Rentvest vs. Buy 🏠

Both lines are measured the same way: what you’re worth assuming you end up owning the retirement home outright, after capital gains tax and stamp duty.

Above the line, buying wins. Below it, renting and investing wins. Everything else is held at your numbers.

• Same money, both sides. Both scenarios draw on one household budget — after-tax income less your living costs. Housing eats into it and whatever survives gets invested, so the two are always spending the same total. Crucially the budget doesn’t depend on either scenario’s costs, which means a cost only ever hurts the side that actually bears it: maintenance moves the owner’s line, rent growth moves the renter’s. If housing outruns the budget, savings get drawn down and you’ll get a warning.
• Swapping houses is expensive. Set a move interval and each move sells up (agent commission plus marketing), pays stamp duty again on the way back in, and restarts the loan at full term. On the defaults, moving every five years costs roughly the price of the house in lost wealth over 25 years — most of it repeat duty and the interest from forever being at the start of an amortisation schedule. Renters are assumed to move just as often, at removalist-and-overlapping-rent prices rather than a five-figure round trip.
• Same finish line. Both are valued as “you own the retirement home outright, plus what’s left” — so the renter pays capital gains tax to get out of shares, then stamp duty to get in.
• Your home is CGT-free. The main residence exemption is applied, which is a large part of why buying is hard to beat.
• The defaults describe a VAS / VOO / VTI mix — roughly 2.1% yield, about half of it franked, 0.05% in fees. There’s deliberately no per-fund allocation slider: with a single expected return for the portfolio, shifting the mix only moves income between growth and dividends, which is worth about $200k across the entire range while a 0.7-point change in the return assumption is worth $728k. It would imply a precision it doesn’t have.
• Domicile is why franking is ~49% and not 100%. VOO and VTI are US-domiciled, so they carry no franking credits: 15% is withheld at source once you file a W-8BEN, then credited back here as a foreign income tax offset, which nets out to paying your Australian marginal rate. Holding them directly also puts US-situs assets in your estate — worth checking against ASX-domiciled equivalents if the balance gets large.
• Dividends are reinvested, net of tax. Each month’s distribution is taxed at your marginal rate — franking credits grossed up and credited back — and what’s left buys more units. That lifts the cost base, so reinvested income isn’t taxed twice: once as income now and again as a capital gain at sale. Capital gains then get the 50% discount.
• Retiring does not reduce capital gains tax. Australia has no age-based CGT exemption — there is no concession for being 60, or retired, or both. All that changes is the rate the gain lands on, so by default the discounted gain is stacked on your other income that year and run through the brackets. A gain in the millions pushes itself into the top bracket even with no other income.
• Land tax doesn’t apply to the home you live in — every state and territory exempts your principal residence, so the default is zero. Fill it in if you’re modelling an investment property or a foreign-owner surcharge.
• Growth defaults come from the record, not vibes. Property at 5.4% is CoreLogic’s 30-year compound rate for national dwelling values; 8.8% for shares sits between Vanguard’s 30-year figures for Australian (9.3%) and international (8.3%) shares. Both periods were flattered by a long fall in interest rates, so treat them as an upper-ish bound.
• First home concessions move constantly and several are income-tested or new-build-only. Where a scheme can’t be worked out from the price, none is applied and you’ll get a warning — always check the override against a real quote.
• The offset is modelled properly. Cash in offset reduces interest instead of earning taxable interest, and the loan clears early as a result.
• Stamp duty uses the current owner-occupier scale for your state, twice — once now, once on the retirement home. Override it if you have a real quote.
• Maintenance is a sinking fund, not a repair bill. It’s built bottom-up: painting, roof, gutters, hot water, air con, flooring, fences, termites, appliances — plus a kitchen and bathrooms amortised over their real replacement cycles. The 1.4% default assumes no pool; add a pool and a big deck and the same build-up lands nearer 1.6–1.8%.
• Superannuation is the big omission. Inside super in pension phase, earnings and capital gains are taxed at nothing — so the same portfolio held there rather than in your own name could avoid most of the capital gains tax shown here. It’s locked up until preservation age, which is why it isn’t modelled, but it’s the single biggest thing that could move the renting side.
• Also not modelled: negative gearing, small business CGT concessions if you sell a company, salary growth, moving costs, divorce, sequence-of-returns risk, or the fact that a house you love is not a spreadsheet.

General information only — not financial advice, and I’m not a financial adviser. Tax scales and duty rates change; check anything that matters with someone licensed. Your numbers stay in your browser.