Many investors are sitting on properties that have grown well in value but barely pay their way. A standard Brisbane house returns around 3% to 4% gross. After interest, rates, insurance and maintenance, plenty cost money every month.
With the 2026 tax reforms limiting negative gearing to new builds, more investors are asking a fair question: should I sell a low-yield property and put the equity into something that produces cash flow?
Sometimes the answer is yes. Often it’s no. The difference comes down to the real cost of switching, which is almost always higher than people expect. This guide walks through how we assess it. It’s written by Yield Street Property Buyers, a Brisbane buyers agency that specialises in high yield property. Our founder, Lauren Jones, is a licensed buyers agent and Qualified Property Investment Adviser (QPIA) who owns a multi-property portfolio and a rooming house of her own.
When recycling equity can make sense
• Your property costs you money every month and you need income, for example as you approach retirement.
• Growth has slowed or the property is in a location you no longer believe in.
• You have a large capital gain locked up earning a small rent compared to its value.
• You’re carrying too much risk in one place and want to rebalance your portfolio.
When holding is usually better
• You bought before 12 May 2026 and rely on negative gearing. That property is grandfathered under the old rules for as long as you own it. Sell it and you give that up permanently. Any established property you buy instead falls under the new rules.
• The property is in a strong growth location with good land content. Quality land is hard to replace.
• The capital gains tax bill would be large and you can’t time the sale to reduce it.
• You’d be selling in a weak market or in a hurry.
The real cost of switching
Every dollar you spend getting out of one property and into another is a dollar that has to be earned back before the switch pays off. Add up all of it:
• Selling costs. Commission, marketing, styling and legal fees. Commission is usually the biggest. On a $900,000 sale, every 1% of commission is $9,000, so it pays to compare. Some agents now charge under the traditional rates.
• Capital gains tax. Often the largest cost of all. Selling costs generally reduce the gain, and the timing of the sale changes how it’s taxed.
• Loan costs. Break fees on fixed loans and discharge fees.
• Stamp duty on the new purchase. In Queensland, transfer duty on a $1.1 million investment site is $43,775 at general rates.
• Purchase costs. Legal fees, building and pest inspections, finance costs and buyers agent fees.
• Time out of the market. If you’re building, there are months of holding costs before the new property earns rent.
A worked example
Here’s a simplified illustration, using example figures only.
An investor owns a house worth $900,000 with a $300,000 loan. It rents for $600 a week, or $31,200 a year, a gross yield of about 3.5%. After interest and running costs, it roughly breaks even.
They sell. After commission and other selling costs of $25,000, an assumed CGT bill of $60,000 and repaying the loan, about $515,000 is left. That’s enough to fund a 30% deposit and costs on a purpose-built rooming house project costing $1.5 million, including $43,775 in stamp duty on the site.
Once complete, five rooms at $440 a week bring in $114,400 a year. After running costs and interest on the new loan, the property returns around $20,000 a year in positive cash flow before tax.
On those numbers, the switch turns a break-even property into a cash flow positive one. But it took roughly $130,000 in selling costs, tax and duty to get there, plus build time with no rent. The investor also took on a larger loan, a more hands-on asset and a smaller pool of future buyers. Whether that trade is worth it depends entirely on the investor’s goals and circumstances.
For a full breakdown of how to compare returns, read our guide to buying a rooming house in Brisbane.
How to reduce the cost of switching
• Compare agent commission. It’s the selling cost you have the most control over.
• Time the contract date. The CGT event usually happens when you sign the contract, not at settlement. Selling in a lower-income year, such as after you retire, may reduce the tax.
• Understand the 1 July 2027 split. Gains built up before that date keep the current CGT treatment. Gains after it are taxed under the new indexation rules. There’s no general reason to rush, but your accountant should model both options.
• Keep your records. Purchase costs, capital improvements and selling costs can all reduce your capital gain.
• Line up the purchase first. Get finance pre-approval and know what you’re buying before you sell, so the equity isn’t sitting idle.
• Buy something that qualifies as new. A project that adds dwellings, such as two rooming houses or a dual occupancy where there was one house, can be an eligible new build under the 2026 rules. See our guide to negative gearing and rooming houses..
Frequently asked questions
Should I sell my investment property to buy a rooming house?
Only if the numbers work after every cost of switching, and the new property suits your goals and risk tolerance. Many investors are better off keeping a good growth property and adding a high yield property alongside it, using equity rather than selling.
Can I use equity instead of selling?
Often yes. Borrowing against your existing property avoids selling costs and capital gains tax, but it increases your total debt. A broker can tell you how much you could access.
Do I lose negative gearing if I sell?
You lose it on the property you sell. If you bought it before 12 May 2026, that grandfathered treatment can’t be transferred to a replacement property.
Should I sell before 1 July 2027?
Not necessarily. Gains built up before 1 July 2027 keep the current CGT treatment under the transition rules. Get your accountant to model your situation.
Our View
Recycling equity can be one of the most powerful moves in a portfolio, but it’s expensive and hard to reverse. We’d rather see an investor keep a quality growth property and add cash flow beside it than sell something good just to chase yield.
When selling does make sense, the gains come from the details: what you pay to sell, when you sign the contract, what you buy next and how quickly it starts earning. Plan the whole switch before you list, not after.
Weighing up whether to sell, hold or add to your portfolio? Book a strategy call with Yield Street Property Buyers. We’ll look at your current properties and what a high yield purchase could do for your cash flow, then work alongside your accountant and broker. Call 0414 221 741 or email hello@yieldst.com.au.
This article is general information only and is current as at October 2026. It isn’t tax, financial or legal advice and doesn’t take into account your objectives, financial situation or needs. Example figures, including tax, are illustrative only and are not a forecast. Speak to a registered tax agent and a licensed financial adviser before you decide to sell or buy.