Equity Release for Investors

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.

Deductibility follows the use of the borrowed funds, not the property the loan is secured against. Where released equity is borrowed and applied to producing assessable income — for example, the deposit on another income-producing investment property — interest on that portion is generally deductible under current law, subject to ATO rules and your circumstances. Where the same funds are used for a private purpose such as a holiday or a new car, that portion is not deductible, even though the loan is secured over an investment property. This is why purpose discipline matters. This is general information only and personal tax advice should be sought for your specific facts.

The cleanest approach is usually a separate loan split for the released equity, kept distinct from the original loan and from any private borrowing, with the funds moving in a way that can be traced from drawdown to the income-producing use. Mixing a deductible release and a private purchase in the same account creates a blended loan that is difficult to apportion and harder to defend later. We position the splits with the tax side of the practice in mind; the accountant then documents the purpose at the year-end rental schedule. Eligibility and lender criteria apply.

In most residential lending scenarios, the lender pays broker commission. We explain remuneration in our Credit Guide. Equity release is frequently arranged at the point of a refinance, and the same remuneration disclosure applies. You receive the Credit Guide before any application proceeds.

When released equity funds the next income-producing property, the interest on that borrowing forms part of the holding costs that determine whether the new property is negatively or positively geared, and the underlying asset carries its own future CGT position. Under current law, interest used to produce assessable income is generally deductible and the CGT discount may apply to qualifying gains. Both are changing under enacted law: the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (No. 49 of 2026) received Royal Assent on 26 June 2026. From the 2027–28 income year, residential-property deductions that exceed the income from the property are quarantined and carried forward rather than deducted against other income in that year, with transitional rules for an ownership interest last acquired before 7.30 pm (ACT time) on 12 May 2026; and for CGT events on or after 1 July 2027 the discount is restructured, with cost-base indexation running from that date. The current rules apply until then. We model against the law that applies to the relevant income year and flag where the enacted changes alter the picture — our guide on how negative gearing works sets out the detail.

It can. The released loan adds a repayment that lenders assess at the actual rate plus at least a 3 percentage point buffer, which reduces the surplus available to service further borrowing. Against that, the released funds become the deposit that lets the next purchase proceed without LMI on the new loan if the new LVR sits at or under 80%. The net effect on capacity is lender-specific, and we model it across several lenders before any application. Outcomes depend on the lender's assessment.

Often yes, but the lender shortlist narrows and the documentation expands. Trust borrowing requires the deed to permit it and lenders generally require personal guarantees from the trustees; company borrowing brings director guarantees and constitution checks. The purpose discipline is the same — deductibility still follows the use of the released funds within the entity. This is general information only; the structure should be confirmed with personal tax and credit advice for the entity involved.