Eternity Group

Property investors · Equity release

Equity Release for Investors

Releasing usable equity from an existing investment property to fund the next deposit — with loan-purpose discipline so that interest deductibility follows the use of the borrowed funds, not just the security. Scoped by a Chartered Accountant who is also a Credit Representative.

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Where information on this page combines tax and lending considerations, tax-related statements are general only and depend on individual circumstances. Eternity Group Accountants is a registered tax agent (TPB 25523469). Mr Rohan Manokaran (Credit Representative 565110) is authorised under Australian Credit Licence 561324. Seek personal tax and credit advice based on your situation.

What this page is for

A narrow focus — releasing equity, not buying.

This page is specifically about cash-out and equity release for investors who already own. It is distinct from our two sibling pages.

If you are buying a new investment property and need the purchase loan itself, the product page is investment property loans. If you want the full picture of how loan structure and your tax position are designed together across a portfolio, that is tax-aware mortgage strategy.

This page narrows to one specific move: pulling usable equity out of a property you already hold and turning it into the deposit for the next one — done with enough purpose discipline that the tax characterisation of the new borrowing is clean from day one. Equity release is where the most expensive coordination mistakes happen, because the deductibility of the released funds depends entirely on what you do with them.

This is general information only and not personal tax or credit advice. Eligibility, lender criteria, fees and charges apply, and outcomes depend on the lender's assessment and your individual facts.

The mechanics

Usable equity is not the same as total equity.

The number that matters for a release is usable equity at the lender's LVR ceiling — typically 80% — not the gap between the loan and the valuation.

Total equity is simply the property value less the loan. Usable equity is the part a lender will release without pushing you above its LVR ceiling. As a general rule, that ceiling sits at 80% of the current valuation; the lender takes 80% of the value, subtracts the existing balance, and what remains is broadly what can be released before serviceability is tested.

Going above 80% LVR is sometimes available but usually brings Lenders Mortgage Insurance and stricter policy, which changes the economics of the release. A fresh valuation drives the whole calculation, so a property that has grown in value since purchase can unlock materially more than the owner expects — and a flat or softening valuation can unlock less. We model the release against a realistic valuation range, not the optimistic one.

LVR thresholds, valuations and the amount released are illustrative and lender-specific. All figures are subject to the lender's valuation and assessment, and fees and charges apply.

Scope

What an equity-release engagement covers.

Practical, lender-specific work — modelled and documented before any application is submitted, with the tax side scoped alongside.

Usable equity calculation

80% LVR ceiling · current valuation

Usable equity worked out against the 80% LVR line on a realistic current valuation, with the existing loan subtracted, so you know the genuine release ceiling before any application. The above-80% LMI scenario modelled separately where it is worth considering.

Loan-purpose discipline

Deductibility follows use, not security

The released portion structured so its use can be traced to an income-producing purpose. Deductibility follows where the money goes — not the property the loan is secured against — so the structure is set before the funds move, not argued afterwards.

Separate splits

Keep deductible and private apart

A dedicated loan split for the deductible release, kept distinct from the original loan and from any private borrowing. Blending a deductible release and a private purchase in one account creates an apportionment problem that is hard to unwind later.

Next-deposit funding

Cash-out to seed the next purchase

Released equity positioned as the deposit and acquisition costs for the next income-producing property, so the new purchase can proceed — ideally with the new loan at or under 80% LVR to avoid LMI on that side too.

Serviceability impact

3pt buffer · holding costs

The new repayment on the released loan assessed at the actual rate plus at least a 3 percentage point buffer, with holding costs included, so the effect on capacity for the next purchase is understood up front rather than discovered at application.

Tax handover

Rental schedule reconciliation

The purpose of the released funds documented for the year-end rental schedule, so the deductible interest on the release reconciles cleanly. The accounting side already knows the structure before the first return after the release is prepared.

The point that decides everything

Deductibility follows the use of the funds, not the security.

This single principle is why equity release is a tax decision as much as a lending one.

It is intuitive to assume that because a loan is secured over an investment property, the interest must be deductible. It is not the security that determines deductibility — it is what the borrowed money is used for. Release $200,000 against an investment property and put it toward the deposit on another income-producing property, and that interest is generally deductible under current law. Release the same $200,000 and spend it on a private purpose, and it generally is not, even though nothing about the security changed.

Where it goes wrong is mixing. A single redraw that funds half a deposit and half a renovation of the family home becomes a blended loan, and the deductible and private portions then have to be apportioned for the life of the loan. The fix is structural and it has to happen before the funds move: a clean split for the deductible release, the private money kept entirely separate, and the trail from drawdown to income-producing use intact. We position the lending so that discipline is built in; the accounting side then documents it at year end. The strategy intersection — including debt recycling — is covered on tax-aware mortgage strategy.

The Government announced changes to the CGT discount and to negative gearing in the 2026–27 Federal Budget; those measures are not yet law and are intended to apply from 1 July 2027 if enacted, so always check the current law for the relevant income year.

Suited to

Investors a release typically suits.

Owners funding the next deposit

Investors with a property that has grown in value, who want to convert that growth into the deposit for the next income-producing purchase without selling the existing asset.

Portfolio builders

Established investors adding the third or fourth property, using sequential equity releases to fund deposits — where the purpose trail across several loans has to stay clean.

Refinancers releasing at the same time

Owners refinancing an investment loan for rate or structure who want to release usable equity in the same transaction rather than running a second application later.

Trust and company investors

Investors holding property through a trust or company who want to release equity within the entity — narrower lender shortlist, guarantees required, purpose discipline unchanged.

Process

From valuation to released funds — with purpose set first.

A predictable sequence with the lending and the tax characterisation coordinated by the same practitioner.

Equity assessment

Realistic current valuation range, existing loan balance and the usable-equity ceiling at 80% LVR worked out before anything is committed.

Purpose mapped

What the released funds are for, mapped to an income-producing use, so the deductible portion is identified before drawdown.

Split structure

The release set up as a separate, traceable loan split — deductible release kept apart from the original loan and any private borrowing.

Serviceability & lender shortlist

The new repayment buffered and modelled across lenders so the impact on capacity for the next purchase is clear, with a shortlist on policy fit.

Application & release

Application to the most-likely lender, valuation, approval and drawdown of the released funds into the structure agreed.

Tax handover

Purpose documented for the year-end rental schedule so the deductible interest on the release reconciles cleanly at return time.

Frequently asked questions

Equity release for investors — common questions.

As a general guide, lenders calculate usable equity against an 80% LVR ceiling on the current valuation, then subtract the existing loan balance. So on a property valued at $1,000,000 with a $500,000 loan, the 80% line sits at $800,000, leaving roughly $300,000 of usable equity before serviceability is even tested. Releasing above 80% LVR is sometimes possible but typically attracts Lenders Mortgage Insurance and tighter policy. These figures are illustrative only — the actual amount depends on the lender's valuation, your serviceability, the security property and current lender criteria, and is subject to the lender's assessment.

How we are paid

How we are paid: Eternity Mortgage Solutions typically receives commissions from the lender for loans arranged on your behalf. A full explanation of how we are paid, our lender panel and any potential conflicts of interest is provided in our Credit Guide and Credit Proposal Disclosure document, available on request before any loan application is submitted.

Related

Where equity release fits

Releasing equity is one move inside a wider investor engagement. The connected pieces are the purchase loan, the refinance where releases usually happen, the strategy layer, and the tax side that documents the purpose.