losses can then only be deducted against other residential property income, including residential capital gains. Excess losses can be carried forward. Properties acquired between 12 May 2026 and 30 June 2027 can use the current rules until 30 June 2027 only.
The trade-off is that a new build may come with different costs and risks from an established home. Whether it suits you is a question for your accountant, and the rules around what counts as an eligible new build are specific, so check them before you commit.
Capital Gains Tax Changes From 1 July 2027
From 1 July 2027, the 50 per cent CGT discount is replaced for gains accruing after that date. Individuals, trusts and partnerships will use cost base indexation and a 30 per cent minimum tax rate on real gains.
Gains that accrue before 1 July 2027 are taxed under the current rules. The split can be worked out with a market valuation at 1 July 2027 or an ATO-published formula. For eligible new builds, investors can choose either the discount or indexation. This is general information only, so speak to your accountant about how it applies to you.
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Book a chat with a Finance Broker at Shoreside Finance today.
How Much Can You Borrow for an Investment Loan?
Your investment loan amount is set by each lender's assessment of your income, debts and expenses, tested at a rate at least 3.0 percentage points above the loan rate. Banks and other ADIs must apply this buffer to new borrowers.
Lenders also count only part of your expected rent. APRA's guidance is that prudent lenders count no more than 80 per cent of expected rent, to allow for vacancy. If you have credit cards, lenders may assess a repayment based on the card limit, so a high unused limit can reduce what you can borrow.
Banks are also limited in how much new lending they can write at a debt-to-income ratio of six times or more. This is a limit on each bank's overall lending, not on you personally, and it does not apply to non-bank lenders. A broker can compare lenders for you. Our investment loans page explains the options we can access.
Interest Only or Principal and Interest: Which Suits an Investor?
Interest-only repayments lower your early repayments, but they do not increase how much you can borrow and they do not reduce the loan balance. Lenders assess the loan as if principal and interest repayments applied over the shorter remaining term.
As an illustrative example at 6.75% p.a., a $600,000 loan costs about $3,375 a month in interest only. That is $600,000 x 6.75% / 12. Suppose the loan is a 30-year term with a 5-year interest-only period. After that period, repayments on the remaining 25 years at the same rate are about $4,145 a month. The figures are illustrative only and the actual rate will depend on your lender and deposit.
In a scenario like this, an investor who plans for the step up avoids a shock when the interest-only period ends. The outcome is a repayment rise of roughly $770 a month that was budgeted for in advance. The trade-off is that you owe the full $600,000 at the end of the interest-only period.
Only the interest portion of a repayment is deductible on a rental property, under either structure. The principal portion is not. Speak with your accountant about your situation.
Deposit, LVR and Lenders Mortgage Insurance
Borrowing above 80 per cent of the property's value generally needs Lenders Mortgage Insurance (LMI), which the borrower pays. The 80 per cent figure is not a legal limit, and each lender sets its own maximum LVR.
A larger deposit can reduce or remove LMI, but it also ties up more of your cash. If you own your home, you may be able to use equity as part of the deposit. Equity release adds debt, and interest is deductible only for the part of the borrowing used for the investment. The use of the funds decides this, not the security. Our refinancing team can look at whether releasing equity suits your position.
Fixed or Variable Rate for an Investment Loan
A variable rate can move up or down, while a fixed rate locks your repayment for a set period. Each has a trade-off, and you can split the loan between fixed and variable portions, subject to lender policy.
Fixed loans can have break costs if you leave early, and features such as extra repayments or an offset account may be limited. Confirm these terms with the lender before you choose. If you already hold a fixed loan, our fixed rate expiry calculator shows your options as the term ends.
Keep Your Cash Buffer Ready Before You Buy
A cash buffer protects you if the property sits vacant or your repayments rise. The step to take before you buy is to test whether you could carry the loan if rent stopped for a period and rates rose.
An offset account can hold that buffer while reducing the interest charged. It does not reduce the loan balance for LVR purposes, and the balance stays accessible. The tax treatment of offset withdrawals is a question for your accountant.
If you already own in Karrinyup or nearby, a loan health check is a sensible first step to see where your current loan stands before you plan a purchase.
Call one of our team or book an appointment at a time that works for you, and we will map out your borrowing options and timing with you.
Frequently Asked Questions
Does the date I buy an investment property affect negative gearing?
Yes. Properties held at 7:30pm AEST on 12 May 2026 keep full negative gearing, as do eligible new builds. From the 2027-28 income year, losses on other established properties bought after that time can only offset residential property income. Ask your accountant how this applies to you.
Does an interest-only loan let me borrow more?
No. Lenders assess interest-only loans on principal and interest repayments over the remaining term after the interest-only period. This usually means a lower maximum loan size than an equivalent principal and interest loan.
How much rent do lenders count towards an investment loan?
APRA's guidance is that prudent lenders count no more than 80 per cent of expected rent. Each lender sets its own policy on what rental evidence it accepts.
When is lenders mortgage insurance usually needed?
LMI is generally required when borrowing goes above 80 per cent of the property's value. The borrower pays the premium, and each lender sets its own maximum LVR.
