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The Full Cost List of Purchasing an Investment Property (2025 Guide)
- Angelina Anderson
- Nov 26
- 4 min read
Buying an investment property is one of the most popular wealth-building strategies in Australia, but it’s also one of the most misunderstood. Most investors underestimate the true cost of buying, holding and eventually selling a property, and this mistake can result in poor cashflow, unexpected tax bills and reduced borrowing power.
At Bear Loans, we help clients understand the entire financial picture before purchasing, not just the loan. As mortgage brokers and Chartered Accountants, we show you the real costs, tax implications and long-term strategy behind every investment property.
This 2025 guide breaks down all the costs you need to understand before buying your next investment property.
1. Upfront Investment Property Costs Every Buyer Should Know
These are the expenses you’ll face before or at settlement.
Stamp Duty
Often, the highest upfront cost. Varies by state and property value.
Investment properties usually attract higher duty than owner-occupied homes.
Conveyancing & Legal Fees
Expect $1,500 – $3,000, depending on complexity.
Building & Pest Inspection
Essential for houses and townhouses. Budget $400 – $800.
Loan Establishment Costs
Depending on the lender:
application fees
settlement fees
valuation fees
annual package fees
Some lenders waive fees, others don’t.
Lenders Mortgage Insurance (LMI)
If borrowing above 80% LVR, LMI may apply. Costs range from a few thousand to tens of thousands, depending on loan size and income type.
LMI varies significantly between lenders; choosing the wrong bank can cost you thousands upfront.
Buyer's Agent Fees (Only If Using One)
Typically, 1.5% – 2.5% of the purchase price.
2. Ongoing Holding Costs (The Ones Investors Forget)
These are the yearly or periodic costs that impact cash flow.
Loan Interest
Your biggest expense.
Choosing interest-only vs principal & interest impacts tax deductibility and cashflow.
Property Management Fees( if using an agent, you can choose to self-manage)
Usually 5–8% of rental income, plus leasing and advertising fees.
Council Rates
Approximately $1,200 – $2,200+ per year.
Water Rates
Budget $800 – $1,000+ per year.
Landlord & Building Insurance
Combined cost: $1,000 – $1,800 per year.
Strata Levies (For Units & Townhouses)
Includes:
administration fund
capital works fund
special levies
Special levies can be unexpected and expensive.
Maintenance & Repairs
Plan for 1% of the property value per year.A $900,000 home → approx. $9,000 annual maintenance.
Vacancy Periods
Expect 2–6 weeks per year without rental income.
Land Tax
Varies by state — critical for investors accumulating multiple properties.
3. Tax Considerations Every Investor Must Know
This is where Bear Loans’ unique broker/accountant perspective becomes invaluable.
Depreciation
A depreciation schedule allows you to claim:
capital works (building write-off)
plant & equipment
A quantity surveyor report costs $400 – $800 but delivers significant ongoing deductions.
Negative Gearing
If your expenses exceed rental income, you may reduce taxable income. But this also means your property costs you money each year.
Negative gearing is a strategy — not a benefit.
Record-Keeping
ATO requires detailed records for:
interest
repairs
strata
rates
insurance
depreciation assets
capital improvements
Poor records = lost deductions or audit issues.
4. Selling Costs: What Happens When You Exit (CGT Included)
Selling an investment property also carries high costs.
Capital Gains Tax (CGT)
This is the big one.
CGT applies when you sell an investment property and depends on:
how long have you owned it
your taxable income
capital improvements
selling costs
depreciation adjustments
your cost base
whether you qualify for any exemptions
If owned >12 months, you generally receive a 50% CGT discount.
Example
Profit: $200,000
Discounted gain: $100,000
Tax payable: 32.5% → 45% depending on your tax bracket.
CGT planning can save (or cost) tens of thousands - timing is crucial.
Agent Commissions
Usually 1.8% – 2.5% of the selling price.
Marketing Costs
Photography, staging, ads, floor plans.Budget $3,000 – $8,000.
Loan Break Costs
Especially relevant with fixed-rate loans.
Conveyancing Costs (Sale Side)
Around $1,200 – $2,200.
5. The Most Overlooked Factor: Borrowing Power & Cashflow Safety
Most investors focus on the property…Few understand how it affects their future borrowing power.
Costs you ignore today can limit what you can borrow tomorrow.
Loan strategy must consider:
✔ equity plans
✔ tax strategy
✔ negative/positive gearing
✔ cashflow buffers
✔ refinancing options
✔ future purchases
✔ CGT timelines
This is where Bear Loans excels because we understand the tax side and the lending side.
Final Thoughts
Buying an investment property is more than picking a suburb and getting a loan. It’s a financial strategy involving cashflow management, tax planning, borrowing capacity, property forecasting and long-term exit planning.
At Bear Loans, you get a mortgage broker who understands the entire picture, not just the rate.
We help you:
structure your loan correctly
understand all costs upfront
Plan your tax strategy
analyse cash flow and future borrowing power
avoid expensive surprises
Thinking of Buying an Investment Property?
Get advice backed by Chartered Accountants and strategic mortgage planning.
Book a strategy session with Bear Loans and make a smarter, more informed investment decision.
Disclaimer
The information provided in this blog is for general information purposes only and does not constitute personal financial, taxation or investment advice. It has been prepared without taking your individual objectives, financial situation or needs into account.
You must not rely on this information without first seeking advice from a qualified professional such as your accountant, tax agent, mortgage broker or financial adviser. Bear Loans accepts no responsibility for any loss arising from reliance on the information contained in this publication.
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