Australian property investment glossary
Plain-English definitions for the terms investors actually need. Negative gearing, CGT, LMI, LVR, SMSF and 39 more, written like a smart friend explained them.
Tax + ATO
How the tax office treats rental income, deductions, and capital gains.
Negative gearing
When your rental loses money on paper, the loss cuts your taxable income.
Positive gearing
When rental income beats expenses, leaving you with extra cash each year.
CGT (Capital Gains Tax)
Tax on the profit when you sell an investment property for more than you paid.
CGT 50% discount
Held over 12 months? Only half the capital gain is taxable.
Division 40 (plant and equipment)
Depreciation on the removable stuff inside the property (oven, carpet, aircon).
Division 43 (capital works)
Depreciation on the building itself - bricks, concrete, fixed structures.
Depreciation schedule
A quantity surveyor's report listing every deductible asset in your property.
PPOR (Principal Place of Residence)
Your main home. Generally exempt from CGT and stamp duty concessions apply.
6-year rule
Rent out your former home for up to 6 years and keep the CGT exemption.
Stage 3 tax cuts
The 1 July 2024 income tax bracket overhaul that reshaped negative gearing math.
Medicare Levy
An extra 2% on top of income tax that helps fund Medicare.
LITO (Low Income Tax Offset)
A tax offset (not a deduction) for taxable incomes below about $66,667.
Finance + loans
Mortgage terms, lender jargon, and how borrowing actually works.
LMI (Lenders Mortgage Insurance)
A one-off insurance fee the lender adds when you borrow more than 80% of value.
LVR (Loan-to-Value Ratio)
Your loan as a percentage of the property value. Lower = cheaper to borrow.
Offset account
A savings account linked to your loan that cuts the interest you're charged.
Interest-only vs principal-and-interest
IO pays only the interest; P&I chips away at the debt too.
Refinance
Switching your existing loan to a new lender or new product for a better deal.
Serviceability
The lender's test for whether you can afford the repayments at a stressed rate.
HEM (Household Expenditure Measure)
A minimum living-cost benchmark lenders use in serviceability tests.
Redraw
A loan feature that lets you pull back extra repayments you made earlier.
Fixed rate vs variable rate
Fixed locks your rate for 1-5 years; variable moves with the market.
Comparison rate
A truer rate that bakes in most fees, so you can compare loans apples to apples.
Property types + structures
Ownership structures, strata, SMSF, and the rentvesting playbook.
SMSF (Self Managed Super Fund)
Your own super fund that can buy property with strict ATO rules.
NRAS (National Rental Affordability Scheme)
A discontinued federal scheme paying incentives for sub-market rentals.
Strata
Ownership of a single unit in a multi-unit building, with shared common areas.
Body corporate / owners corp
The legal entity of all unit owners that runs and maintains shared parts of a strata block.
Dual occupancy
One block, two separately rentable dwellings - higher yield, more complexity.
Rentvesting
Rent where you want to live, buy investment property where the numbers work.
Granny flat
A small secondary dwelling on the same lot - boosts yield without subdivision.
Owner-occupier vs investor
How you intend to use the property changes the loan, the tax, and the duty.
State + government
Stamp duty, land tax, RTA rules, and government-scheme shorthand.
Stamp duty
A state-level tax on property purchases, typically the biggest upfront cost.
Transfer duty
The same as stamp duty - just a more accurate modern name some states prefer.
FHB (First Home Buyer) schemes
Federal and state schemes that cut stamp duty or guarantee deposits for first buyers.
Land tax
An annual state tax on the unimproved value of investment land you own.
Foreign buyer surcharge
An additional 7-8% stamp duty load on property purchased by foreign persons.
State revenue office
The state body that collects stamp duty, land tax, and processes property transfers.
RTA (Residential Tenancies Act)
The state law governing every landlord-tenant relationship in residential property.
Prescribed form
A state-mandated template letter - using the wrong format invalidates the notice.
Returns + metrics
Yield, cashflow, equity, and the numbers investors actually quote.
Gross yield
Annual rent divided by property value. Quick top-line return number.
Net yield
Yield after stripping out running costs - the honest return number.
Cashflow positive vs cashflow negative
Whether the property puts cash in your pocket or takes it out, each year.
Equity
The slice of the property you actually own - value minus loan balance.
Capital growth
The increase in property value over time. The real long-term wealth driver.
Rental return
A loose term for the cash a property earns - usually means gross or net yield.
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