Investment property or shares?
The great Australian wealth debate, run properly — with stamp duty, gearing, dividends and capital gains tax all in, and the answer broken down by state.
Over 10 years in New South Wales, on these assumptions
shares would leave you $106,420 ahead
$1,053,268
$1,159,687
Net wealth after selling and paying capital gains tax, from the same $322,111 of upfront cash (incl. $54,151 stamp duty) and the same yearly out-of-pocket.
The verdict is highly sensitive to capital growth and share returns — open the advanced panel to set your own. Property uses New South Wales stamp duty; prices default to ABS mean dwelling values. A guide, not financial advice.
The argument is usually settled with headline returns — property doubles every decade, the index does better — and neither claim survives contact with the costs. Property is bought with borrowed money and taxed on the way in by the state. Shares cost nothing to acquire but cannot be geared as far.
This page compares them on the only basis that settles anything: the after-tax cash you would actually hold at the end, from the same upfront money and the same yearly out-of-pocket commitment. Because duty is a state tax and typical prices differ sharply by market, the answer is repeated across all eight states and territories.
How this is calculated
- 1
Price the entry, and match it
Your deposit, your state's transfer duty and an allowance for conveyancing, inspections and loan setup make up the upfront cash. The shares path is handed that same amount on day one. The remaining price becomes a principal-and-interest loan over 30 years.
- 2
Run the property year by year
Rent is the property's value times the gross yield, less vacancy. Interest, rates, insurance, maintenance and the agent's fee come out of it, and any loss is refunded at your marginal rate — negative gearing. Value and rent grow at your capital-growth rate.
- 3
Force both paths to cost you the same
If the property runs short of cash after that refund, the gap counts as money you tipped in, and the same amount goes into the share portfolio that year. Any surplus is reinvested into shares alongside the property.
- 4
Tax dividends yearly, growth at the end
The share return splits into a dividend yield and capital growth. Dividends are taxed each year at your marginal rate, less the franking credit on the franked portion that offsets the 30% company tax already paid, then reinvested.
- 5
Sell both and pay capital gains tax
The property sells net of agent and legal costs, with duty and buying costs in its cost base. The discounted gain stacks on your other income to find the extra tax and Medicare levy it triggers; shares are treated the same way.
What it assumes
- Returns are fixed and nominal — the same growth and share return every year, with no inflation adjustment. The verdict swings hard on both, which is why the tool solves for the break-even level of each.
- Both assets are sold in one hit at the end and taxed under the current year's rules, including the 50% CGT discount for assets held over twelve months.
- Duty uses each state's owner-occupier scale for an established home. Queensland and the ACT apply concessional owner-occupier rates an investor would not get, so duty is understated there.
- Land tax, depreciation and lenders mortgage insurance are all excluded, and your marginal rate is held flat for the whole hold. Land tax would drag the property down and depreciation would lift it — a rough wash, not a precise offset.
- One property, tenanted apart from the vacancy allowance, with no special levy, problem tenant or renovation — concentration risk a diversified portfolio does not carry.
Common questions
Doesn't negative gearing make property win on its own?
It softens the loss, it does not create the gain. A negatively geared property loses money every year, and the refund only hands back your marginal rate on that loss. Property wins here on capital growth, not on the deduction.
Why does the state change the answer so much?
Duty is a state tax on the purchase price, so the same house costs a different amount to acquire depending on which border it sits behind, and that money never earns a return. The state table also prices each state at its own ABS mean dwelling value.
Shouldn't leverage make property win automatically?
Gearing multiplies whatever the property does, in both directions, and interest is a real cost that only pays if growth plus rent, after costs and tax, beats it. The sensitivity grid runs deposits from 10% to 50% against a range of growth rates.
How long before property catches up?
Longer than most expect. Duty and transaction costs are sunk whether you hold three years or thirty, and the loan is largest at the start. The chart marks the year the two paths cross, if they cross at all.
Sources: ABS — Total Value of Dwellings · ATO — Individual income tax rates (residents) · ATO — Medicare levy · Revenue NSW — Transfer duty · SRO Victoria — Land transfer duty · All data sources
See also: Investment property · Capital gains tax · Stamp duty · Rent vs buy
General information only, not financial advice. Figures are estimates based on the inputs and assumptions above and don't account for your personal circumstances. Confirm anything important with the relevant authority or a licensed adviser.