Home Calculators Can I afford an investment property Calculator
This calculator provides an estimate of how much an investment property will cost.
The calculator estimates the amount of cash you will require (or receive) on a monthly and annual basis to fund your investment property. It also gives an indication of the change in the amount of tax you will pay due to owning an investment property. These two measures are then combined to provide a measure of the after tax profit or loss associated with owning an investment property.
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The investment property calculator provides an estimate of how much an investment property will cost.
It combines the cash operating revenue, rent, and the cash operating expenses, with the change in the amount of income tax paid to measure the net change in the investor's income due to owning the investment property.
It is important to recognise that the results are only rough estimates and should not be treated as financial advice. Before making any investment decisions you should consult your financial adviser.
Assumptions
Monthly Rental Income:
Monthly Rental Income is the rental income you receive each month. It can be increased each year by inserting a growth rate in Potential Rental Growth per annum.
Monthly Loan Repayment:
Monthly Loan Repayment is the value of monthly loan repayments, assuming interest only payments.
Monthly Cash Operating Expenses:
Monthly Cash Operating Expenses is the total of the tax deductible expenses associated with maintaining the property for the month. It increases by the growth rate input in Annual Increase in Operating Expenses.
Cash Flow:
Cash Flow is the cash revenues less the cash expenses. That is Rental Income less the Loan Repayments and Cash Operating Expenses. This measures the amount of cash you will receive, if it is a positive number, or the amount you will have to pay, if it is a negative number.
Annual Building Allowance:
Annual Building Allowance is the tax deduction which can be made for this property. The rate at which building allowance can be claimed is determined by when the property was built.
Annual Tax Profit/Loss on Property:
Annual Tax Profit/Loss on Property combines the cash flow generated by the property with the tax deductions to determine the profit or loss for accounting purposes. Building allowance reduces taxable income, the profit or loss for accounting purposes will be lower than the cash flow generated.
Change in Tax Paid:
The Change in Tax Paid measures the change in the amount of income tax the investor pays due to owning the investment property, compared to if they did not own the property. This is calculated based on the annual taxable income from other sources entered by the user. If the Change in Tax Paid is negative it means the user pays less tax. If it is positive it means the user pays more tax, relative to if they had not owned the investment property.
After Tax Profit/Loss on Investment:
The After Tax Profit/Loss on Investment combines the cash flow associated with the investment property with the tax effect of owning the investment property to measure the net effect of the investment. A positive number indicates a profit, a negative amount indicates an after tax loss.
Australia’s property market has moved to the recovery stage of the cycle, with prices in many locations having made up all the losses of 2022.