A couple, a home with equity in it, and ten years. A case study testing cash, equity and borrowing capacity at every purchase – and what the bank says at each one
Built from High Income Property’s house and land and buyers agency work with individual investors across Australia, together with the lending rules published by APRA and the Reserve Bank, the 2026 tax reforms as enacted, published 2026 lender rate cards, and the 2026-27 land tax and duty scales of the three states used in the example.
Palash Dave
Founder and Director, High Income Property
Investment Property Strategist · House and Land · Buyers Agency · Australia-wide
High Income Property · prosperity solutions
highincomeproperty.com.au Contact Us (02) 8007 4001
This paper follows one household month by month from November 2026 to October 2036. It does not assume how many properties they end up with. It works that out, by putting every purchase through the same two tests a lender would apply, and buying only when both are passed.
| Section | What it covers |
|---|---|
| Start here | The four things to know before reading the rest |
| 1. Why the ladder stalls | What an equity ladder is, and the two things that can stop it |
| 2. The household and the plan | Who is buying, with what, and the five properties they set out to buy |
| 3. The two tests, in numbers | The funds test and the serviceability test, worked line by line |
| 4. What actually happened | Purchase by purchase, with the dates the model produced |
| 5. Ten years on | What they own, what they owe, and what it cost to hold |
| 6. Would a different lender help? | Second-tier and non-bank lenders: what they change, what they cost, and what they do not fix |
| 7. What changes the answer, and what does not | Every lever tested one at a time |
| 8. Who should own them | Land tax across three states under five ownership arrangements |
| 9. The tax and serviceability effect of substituting established property | What the 2026 reforms do to a portfolio built on established stock |
| 10. Conclusions, strategy and what to ask | What the numbers support, where they do not, and the questions to answer first |
| Appendix A and B | The portfolio by income year; the rates and scales used |
| Sources and important information | Every figure, its publisher and its date |
Most portfolio advice starts at the end – five properties, a number for the equity, a photograph of somebody on a balcony – and works backwards. This paper starts at the beginning and goes forwards, one month at a time, and lets the answer fall out of the arithmetic.
Who it is written for. The experienced property investor – someone who already owns property, has usable equity and borrowing capacity, and is deciding how to grow a portfolio rather than whether to start one.
The question. A couple with a home, some savings and two good salaries want five investment properties in ten years. How far do they actually get, and what stops them?
The household. Two salaries of $180,000 and $95,000, a home worth $1,300,000 with $200,000 still owing on it, and $230,000 saved. This is a comfortable household by any measure, and that is deliberate: it shows where the ceiling sits even when money is not the first thing to run out.
The plan they start with. Five new-build purchases across Queensland, New South Wales and Victoria, spread deliberately so that each state’s land tax threshold is used once.
The two tests. Before every purchase the model checks that the money is there, and runs an indicative serviceability assessment. Both use published rules, not rules of thumb – but an indicative assessment is not a lender decision.
The period. From the first settlement on 1 November 2026 to 31 October 2036 – ten years – month by month.
The aim. Not to sell a number, but to show where the ceiling is, what sets it, and which of the things you can control actually move it.
The health warning. Every figure is a scenario built from the assumptions set out later. Change an assumption and the figure changes; Sections 6 and 7 show by how much.
Equity. What a property is worth, less what is owed on it. Equity is not money until a lender agrees to lend against it.
Gross equity against usable equity. Gross equity is value less debt. Usable equity is the part a lender will actually release – 80% of value, less what is already owed. Only the second one buys anything.
Equity release. A new loan drawn against a property you already own, used as the deposit on the next one. It is debt, not savings.
Serviceability. The lender’s test of whether your income covers your commitments – done at a rate well above the one you actually pay, and applied to the position after the new loan, not before it.
Interest only against principal and interest. An interest-only loan repays none of the debt, so the payment is smaller but the balance never falls. Interest-only periods are granted for a set number of years and then end.
Shading. Lenders count only part of your rent – typically 80% – to allow for vacancy and costs.
Debt-to-income ratio. Total debt divided by total gross income. Since February 2026 banks must keep loans at six times or more to a small share of their new lending.
Land tax. An annual state tax on the land value of investment property, charged on everything you own in that state added together, above a threshold. The home you live in is exempt.
Holding shortfall against total cash invested. The holding shortfall is what the properties cost to keep each year after tax. It is not the same as the total cash the household puts in, which also includes deposits, duty and buying costs.
If you read nothing else, read these two pages. They answer the four questions this household actually had:
how far the ladder went;
what stopped it;
what it cost along the way;
what they owned at the end.
Four purchases in ten years. Nov 2026, May 2027, Nov 2028 and Jul 2036. The fifth never happened inside the ten years.
The first two came quickly. Six months apart, because $840,000 of equity in the home was sitting there ready to be released.
Then the gaps got long. 7.7 years between the third and the fourth, and nothing after that.
There was equity to spare. At the third purchase the household could have released $717,835; the purchase needed $243,815, leaving $474,020 untouched.
The lender was the constraint. The third purchase cleared the assessment by $5,190 a year against a $5,000 requirement, and the fourth by $5,100. Neither has much room in it: a lender shading rent at 75% rather than 80%, or applying a higher expenditure floor, would move these purchase dates by years rather than months. The fourth was declined repeatedly before it passed: six months before it cleared, the same assessment left $3,795 a year, which is a fail under the $5,000 of headroom the model requires. A fifth was never reachable inside the ten years at all.
This is the opposite of what most people expect. The common worry is finding the deposit. In this case study the deposit is never what stops a purchase – the income test is. Whether that holds for any other household depends entirely on its own equity and income.
Interest rates. At 8% instead of 6.5% the ladder reaches 3 properties, not four, and investment equity falls to $306,808. The Reserve Bank raised three times in the first half of 2026.[6]
The cash runs out. The four properties run at an after-tax holding shortfall of $425,610 over ten years – about $819 a week. Savings do not cover it, and $252,523 has to be borrowed back against equity simply to keep holding them.
Interest-only periods end. If they end after five years the ladder stops at 3 properties rather than four, and $375,585 has to be found against equity rather than $252,523.
One income instead of two. The same plan on a single salary of $180,000 reaches 2 properties. Two incomes are doing more work here than any property decision in the paper.
Rules changing under you. Since February 2026 banks must ration lending above six times income; since May 2026 several major lenders have been reported to no longer add back the tax benefit of a rental loss on established property. Both changes exempt new builds. Both could change again.[2][10]
Four investment properties worth $4,267,636, against investment debt of $3,581,365 – $686,270 of equity in them.
The home, now worth $1,845,525, with the loan down to $152,704. Total equity across everything: $2,379,092.
Rent of $173,119 in the tenth year, against a portfolio that still costs money to hold.
Land tax of $2,649 a year – because the four are deliberately held across two names. In one name the same four would cost $9,498; in a single discretionary trust, $29,635.
These are scenarios, not forecasts. A different rate, growth path, rent or lender policy changes every number in this paper. Nothing here is advice for any particular person, and no part of it should be acted on without a broker and a registered tax agent looking at your own position.
High Income Property is a buyers agency. It receives commissions from developers and builders on the house and land packages it introduces, and fees from clients it acts for on established property. That is stated here, at the front, so that the reader can weigh the analysis with it in mind.
Every figure in this paper falls out of the list below. Nothing else is used.
Dates. The first property settles 1 November 2026. Each new build takes twelve months and is rented from the month after. The model runs to 31 October 2036.
The loan on each purchase. 80% of the price, interest only at 6.5% – the Reserve Bank’s figure for investor interest-only new lending in July 2026 – held at that rate throughout. That is a scenario, not a safe plan: rates move, and interest-only periods end. Section 7 tests both.[7]
The home loan. $200,000 at 6.0%, principal and interest over 25 years. It is not deductible and no rent offsets it. The rate is an assumption.
Equity releases. Released only to 80% of a property’s current value, across the home and the investments together. A release is a loan: it is added to the debt, it costs interest, and it counts in the next serviceability test. Interest on a release used for investment is treated as deductible.
The lender’s test. Income assessed after tax; 80% of gross rent counted; living expenses of $4,200 a month rising 2.5% a year, against which lenders apply the Household Expenditure Measure as an unpublished floor; and every debt after the purchase – including the new loan and the home loan – assessed at its own rate plus the lender’s buffer, principal and interest over 25 years. A purchase proceeds only when the test leaves at least $5,000 a year of headroom. That is a conservative rule imposed by the model, not a published lender policy.[1][9]
Rent and costs. Gross yields quoted in Table 3 are the weekly rent over 52 weeks, which is the market convention; every cash flow in this paper is calculated on fifty paid weeks. Management 6.6% of rent including GST, plus a leasing fee. Rates, water and landlord insurance about $6,000 a year. Maintenance $1,500 a year for five years then $3,000. Costs rise 3% a year, rents 3.5%.
The build. Twelve months from settlement, with the package treated as fully drawn at settlement rather than in progress payments. Rent starts the month after completion, and nothing is deducted while the land is vacant. A property still under construction at the end of the model is shown separately in Section 5.
Depreciation. Each new build claims 2.5% of its construction cost as capital works, plus plant and equipment in the early years.
Land tax. The 2026-27 scales of the three states, applied to the aggregated land value held by each owner in each state and recalculated every year. The home is exempt.
Tax. The 2026-27 income tax scale. Every property in the base case is a new residential dwelling, so rental losses stay deductible against salary.
Growth. Land 5% a year, buildings 2% a year, applied to the home as well. Tested at 3% and 7%.
Not included. Any sale, lenders mortgage insurance in the base case, buying costs beyond conveyancing, any period of unemployment, and any change of policy by a lender.
Nothing here is worth reading unless you can see which figures are rules and which are choices. Every input falls into one of three kinds.
A verified rate or rule is published by a regulator, a revenue office, a lender or the Act. A property input is a choice made for this example. An assumption is a judgement that could reasonably be made differently – and the ones that matter are tested later in the paper.
| Input | What kind of number | Where it comes from |
|---|---|---|
| Interest rate, major bank investor loan — 6.5%, interest only | Verified rate | Reserve Bank table F6, investor interest-only new loans, July 2026 |
| Assessment rate at a bank — 9.5% | Verified rule | The product rate plus APRA’s 3 percentage point buffer, which applies to banks |
| Interest rate, non-bank investor loan — 7.15% | Verified range | Published 2026 rate cards: Resimac 6.69%, La Trobe from 7.09%, Bluestone from 7.14%, Pepper about 7.44% |
| Assessment buffer at a non-bank — 2.0 points | Assumption | Non-banks are outside the APRA requirement and none publishes its buffer; broker reporting says 1 to 2 points |
| Debt-to-income limit — 6 times, capped at 20% of new lending | Verified rule | APRA, in force since 1 February 2026, banks only; new dwellings exempt |
| Share of rent counted in servicing — 80% | Assumption | An industry convention; lenders use 70% to 80% and none publishes it |
| Household living expenses — $4,200 a month, rising 2.5% a year | Assumption | Declared expenses. Lenders take the higher of this and the Household Expenditure Measure, which is not published |
| Home loan — $200,000 at 6.0%, principal and interest | Property input | Chosen for the example; the rate is an assumption |
| Equity released only to 80% of value | Assumption | Above 85% the mortgage insurer caps the cash-out at 20% of value |
| Transfer duty and land tax in each state | Verified rate | Queensland Revenue Office, State Revenue Office Victoria, Revenue NSW, 2026-27 |
| Negative gearing and capital gains rules | Verified rule | Treasury Laws Amendment (Tax Reform No. 1) Act 2026 |
| Prices, land shares and rents of the five properties | Property input | Chosen for the example; each is a scenario, not a listing |
| Deductions during construction — none | Verified rule | Section 26-102 denies holding costs on vacant residential land until the dwelling can be occupied and is available for rent |
| Tax benefit of a rental loss — at each owner’s own bracket | Verified rule | A property held 50/50 splits the loss between two people on different incomes |
| Land tax values — three-year average in Queensland and New South Wales | Verified rule | Both states assess on the lesser of the current value and a three-year average; Victoria uses the single year |
| Land growing 5% a year, buildings 2%; the home split 50/50 between land and building | Assumption | Tested at 3% and 7% |
| Salaries $180,000 and $95,000, rising 3% a year | Property input | Chosen for the example |
The idea behind an equity ladder is simple, and it is not wrong. You own something. It grows. You borrow against the growth and use that as the deposit on the next one. Repeat.
There are only two things that can stop it, and which one stops you first decides everything about how you should plan:
You run out of usable equity. The deposit gets larger in dollars as prices rise, you can release only to about 80% of value, and every release is new debt from the day it is drawn.
The lender says no. Serviceability is tested at about three percentage points above the rate you pay, on principal and interest, against every debt you have – including the loan you are applying for.
Where there is equity behind the borrower, it is almost always the second that binds – and that is the case in this paper.
This household had $717,835 of releasable equity at the third purchase and used $243,815 of it. Money was never the problem. What ran out was the lender’s willingness to add another loan to the same income – and the home loan they already had, which earns no rent, was part of what used that willingness up.
The comparison only means something if the starting position is stated exactly. Table 2 sets it out.
| The position at 1 November 2026 | |
|---|---|
| Who is buying | A couple. One salary $180,000, the other $95,000 — $275,000 between them |
| The home they live in | Worth $1,300,000, with $200,000 still owing at 6.0%, principal and interest over 25 years |
| Equity in the home at the start | $1,100,000, of which $840,000 can be released at an 80% ceiling |
| Savings | $230,000 in cash, plus $2,500 a month put aside |
| Declared living expenses | $4,200 a month, rising 2.5% a year |
| Marginal tax rate | 37% for the higher earner, 30% for the lower, on the 2026-27 scale |
| What they want | Five investment properties over ten years, November 2026 to October 2036 |
| How they will fund each one | Cash first, then equity released from the home and from what they have already bought |
| What they will not do | Sell anything, use a guarantor, or borrow from family |
The $1,300,000 property is the home they live in. It earns no rent, its loan is not deductible, and it is exempt from land tax. Equity released from it and used to buy an investment is treated as deductible, because deductibility follows the use of the borrowed money rather than the property securing it – a point to confirm with a registered tax agent in any real case.
The plan is deliberately spread across three states. That is not diversification in the usual sense – it is because land tax is charged on everything you own in one state added together, and each state has its own threshold. Buying the second property in a different state starts a fresh threshold rather than stacking on the first.
| # | State | What it is | Price | Land value | Rent a week | Gross yield |
|---|---|---|---|---|---|---|
| 1 | Queensland | New build on a greenfield site | $780,000 | $400,000 | $735 | 4.9% |
| 2 | New South Wales | New build | $850,000 | $450,000 | $785 | 4.8% |
| 3 | Queensland | New build, dual income | $950,000 | $420,000 | $1,023 | 5.6% |
| 4 | Victoria | New build | $750,000 | $370,000 | $678 | 4.7% |
| 5 | Queensland | New build, dual income | $1,000,000 | $440,000 | $1,135 | 5.9% |
Gross yield is rent divided by price, before any costs. All five are new builds: under the 2026 reforms a new residential dwelling keeps negative gearing and the choice of capital gains method, and sits outside the lending limit described in Section 3. That status was still an exposure draft at the date of this paper and should be confirmed against the contract.[14]
Three choices in that table are worth explaining, because they set the result:
The yields are mixed on purpose. Properties three and five are dual income at 5.6% and 5.9%; one, two and four are growth stock at 4.9%, 4.8% and 4.7%. Rent is what keeps a portfolio serviceable, so a ladder built only on low-yield growth property stops earlier.
Dual income does not come cheap. A new dual-income property in Queensland does not go below about $900,000, which is why properties three and five are priced at $950,000 and $1,000,000. An established one can be bought for about $850,000, and Section 9 runs the whole plan in established stock.
All five are new builds. That is the most favourable case under the current rules, and Section 9 shows what the same plan looks like without it.
Every purchase has to pass both tests. This section works them both, in full, at the third purchase in Nov 2028.
The question is whether there is enough money to reach the first tenant. It is answered in two halves: what can be released from what is already owned, and what the next purchase costs before any rent arrives.
| Step | Amount |
|---|---|
| The home and the two properties already bought, at Nov 2028 | $3,109,634 |
| Eighty per cent of that — the most a lender will advance against them | $2,487,707 |
| Less everything already secured against them — the home loan of $192,660, the two purchase loans and the earlier release | ($1,769,872) |
| = Equity that can be released | $717,835 |
| Funds the purchase needs: deposit of 20%, duty, conveyancing and interest during the build | $243,815 |
| Of which drawn as an equity release | $243,815 |
| Equity still unused after the purchase | $474,020 |
Equity released is a new loan, secured against the home and the first two properties. The home is included in the pool because a lender will lend against it like any other security – which is exactly what makes this household’s ladder possible in the first place.
The funds test is not close. The household can release $717,835, needs $243,815, and still has $474,020 of unused capacity afterwards. If this were the only test, they would buy all five quickly.
This is the bank’s question. It is applied to the position AFTER the purchase – the new loan and the rent the lender will accept for the new property are both in it – and it is harsher than most investors expect, for four reasons:
The rate is not your rate. APRA requires banks to assess at least three percentage points above the product rate, so a 6.5% loan is tested at 9.5%.[1]
Interest-only debt is assessed as if you were paying it down. The test applies principal and interest over the remaining term, which is a much larger number than the interest actually paid.
Only part of the rent counts. Lenders shade rent by about 20%, to allow for vacancy, management and repairs.
The home loan is in there too, with no rent against it. It is the one debt in the portfolio that gives nothing back to the test.
| Step | A year |
|---|---|
| Two salaries, after income tax | $218,653 |
| Rent from all three properties, including the one being bought at its on-completion appraisal | $135,489 |
| Less the 20% the lender does not count | ($27,098) |
| Add back the tax benefit of the rental loss — allowed because all three are new builds | $21,103 |
| Less household living expenses, indexed at 2.5% a year | ($52,951) |
| Less assessed repayments on ALL debt after the purchase — the home loan, every investment loan, every release and the new loan | ($290,006) |
| = Surplus the lender sees | $5,190 |
| Debt-to-income ratio after the purchase | 6.5 times |
Assessed repayments are on total debt of $2,773,687 after the purchase – the home loan of $192,660, the three purchase loans, and every equity release – each at its own rate plus three points, principal and interest over 25 years. The interest actually paid that year was $179,326. This is a simplified assessment: every lender applies its own policy, income treatment and expense floor.
Two things in Table 5 are worth sitting with:
The gap between $290,006 and $179,326. The bank tests this household against a repayment 62% larger than the one they are actually making, because it applies principal and interest at over 9% to debt they are servicing interest only at 6.5%. That gap is the buffer doing its job, and it is why portfolios stop growing long before the cash flow stops working.
The debt-to-income ratio after this purchase is 6.5 times. Since 1 February 2026 a bank may write no more than 20% of its new lending at six times income or more, measured separately for investors. It is a quota on the bank, not a rule about you: qualifying new dwellings sit outside the quota, so they do not consume it – but that does not make a borrower serviceable, and the lender still has to approve the loan under its own credit policy. On established stock at this ratio, these purchases would be competing for a capped share of the bank’s book.[2][3][4][5]
The model does not assume the purchase dates. It walks forward month by month and buys the next property in the plan on the first month both tests pass. Table 6 is the result.
| Property | When | Price | Funds needed | From cash | From equity release | Total debt after | Debt to income | Lender surplus |
|---|---|---|---|---|---|---|---|---|
| Property 1 — QLD | Nov 2026 | $780,000 | $202,281 | $202,281 | $0 | $824,000 | 2.6 | $105,565 |
| Property 2 — NSW | May 2027 | $850,000 | $221,107 | $0 | $221,107 | $1,723,354 | 5.4 | $21,098 |
| Property 3 — QLD | Nov 2028 | $950,000 | $243,815 | $0 | $243,815 | $2,773,687 | 6.5 | $5,190 |
| Property 4 — VIC | Jul 2036 | $750,000 | $199,920 | $0 | $199,920 | $3,715,685 | 6.4 | $5,100 |
Funds needed is the deposit, transfer duty, conveyancing and the interest during the twelve-month build. Total debt after includes the home loan and every equity release drawn to that date. Lender surplus is the annual surplus the serviceability test showed after the purchase.
Reading down the table:
Only the first deposit comes from savings. $202,281 of the household’s $230,000 – and there is still a $624,000 loan behind it.
The next three are funded entirely by releases. $221,107, then $243,815, then $199,920, drawn against the home and the growing portfolio. Nothing is sold.
The surplus collapses, not the equity. From $105,565 a year at the first purchase to $5,190 at the third. The household is not running out of money; it is running out of borrowing capacity.
And then it waits. 7.7 years between the third and fourth purchases, while rent growth slowly rebuilds enough capacity for one more.
| At 31 October 2036 | |
|---|---|
| Investment properties owned | 4 |
| – of which complete and rented | 3 |
| – of which still under construction | 1 |
| What they are worth | $4,267,636 |
| Investment debt, including every equity release | $3,581,365 |
| = Investment equity | $686,270 |
| The home | $1,845,525, loan down to $152,704 |
| = Equity in the home | $1,692,821 |
| = Total equity, home and investments | $2,379,092 |
| Loan-to-value ratio across the investment portfolio | 84% |
| Rent coming in, in the tenth year | $173,119 |
| After-tax holding shortfall over the ten years | ($425,610) |
| Home loan repayments over the ten years (interest and principal) | ($154,632) |
| Extra borrowed against equity to cover the cash gap | $252,523 |
| Land tax in the tenth year, held the way this paper suggests | $2,649 |
One property is not finished. The one bought in Jul 2036 is still being built at the reporting date – it completes in Jul 2037, outside the ten years, and earns no rent inside them. The model treats a house and land package as fully drawn at settlement, so its $380,000 of construction sits in the value above at contract cost while 3 months of the twelve-month build have run. That overstates the completed asset and overstates the interest paid during the build; a progress-drawn loan would do both more gently. The observation below sets out what it is actually worth at the reporting date.
Four observations, none of them comfortable:
Most of the equity was already there. Of $2,379,092 at year ten, $1,692,821 is in the home. The four investment properties contributed $686,270 – real, but a long way short of the impression a portfolio of this size gives.
The holding shortfall is continuous, and it outruns the savings. $425,610 over ten years, about $819 a week. The $252,523 borrowed back against equity is not the investment shortfall alone: it is what is left after the first deposit takes all but $27,719 of the savings, the shortfall runs for a decade, and $154,632 of home loan repayments come out of the same account. A portfolio that funds its own losses from its own equity is a portfolio with no margin.
The loan-to-value ratio ends at 84% on the investments. Ten years of growth has been converted into more property rather than into a lower ratio. That is the ladder working as designed, and it is also the risk.
The last purchase is $45,379 under water at the reporting date. It carries a $600,000 loan of its own and consumed $199,920 of released equity to buy, against $754,541 of land and construction – so it sits $45,379 behind while it is being built, and it stays that way until it is finished and rented in Jul 2037. Strip it out and the household holds 3 completed properties worth $3,513,095. A purchase made this late in the run is a commitment, not yet a result.
The shaded band is total equity, home and investments together. Each dotted line is a purchase. Debt steps up twice at each one – the new loan, and the release that funded its deposit.
Once serviceability is shown to be the ceiling, this is the first question any investor asks. The answer is more interesting than yes or no.
APRA’s buffer binds banks, not everyone. The three percentage point requirement applies to authorised deposit-taking institutions. APRA told a Senate committee in June 2026 that it has no direct supervisory authority over non-bank lenders, which fall under ASIC’s responsible lending obligations instead.[27][28]
So does the debt-to-income quota. The 20% limit on lending at six times income or more, in force since February 2026, is likewise a requirement on banks only.[2]
But no regulator sets non-banks a number. ASIC’s obligation is that a loan must not be unsuitable, assessed on reasonable inquiries and verification. There is no prescribed buffer, which means each lender sets its own – and none of them publishes it.[28]
And they are a small part of the market. Non-bank lenders are less than 5% of Australian housing lending.[27]
This paper models a non-bank assessing at 2.0 percentage points rather than 3.0. The regulatory asymmetry is a verified fact; the size of the gap is not. Broker reporting in 2026 puts non-bank buffers at 1 to 2 points, and 2.0 is used here as a stated assumption.
| Lender | Rate | Source and date |
|---|---|---|
| Reserve Bank average, all lenders, investor interest-only new loans | 6.50% | Table F6, July 2026 |
| Resimac, Prime Full Doc, interest only, 70 to 80% LVR | 6.69% | Broker rate card, 15 May 2026 |
| La Trobe Financial, investment, from | 7.09% | Broker product guide, August 2026 |
| Bluestone, residential investment, from | 7.14% | Published rates, 17 August 2026 |
| Pepper Money, Prime investor, interest only | about 7.44% | Rate card, 28 July 2026, including the 0.30% interest-only loading |
| Pepper Money, Near Prime investor, interest only | about 7.99% | Rate card, 28 July 2026 |
The model uses 7.15%, the middle of the prime non-bank range, plus an application fee of 1% of the loan – the midpoint of La Trobe’s 0.75% to 1.50% investment scale. Bluestone’s risk fee of up to 3% of the amount borrowed, capitalised at settlement, is not modelled and would make the comparison worse.[29][30][31][32]
| Strategy | Bought | Last purchase | Investment equity at year ten | Holding shortfall | Lender fees | What happens |
|---|---|---|---|---|---|---|
| Major banks only | 4 | Jul 2036 | $686,270 | ($425,610) | $0 | The base case |
| Banks first, a non-bank once a bank says no | 4 | Nov 2033 | $617,336 | ($562,163) | $13,600 | Still four, but the last purchase arrives 2.7 years earlier |
| A non-bank from the start | 4 | Sep 2036 | $487,117 | ($603,013) | $26,640 | Still four, on the same timing — every loan at the higher rate from day one |
Moving to a non-bank when a bank says no brings the fourth purchase forward to Nov 2033, 2.7 years earlier than the banks alone allow. It does not produce a fifth property inside ten years. It costs about $136,553 more in holding shortfall and leaves $68,935 less equity at year ten. What a non-bank buys here is time, not an extra property.
Separating the lower buffer from the higher rate is the most useful thing in this section.
| What changes | Bought | Investment equity at year ten | What it shows |
|---|---|---|---|
| Nothing changes — a major bank at 6.50%, assessed at 9.50% | 4 | $686,270 | The base case |
| The buffer alone: assessed at 2.0 points, rate held at 6.50% | 4 | $681,987 | Still four, but the last purchase arrives 3.8 years earlier — the lower buffer is what moves the date |
| The rate alone: 7.15%, buffer held at 3.0 points | 3 | $508,611 | The premium costs $177,660 of equity and buys nothing |
| Both together — a real non-bank | 4 | $487,117 | The two effects very nearly cancel |
The lower buffer buys time. Holding the rate at 6.50% and assessing at two points instead of three brings the fourth purchase forward from Jul 2036 to Oct 2032 – nearly four years – without changing how many properties are bought.
The rate premium costs a property. Charging 7.15% instead of 6.50% on the whole balance, with the buffer unchanged, stops the ladder at 3 rather than four and leaves $177,660 less equity. The premium is charged on every dollar borrowed, so it works against the very cash flow the servicing test measures.
Put together at a real non-bank rate, the timing gain roughly offsets the cost. Which is why all three strategies in Table 9 end at four properties, with progressively less equity.
It is not a way around the 2026 tax change. The one non-bank funder in the 2026 record removed negative gearing add-backs for established property on 12 May, the same day as the major banks. Every lender that has changed, bank or non-bank, has kept the carve-out for new builds and for stock held before that date, and removed it everywhere else. A tax-law change flows through everyone’s calculator.[10][11]
It does not raise anyone’s income. A thinner buffer raises the lender’s tolerance, not the borrower’s capacity. It means more debt against the same income, and less protection against exactly the three shocks the buffer exists for: rates rising, income falling, expenses rising.
It is usually described as a bridge, not a home. Brokers treat non-bank lending as a temporary step, with a refinance back to a major once the position improves. That exit depends on the major’s servicing test at a future date, which the borrower does not control – and 2026 showed the whole market can retighten in a fortnight.[33]
The protections are close, but not identical. A non-bank holding an Australian credit licence is bound by the responsible lending obligations, the National Credit Code including hardship, and the external dispute scheme. It is not bound by the Banking Code of Practice.
This section changes one thing at a time and reports what happens, so the reader can see which levers matter and which do nothing at all.
| What changes | Bought | Last purchase | Investment equity | Holding shortfall | What it means |
|---|---|---|---|---|---|
| The base case | 4 | Jul 2036 | $686,270 | ($425,610) | Stopped by the lender, not by equity |
| Clear the $200,000 home loan first | 4 | Oct 2032 | $936,302 | ($449,976) | Still four, but the last purchase arrives 3.8 years earlier — the single most effective change tested |
| Release equity to 88% with mortgage insurance | 4 | Jul 2036 | $686,270 | ($425,610) | Still four, on the same timing — equity was never the constraint |
| Land grows 7% a year instead of 5% | 4 | Aug 2036 | $1,058,880 | ($424,271) | Still four, on the same timing — more equity, same wall |
| Land grows 3% a year | 4 | Jul 2036 | $366,514 | ($425,610) | Still four, on the same timing — less equity, same wall |
| Interest rises to 8% | 3 | Jul 2034 | $306,808 | ($612,719) | Falls to three |
| The interest-only period ends after five years | 3 | Nov 2028 | $739,701 | ($417,558) | Falls to three — $375,585 has to be drawn against equity |
| One income of $180,000 instead of two | 2 | Jan 2034 | $499,289 | ($179,712) | Falls to two |
Everything else is held exactly as in the base case. Figures in brackets are negative.
The results split cleanly into three groups.
Clearing the home loan first. Paying off the $200,000 before starting still buys 4 properties, but the fourth arrives in Oct 2032 rather than Jul 2036 – almost four years earlier – and the household ends with $936,302 of investment equity, $250,031 more than the base case. It also cuts the amount borrowed back to cover the shortfall from $252,523 to $122,257. It is the one debt that consumes borrowing capacity and returns no rent, and removing it is the single most effective change in this table.
Mortgage insurance. Releasing to 88% of value instead of 80% changes the answer not at all, because equity was never the binding constraint. In a paper written for a household without a home this would be the main lever; here it is worthless – and above 85% the mortgage insurer caps the cash-out at 20% of the property’s value in any case.[8]
Growth. Land at 7% a year rather than 5% adds a great deal of equity – $1,058,880 against $686,270 – but still buys four properties. Growth makes the same ladder more valuable; it does not make it longer, because it does nothing for the income test.
Higher interest rates. At 8% the ladder stops at 3 properties and equity falls to $306,808. This is the case to be able to carry.
Slower growth. At 3% a year, still four properties, but only $366,514 of equity.
Interest-only periods ending. Worse than it looks: the ladder stops at 3 properties rather than four, and $375,585 has to be drawn against equity rather than $252,523, because principal repayments fall due while the portfolio is still loss-making and the assessed repayments rise with them.
One income instead of two. 2 properties. The detail is in Table 12.
| Purchase | When | Surplus the lender sees after the purchase | Debt to income after the purchase |
|---|---|---|---|
| Property 1 | Nov 2026 | $27,903 | 3.8 |
| Property 2 | Jan 2034 | $5,259 | 5.2 |
On one income the ladder stops at 2. The second purchase clears the test by $5,259 a year at 5.2 times income, and a third assesses at ($39,542). The equity was there the whole time – $673,069 of it was not the issue. The income was.
The honest answer is that on these assumptions the fifth purchase is a long way out.
Extending the model to fifteen years does not produce it on bank lending alone. The household still holds four properties in 2041, with $1,382,274 of investment equity – the extra years add value, not another purchase.
With a non-bank available it arrives in Feb 2041, about fourteen years in. That is what the flexibility is worth on a long enough view: it does eventually produce the fifth property, at a materially higher holding cost throughout.
So the title of this paper is a question, not a promise. For this household, on these assumptions, five properties is a fifteen-year project, not a ten-year one.
Ownership is usually treated as a legal question decided at the end. It is a cash-flow question, it compounds every year, and on a four-property portfolio the difference between the best and worst arrangement is larger than most people’s annual maintenance bill.
Land tax is why. It is charged on the total land value one owner holds in one state, above a threshold, every year. Three features of the three states drive the whole result:
Queensland has a $600,000 threshold, and each trust is assessed separately. Splitting a Queensland holding between two people can put both halves under the threshold. A second trust starts a fresh $350,000 threshold, and Queensland does not group related companies at all.[16][17]
Victoria starts at $50,000, and its first bands are flat dollar amounts. Splitting a smaller title across two owners can cost more than leaving it with one, because each half attracts a flat charge. Victorian trusts pay on a separate surcharge scale until $3,000,000.[20][21]
New South Wales has the highest threshold at $1,075,000 – and it is frozen. It has not been indexed since 2024, so land values grow into it every year. A discretionary trust gets no threshold there at all and pays 1.6% from the first dollar.[23][24]
| How they are held | What that means | Land tax in year ten |
|---|---|---|
| The mix used in this paper | Queensland and New South Wales in both names; Victoria deliberately in one | $2,649 |
| All as tenants in common, 50/50 | Every property split down the middle | $3,026 |
| All in one name | All properties held in one name | $9,498 |
| One property in each of four trusts | Four trusts, four sets of establishment and accounting costs | $25,135 |
| All in one discretionary trust | One discretionary trust holding everything | $29,635 |
Illustrative 2036 amounts, calculated on the 2026-27 rates and thresholds held constant – not a forecast of the legislation in 2036. Taxable land values at year ten, after the three-year averaging Queensland and New South Wales apply: Queensland $1,207,555 across two properties, New South Wales $679,048, Victoria $374,541 on the single current year. The home is exempt throughout.
The arrangement used in this paper costs $2,649 a year. The same four properties cost $9,498 in one name, and $29,635 in a single discretionary trust – a difference of $26,986 a year, every year, for holding identical assets.
New South Wales does the damage. A discretionary trust receives no land tax threshold there and pays 1.6% from the first dollar. On the New South Wales property alone that is most of the gap.
Four separate trusts do not fix it. At $25,135 a year they are barely better, because the New South Wales rate applies to each of them equally, and each trust brings its own establishment and annual accounting cost.
There is a live change to watch. A 30% minimum tax on discretionary trusts from 1 July 2028 has been announced, with a three-year window from 1 July 2027 to move assets out. It is not law, and consultation closes on 18 September 2026 – anyone setting up a trust now should ask their adviser about it directly.[15]
None of this says trusts are wrong. It says the case for one rests on asset protection and succession, not on tax. If a trust is being recommended to you on tax grounds for a portfolio of this size and shape, ask to see the land tax worked in every state you intend to buy in.
The cheapest arrangement here is not exotic. Queensland and New South Wales are held in both names, which splits the Queensland assessment of $1,207,555 into $603,778 for each owner – barely above the $600,000 threshold, so almost all of it escapes tax where a single owner would be well into the 1.65% band. Victoria is deliberately held in one name, because splitting it there costs more. That is a decision made before the first contract is signed, and it is expensive to undo afterwards – transferring a property to fix it triggers duty and, usually, capital gains tax.
Every purchase so far has been a new build. The 2026 reforms treat established property very differently, and a portfolio is where that difference compounds. This section runs the identical plan – same prices, same states, same rents, same household – in established stock.
This is not an asset-performance comparison. Land share, location, maintenance and construction timing are deliberately held outside the test, and established property’s usual advantages – a higher land share, rent from settlement, no construction delay – are not credited to it. What is isolated here is the tax and serviceability effect of the 2026 rules, and nothing else.
Three things change at once:
Duty is charged on the whole price, not the land. On the first purchase that is $15,700 more, payable before any rent arrives.[19]
Rental losses are quarantined from 1 July 2027. For established property acquired after 12 May 2026, losses can no longer be deducted against salary. They are pooled and carried forward against future residential rental income and residential capital gains.[12][13]
Lenders no longer add back the tax benefit. Several major lenders were reported through 2026 to have removed the negative gearing add-back from servicing for established property contracted after 12 May 2026, while keeping it for new builds. This is trade-press reporting on named lenders, not a comprehensive survey of lender policy.[10][11]
| All new builds | All established | |
|---|---|---|
| Properties bought in ten years | 4 | 3 |
| Transfer duty on the first purchase | $12,425 | $28,125 |
| What the portfolio is worth at year ten | $4,267,636 | $3,396,067 |
| Investment debt | $3,581,365 | $3,040,052 |
| = Investment equity | $686,270 | $356,015 |
| After-tax holding shortfall over ten years | ($425,610) | ($729,782) |
| Extra borrowed against equity to cover it | $252,523 | $556,176 |
| Losses quarantined and unused at year ten | $0 | $693,087 |
Identical prices, states, rents, growth and household. The only differences are duty on the full price, the quarantining of losses from 1 July 2027, the loss of the servicing add-back, and the smaller depreciation available on an older building.
The result is 3 properties instead of four, and $356,015 of investment equity instead of $686,270 – a gap of $330,255. Two things about how it gets there matter more than the headline:
Both changes bite, and the tax change bites harder. With only the servicing change applied, the household still reaches three but keeps $730,313 of equity. With only the tax change, it keeps $355,464. Quarantining removes the annual refund, and that refund was what funded the shortfall.
The cash position becomes the real problem. The established ladder runs an after-tax shortfall of ($729,782) against ($425,610) for new builds, and $556,176 has to be drawn against equity to survive it – against $252,523 in the base case. That is a household consuming its own house to hold three investment properties.
And the losses are not gone, but they are stuck. $693,087 of quarantined losses sit unused at year ten. They are worth something eventually – against residential rental profit, or a residential capital gain – but they are worth nothing to a household trying to service a loan in 2032.
None of this says established property is a bad asset. Established homes sit on more land, land is what grows, and over a long enough hold that can more than offset everything above. It is an argument about sequencing: under the rules as they stand, a portfolio built on established stock accumulates deposits more slowly and carries a much larger cash drain.
Run forward month by month, with both tests applied honestly, this ladder produces five conclusions.
On the base-case assumptions, ten years buys four properties, not five. $4,267,636 of investment property, $3,581,365 of investment debt, $686,270 of investment equity, and $2,379,092 of total equity once the home is counted.
The bank is the ceiling, not the deposit. There was $474,020 of unused equity at the third purchase. What ran out was borrowing capacity.
The home loan is the most expensive $200,000 in the model. Clearing it first does not add a fifth property, but it brings the fourth forward by 3.8 years – from Jul 2036 to Oct 2032 – and is worth $250,031 of extra investment equity by the end of the ten years. It consumes borrowing capacity and returns no rent.
A more flexible lender buys time, not an extra property. It brings the fourth purchase forward by 2.7 years, from Jul 2036 to Nov 2033, at the cost of a rate premium charged on every dollar borrowed. It does not produce a fifth property inside the ten years. Run out to fifteen years, a fifth arrives in Feb 2041 on the switching path and not at all on bank lending alone.
Ownership structure creates a $26,986 annual land tax range in this scenario. $2,649 a year under the arrangement used here against $29,635 in a single discretionary trust, for identical assets – decided before the first contract and expensive to undo.
A paper written by a buyers agency should be clear about where its own model breaks down. There are four situations where these numbers should not be used:
If you do not already own a home with equity in it. Almost everything here follows from $840,000 of releasable equity being available on day one. Without it the ladder is shorter and slower, and the deposit becomes the binding constraint instead of the bank.
If your income is variable. Self-employed, contract or bonus-dependent income is assessed differently and usually more harshly. The servicing arithmetic in Section 3 would not hold.
If you intend to sell along the way. Nothing is sold in this model. Selling changes the tax position, the equity position and the borrowing capacity at once, and the 2026 capital gains rules make the timing of a sale much more consequential than it used to be.
If your marginal rate is much lower. Most of the tax benefit modelled here is worth 37 cents in the dollar. On a lower income the negative gearing arithmetic weakens considerably, and a higher-yielding property becomes the better first step.
The mistake this paper is written against is buying a property and hoping a portfolio appears. What the model shows is that the first purchase, and the debt you already carry, largely determine whether there is a fourth:
the debt you bring with you decides how much capacity is left for the first purchase, before any property is chosen;
the state decides which land tax threshold is used up, and which is still available;
the name on the title decides the land tax bill in year ten, and cannot be changed cheaply;
new or established decides whether the losses are deductible and whether a lender will count them;
and the yield decides how much of the next loan the rent can carry.
None of those are decisions about a house. They are decisions about a sequence, and they are made best before the first contract rather than after the third.
What does my borrowing capacity look like at an assessment rate above 9%, with every existing debt assessed on principal and interest – including the loan on my own home?
What would clearing or reducing my home loan do to that number, and how does that compare with using the same money as a deposit?
What is my debt-to-income ratio after this purchase, and does this lender ration approvals above six times?
If a bank declines, what would a second-tier or non-bank lender cost me in rate and fees over the whole hold, not just at settlement – and what is my path back to a major?
If I buy in this state and this name, what is my land tax bill in year ten, in every state I intend to buy in?
Is this property a new residential dwelling as the legislative instrument will define it, and will the contract confirm it?
Can I carry 8% interest, and the end of an interest-only period, across the whole portfolio without selling?
If the portfolio starts consuming its own equity to fund its shortfall, at what point do I stop?
The serviceability arithmetic in Section 3 is a simplified version of what lenders do; every lender assesses differently, and only a broker running your actual position can tell you what you can borrow. The non-bank buffer in Section 6 is an assumption, not published policy. Have a registered tax agent confirm the quarantining and capital gains treatment for your circumstances, and the deductibility of interest on equity released from your own home. The land tax figures use the 2026-27 scales, which the states can change at any time; Victoria’s current scale is legislated only to the 2033 land tax year. A downloadable calculator with the full input schedule used here will be added to the High Income Property website.
Even an experienced investor should not model a sequence like this without lender, tax and ownership advice alongside it. The lending rules changed in February, the tax rules changed in June, and the land tax answer is different in every state. That is what High Income Property does. It is a buyers agency working with investors across Australia on both new house and land packages and established property, and it starts with the sequence: which purchase makes the next one possible, in which state, in which name, and in which order. If you are planning more than one property, the model in this paper can be run on your income, your equity and your borrowing capacity, on real properties.
Book a strategy call – Contact Us · highincomeproperty.com.au · (02) 8007 4001
Palash Dave
Founder and Director, High Income Property
Palash founded High Income Property to give individual investors the kind of location and finance analysis that is usually reserved for institutions. With a background in banking and more than a decade placing clients into house and land and established property in growth areas right across Australia, he works from what is settling on the ground rather than from sales scripts, and is a regular commentator on growth-area investing.
Every figure in the body of this paper comes from these cash flows. The model runs monthly; this table groups the months into income years, July to June, with the first and last rows part years.
Outgoings combines management and leasing fees, rates, water, insurance and land tax.
Interest is on the investment loans and the equity releases. The home loan is not included here, because it is not an investment expense – it is in the cash position instead.
Tax effect is the refund on the rental loss at the household’s marginal rate. Every property is a new residential dwelling, so no losses are quarantined.
Every figure is in thousands of dollars, and figures in brackets are negative.
| Income year | Homes | Rent | Outgoings | Maint. | Interest | Pre-tax | Deprec. | Tax effect | After tax | Cumulative |
|---|---|---|---|---|---|---|---|---|---|---|
| 2026-27 | 1 | 0.0 | 0.0 | 0.0 | (13.5) | (13.5) | 0.0 | 0.0 | (13.5) | (13.5) |
| 2027-28 | 2 | 12.7 | (3.3) | (0.5) | (90.2) | (81.3) | 4.5 | 7.1 | (74.2) | (87.8) |
| 2028-29 | 3 | 73.4 | (18.4) | (2.9) | (124.3) | (72.2) | 25.2 | 24.1 | (48.1) | (135.8) |
| 2029-30 | 3 | 100.7 | (24.4) | (3.8) | (171.0) | (98.6) | 32.1 | 34.1 | (64.5) | (200.3) |
| 2030-31 | 3 | 140.2 | (32.9) | (4.9) | (172.9) | (70.5) | 42.7 | 39.3 | (31.2) | (231.6) |
| 2031-32 | 3 | 145.1 | (33.9) | (5.6) | (174.0) | (68.5) | 40.2 | 37.1 | (31.3) | (262.9) |
| 2032-33 | 3 | 150.2 | (35.0) | (8.5) | (175.2) | (68.4) | 38.4 | 36.0 | (32.4) | (295.3) |
| 2033-34 | 3 | 155.5 | (36.1) | (9.6) | (176.3) | (66.6) | 37.0 | 34.4 | (32.2) | (327.5) |
| 2034-35 | 3 | 160.9 | (37.3) | (11.1) | (177.5) | (64.9) | 35.9 | 32.9 | (32.0) | (359.5) |
| 2035-36 | 3 | 166.6 | (38.5) | (11.4) | (178.6) | (61.9) | 35.1 | 31.1 | (30.8) | (390.3) |
| 2036-37 | 4 | 114.3 | (26.4) | (7.8) | (137.1) | (56.9) | 23.1 | 21.7 | (35.3) | (425.6) |
All figures in thousands of dollars. “Homes” is the number of investment properties owned at the end of that income year.
All figures are the 2026-27 scales published by the three revenue offices, reproduced so that any reader can check the land tax and duty numbers in the body of the paper.
| State | Threshold, individual | Rate above the threshold | Threshold, trust | The feature that matters most |
|---|---|---|---|---|
| Queensland | $600,000 | $500 plus 1.0% above the threshold; 1.65% above $1,000,000 | $350,000 | Each trust is assessed separately, so a second trust starts a fresh threshold |
| Victoria | $50,000 | Flat $500 to $99,999, flat $975 to $299,999, then 0.3% and 0.6% steps | $25,000 | The first bands are flat amounts, so splitting a title can cost more than leaving it whole |
| New South Wales | $1,075,000 | $100 plus 1.6% above the threshold, which is frozen | None | A discretionary trust gets no threshold and pays 1.6% from the first dollar |
Queensland assesses at 30 June on a three-year average of land values; Victoria at 31 December on the single-year site value; New South Wales at 31 December on a three-year average. Land held in another state is never counted – Queensland’s 2022 measure to count interstate land was removed before it commenced.[18][23]
| State | Rate scale used | Duty on the land contract | Duty if bought established |
|---|---|---|---|
| Queensland | $1,050 plus $3.50 per $100 above $75,000; $17,325 plus $4.50 per $100 above $540,000 | $12,425 on $400,000 of land | $28,125 on $780,000 |
| Victoria | $2,870 plus 6% of the amount above $130,000; 5.5% of the whole value from $960,000 | $17,270 on $370,000 of land | $40,070 on $750,000 |
| New South Wales | $11,602 plus $4.50 per $100 above $387,000 | $14,437 on $450,000 of land | $32,437 on $850,000 |
Where an investor buys land and builds under a separate contract, duty is assessed on the land contract. New South Wales publishes this position in Revenue Ruling DUT 018; Queensland and Victoria reach the same result through the structure of their Duties Acts, though neither publishes a statement to that effect. Buying several lots in one development within twelve months can be aggregated and dutied as one arrangement.[26][22][25]
Figures are as published in September 2026. Publishers revise their data, governments change rates and rules, lenders change credit policy without notice, and two of the measures relied on here are not yet final. Check the current release before relying on any figure.
[1] APRA, Strengthening residential mortgage lending assessments – the 3 percentage point serviceability buffer, 6 October 2021. https://www.apra.gov.au/strengthening-residential-mortgage-lending-assessments
[2] APRA, Activation of debt-to-income limits as a macroprudential policy tool – letter to all authorised deposit-taking institutions, 27 November 2025. https://www.apra.gov.au/activation-of-debt-to-income-limits-as-a-macroprudential-policy-tool
[3] APRA, Debt-to-income limit – implementation details, including the exemption for construction and newly erected dwellings, November 2025. https://www.apra.gov.au/sites/default/files/2025-11/Implementation%20Details%20-%20DTI%20limit.pdf
[4] APRA, APRA maintains current macroprudential policy settings in a highly uncertain environment, 28 May 2026. https://www.apra.gov.au/news-and-publications/apra-maintains-current-macroprudential-policy-settings-highly-uncertain
[5] APRA, System Risk Outlook – investor credit growth and household debt, May 2026. https://www.apra.gov.au/apras-system-risk-outlook-may-2026
[6] Reserve Bank of Australia, Statement by the Monetary Policy Board – cash rate held at 4.35%, 11 August 2026. https://www.rba.gov.au/media-releases/2026/mr-26-19.html
[7] Reserve Bank of Australia, Statistical table F6, Housing Lending Rates – investor interest-only new loans, published 7 September 2026. https://www.rba.gov.au/statistics/tables/xls/f06hist.xlsx
[8] Helia, Lenders Mortgage Insurance Underwriting Standards and Guidelines – equity release and cash-out limits, effective 5 January 2026. https://www.helia.com.au/media/x1pa2gta/lmi-underwriting-standards-and-guidelines-5-january-2026.pdf
[9] Melbourne Institute, Household Expenditure Measure – quarterly updates, page updated 10 July 2026. https://melbourneinstitute.unimelb.edu.au/research/family-and-labour-economics/projects/2012/household-expenditure-measure-quarterly-updates
[10] The Adviser, CBA hard-wires negative gearing changes into servicing, 1 June 2026. https://www.theadviser.com.au/lender/48494-cba-hard-wires-negative-gearing-changes-into-servicing
[11] Broker Daily, How lenders are adjusting servicing in the wake of the Budget, 28 May 2026. https://www.brokerdaily.au/lender/21608-how-are-lenders-adjusting-servicing-in-the-wake-of-the-budget
[12] Federal Register of Legislation, Treasury Laws Amendment (Tax Reform No. 1) Act 2026 – quarantining of residential rental losses and the capital gains transition, assent 26 June 2026. https://www.legislation.gov.au/C2026A00049/latest
[13] Australian Taxation Office, Tax reform – reforming negative gearing and capital gains tax, 2026. https://www.ato.gov.au/about-ato/new-legislation/in-detail/individuals/tax-reform-boosting-home-ownership-reforming-negative-gearing-and-capital-gains-tax
[14] The Treasurer, Consultation on the next tranche of tax reform legislation – the draft definition of a new residential dwelling, 4 August 2026. https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/consultation-next-tranche-tax-reform-legislation
[15] Australian Taxation Office, Tax reform – introducing a minimum tax on discretionary trusts (announced, not yet law), 2026. https://www.ato.gov.au/about-ato/new-legislation/in-detail/businesses/tax-reform-introducing-a-minimum-tax-on-discretionary-trusts
[16] Queensland Revenue Office, Land tax rates for individuals, current at September 2026. https://qro.qld.gov.au/land-tax/calculate/individual/
[17] Queensland Revenue Office, Land tax rates for companies and trusts, current at September 2026. https://qro.qld.gov.au/land-tax/calculate/company-trust/
[18] Queensland Revenue Office, Taxable value – three-year averaging of land values, updated 17 August 2026. https://qro.qld.gov.au/land-tax/about/taxable-value/
[19] Queensland Revenue Office, Transfer duty rates, updated 25 June 2026. https://qro.qld.gov.au/duties/transfer-duty/calculate/rates/
[20] State Revenue Office Victoria, Land tax current rates, 2024 to 2033 land tax years, updated 20 July 2026. https://www.sro.vic.gov.au/about-us/rates-and-statistics/current-rates/land-tax-current-rates
[21] State Revenue Office Victoria, Trusts and land tax – the trust surcharge scale, updated 24 August 2026. https://www.sro.vic.gov.au/owning-property/land-tax/companies-and-trusts/trusts-and-land-tax
[22] State Revenue Office Victoria, Land transfer duty, non-principal place of residence – current rates, updated 10 July 2026. https://www.sro.vic.gov.au/about-us/rates-and-statistics/current-rates/land-transfer-duty-non-principal-place-residence-current-rates
[23] Revenue NSW, Land tax thresholds and rates – including the threshold freeze from 2025, updated 16 March 2026. https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/land-tax/understanding-land-tax/thresholds-and-rates
[24] Revenue NSW, How trusts are assessed for land tax – special trusts receive no threshold, updated 25 August 2026. https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/land-tax/understanding-land-tax/types-of-landowners/trusts
[25] Revenue NSW, How to calculate transfer duty – 2026-27 rates, updated 19 August 2026. https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/transfer-duty/understanding-transfer-duty/calculate-transfer-duty
[26] Revenue NSW, Revenue Ruling DUT 018 – dutiable transactions over land and improvements, current. https://www.revenue.nsw.gov.au/help-centre/resources-library/rulings/duties/dut018
[27] APRA, Submission to the Senate Select Committee on Productivity, Housing lending – the buffer applies to authorised deposit-taking institutions; non-bank lenders sit with ASIC and are under 5% of housing lending, June 2026. https://www.apra.gov.au/system/files/2026-06/Submission%20-%20Senate%20Select%20Committee%20on%20Productivity%20-%20Housing%20lending%20-%20Redacted.pdf
[28] ASIC, Responsible lending conduct – Regulatory Guide 209 and Chapter 3 of the National Consumer Credit Protection Act 2009, current. https://www.asic.gov.au/regulatory-resources/credit/responsible-lending
[29] Resimac, Broker interest rate card – investor interest-only rates, 15 May 2026. https://www.resimac.com.au/broker
[30] La Trobe Financial, Broker product guide – investment rates and application fees, August 2026. https://www.latrobefinancial.com.au/
[31] Bluestone, Published residential investment rates and fees, including the risk fee, 17 August 2026. https://bluestone.com.au/our-rates/
[32] Pepper Money, Retail residential home loans interest rate card and fee schedule, 28 July and 21 August 2026. https://www.pepperbroker.com.au/
[33] The Adviser, Brokers turn to non-banks amid the serviceability squeeze, June 2026. https://www.theadviser.com.au/broker/48313-non-bank-mortgages-creep-higher-as-serviceability-squeeze-bites
General information only. This report has been prepared by High Income Property Pty Ltd (HIP) for general information and educational purposes. It does not take into account your objectives, financial situation or needs, and it is not financial, credit, taxation or legal advice. You should obtain advice from a licensed credit assistance provider, a registered tax agent and a lawyer before acting on anything in it.
Worked examples and assumptions. The examples are hypothetical and illustrative. Prices, land values, rents, interest rates, serviceability treatments, lender buffers, fees, expenses, vacancy, maintenance, depreciation, growth rates, tax rates and land tax scales are assumptions or scenarios, not predictions, and small changes to them produce materially different results. The serviceability calculations are simplified versions of a lender assessment and do not replicate any particular lender’s policy or credit criteria.
Lender information. Rates and fees are taken from lenders’ published rate cards at the dates shown and change frequently. The buffer used for non-bank lenders in Section 6 is an assumption drawn from broker reporting, not published policy; no non-bank lender publishes its serviceability buffer. Naming a lender is not a recommendation of it, and HIP does not provide credit assistance.
Measures not yet final. The definition of a new residential dwelling was an exposure draft at the date of this paper, with no legislative instrument registered. The announced minimum tax on discretionary trusts from 1 July 2028 is not law. Victoria’s land tax scale is legislated only to the 2033 land tax year. Lender servicing policies described here were as reported in mid-2026 and may since have changed.
Third-party data. Figures attributed to third parties are reproduced as published at the dates shown. HIP has not independently verified them, they may contain errors or be revised, and HIP accepts no liability for them.
Our interests. High Income Property is a buyers agency and receives commissions from developers and builders in connection with the house and land packages it introduces, and fees from clients it acts for on established property. Readers should weigh the analysis in this paper with that in mind.
Currency and copyright. Information is current as of September 2026 unless otherwise stated. © High Income Property Pty Ltd 2026. Third-party trademarks and data remain the property of their owners.
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