70% rule calculator

What is the 70% rule?

The 70% rule says: maximum buy price = (ARV × 70%) − renovation cost. ARV is the after-repair value — what the finished property sells for. You take 70% of that, subtract what the renovation will cost, and the number you're left with is the most you can pay for the place. The 30% you carved off is a buffer, and its job is to absorb every cost between buying and banking your profit: stamp duty, holding costs, selling costs, tax and the margin you actually want to walk away with. If the seller's asking price is above your 70%-rule maximum, you walk. That's the whole point of the rule — it gives you a walk-away number before you fall in love with the house.

Does the 70% rule work in Australia?

Yes, but it needs one honest adjustment. The rule was popularised in the United States, where transaction costs, holding costs and the tax treatment of a flip all look different to ours. Drop the US 70% figure onto an Australian deal without checking it and you can talk yourself into overpaying. The number still works as a fast filter — but treat 70% as the middle of a range, not gospel. In a soft market with longer selling times and nervous buyers, tighten to 65%. In a genuinely hot market with quick resales and low days-on-market, 75% can still leave an acceptable margin. The slider above lets you test all three in a few seconds.

What the 30% buffer actually has to cover

The reason the rule works is that the 30% you set aside is not spare change — it gets eaten by real, unavoidable Australian costs. Here's where it goes on a typical deal:

Stamp duty (transfer duty). This is usually the single biggest transaction cost, and it's charged on the purchase price. In NSW, transfer duty on a $700,000 purchase comes to roughly $21,600 under the 2026 rates published by Revenue NSW. Every state runs its own schedule, so check yours — but budget for a five-figure hit before you've painted a single wall. Our stamp duty calculator works it out per state.

Selling costs. Agent commission in Australia typically runs 2% to 3% of the sale price — around 2.5% is a common middle for capital-city stock, higher in regional markets. On a $780,000 resale that's roughly $19,500 in commission alone, before marketing, styling and conveyancing.

Holding costs. Loan interest, council rates, water access charges, insurance and utilities keep ticking over for the whole hold — often longer than you plan once you count settlement, the build and the days-on-market at the end. This is the line item flippers most often underestimate; the holding cost calculator breaks it down.

Tax. This is the big one people get wrong. Profit from a flip you bought with the intention of renovating and reselling is generally treated by the ATO as ordinary income on revenue account — not a capital gain — which means the 50% CGT discount usually does not apply. The ATO sets this out in its guidance on tax consequences on sales of property. Model the after-tax number, not the gross, and confirm your position with an accountant.

A worked Australian example

Say the comps tell you the finished house sells for an ARV of $780,000, and the renovation will cost $90,000. Apply the rule: 70% of $780,000 is $546,000, minus the $90,000 reno gives a maximum buy price of $456,000. If the vendor wants $520,000, the deal fails the rule by $64,000 — and that gap is almost exactly the buffer you'd need for stamp duty, agent commission, holding and tax on a deal this size. The rule isn't being pessimistic. It's being accurate.

When to tighten and when you can stretch

Move to 65% when the exit is uncertain: a thin comparable-sales set, a suburb with long days-on-market, a structural reno where the budget could blow out, or rising interest rates lengthening your carry. Only stretch toward 75% when the resale is fast and well-evidenced, the reno is cosmetic and tightly scoped, and you have contingency in reserve. The percentage is really a proxy for risk — the more can go wrong between buying and selling, the more buffer you leave.

Why it's a discipline check, not a valuation

The 70% rule doesn't tell you what a property is worth. It tells you the most you can pay and still make money. Most flippers lose deals the other way round — they anchor on the ARV, fall for the house, and bid up until the margin quietly disappears. The rule forces you back to the buy-side question every time: what's my walk-away number? Treat it as a first-pass filter, then pressure-test the survivors with a full feasibility. You can run the complete numbers on our flip ROI calculator, or see what a finished analysis looks like on a real listing in the sample analysis.

This is general information, not financial, tax or legal advice. Figures are examples and current at the time of writing — verify current stamp duty rates and your own tax position before you act.