How much does it cost to buy an investment property?

Most first-time investors focus on the deposit and forget the costs sitting on top of it. Those costs decide how much cash you really need on settlement day, and whether your numbers work. This guide covers what you pay upfront, what you pay every year, and which costs you can often avoid or claim back.

The upfront costs of buying an investment property

These are the one-off costs you pay to acquire the property, separate from your deposit. The table below shows what each is and a typical range for a standard purchase. The actual figures vary by state, lender and property.

A worked example: an $800,000 investment property in NSW

Here's how it stacks up for a first-time investor buying an $800,000 property in New South Wales with a 12% deposit (so LMI still applies). Treat it as an illustration, not a quote.

The deposit is $96,000, but the costs add roughly another $47,200, about 5.9% of the price. That gap is exactly what catches first-time investors out. Our property purchase costs calculator totals all of this for your price and state in a couple of minutes.

Stamp duty is usually the biggest cost

Stamp duty (transfer duty) is charged by each state and territory on the purchase price, and for an investment property you pay the full rate. The first-home buyer concessions and exemptions don't apply, because it isn't your home. It scales with price, so on an $800,000 purchase it can range from around $31,000 in NSW to figures in the high $30,000s or $40,000s in other states.

It's payable at or shortly after settlement and normally has to come from cash rather than the loan. The main exception is a guarantor loan, which can let you fold it in. Either way, it usually drives your upfront budget more than anything else.

LMI, and how to avoid it

LMI protects the lender if you can't repay, and it applies when your deposit is under 20% (an LVR, or loan-to-value ratio, above 80%). On an investment property at 90% LVR it can run to $15,000–$25,000 or more. You can avoid or reduce it a few ways:

• Put in a 20% deposit (an 80% LVR): the classic way to skip LMI entirely
• Use equity from your own home to top up the deposit to 20%
• Use a guarantor loan: a family member's property as extra security can remove the need for LMI, even with a smaller deposit
• Or buy with a smaller deposit and pay LMI: sometimes worth it to buy sooner while prices and rents move

Whether paying LMI is smart depends on the numbers. We cover the deposit side in detail in how much deposit you need for an investment property.

The ongoing costs you need to be aware of

Buying is one bill; holding the property is another. These recurring costs come out of (and are largely offset by) the rent. Budget for them so a tenant-free month or a repair doesn't catch you out.

• Loan interest: the largest ongoing cost; interest-only is common for investors to manage cash flow
• Council rates and water rates: set by your local council and water authority
• Landlord (building) insurance: covers the building plus loss of rent; budget roughly $1,000–$2,000 a year
• Strata / body corporate levies: for apartments and townhouses, often $2,000–$6,000+ a year
• Property management: a managing agent typically charges 5–8% of the rent collected
• Repairs and maintenance: a sensible rule of thumb is to set aside about 1% of the property value a year
• Land tax: payable to your state once your total landholdings pass its threshold (investments count; your home usually doesn't)

Land tax in particular surprises new investors: your own home is generally exempt, but investment properties count toward your state's land-tax threshold, so a second property can trigger an annual bill you didn't pay before.

Which of these costs are tax deductible?

Broadly, the ongoing costs (loan interest, property management, council and water rates, landlord insurance, repairs and depreciation) are deductible against the rental income.

The change that matters most is what happens when those costs are more than the rent. Under the old rules, that net loss could be applied against your other income, such as your salary, to lower your tax bill. That is what negative gearing meant.

Under the reforms taking effect from 1 July 2027, a first-time investor generally can't apply that loss against their personal income. Instead the loss is carried forward and used later, once the property becomes cash-flow positive or you make a capital gain when you sell.

Upfront costs work differently again: stamp duty and legal fees are usually added to your cost base (the figure your capital gain is measured against when you sell) rather than deducted now.

The rules depend on your personal circumstances, so read our guide to the negative gearing and CGT changes for what changed and who's grandfathered (protected under the old rules). This isn't tax advice: confirm the detail with a registered tax agent or accountant before you rely on it.

How to fund the costs without draining your savings

You don't always need tens of thousands in cash. If you own a home that's grown in value, the usable equity can often cover both the deposit and the upfront costs. See how to use your home's equity to invest.

It also pays to know your borrowing limit first, because that sets the price you're working with, and therefore the stamp duty: read how much you can borrow for an investment property.

Work out your real numbers

Want the full upfront figure for your price and state? Run the property purchase costs calculator to total every cost, check your limit with the borrowing-capacity calculator, or start on the investment property page. When you're ready, a free discovery call with Scott turns these estimates into real, lender-checked numbers.

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