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Investment Property Calculator Disclaimer


Terms of Use

This calculator is issued by Empower Housing Group Pty Ltd, ABN 97 107 051 383 (EHG). It is important to understand that this calculator provides possible outcomes based upon both the information provided by you and the assumptions used and that its results are for illustration and information purposes only.

Results are not guaranteed in any way and do not constitute a forecast or estimation of amounts payable or available in the future.

While the calculator is a useful starting point, it cannot replace expert, licensed financial advice and should not be used as the basis for any financial decision. You should consider obtaining advice from a qualified financial adviser to assess your specific financial situation before making any financial decisions.

This calculator is based on the laws of Australia applying as at 12th April 2014.

This calculator assists you to determine the affordability of an investment property. It combines factors such as rent, operating expenses and tax deductions to provide you with an estimate of the net amount you will receive for the investment property (the after tax profit) or the net amount you will pay for the property (the after tax loss).

What you should know

The results provided by this calculator are approximations only and are based on underlying assumptions set out below. While the information you provide impacts the calculator’s results, the calculator cannot incorporate every factor that will influence the actual costs, income, tax concession/liability and ongoing cash flow/shortfall from purchasing an investment property.

EHG specifically disclaims any liability (whether based in contract, tort, strict liability or otherwise) for any direct, indirect, incidental, consequential, or special damages arising out of or in any way connected with the access to or use of the Investment Property Calculator.

Important information

  • Calculations are preset for principal and interest repayments.
  • The property's purchase costs include applicable stamp duty, mortgage and transfer fees, legal fees, valuations and/or lenders mortgage insurance.
  • The ongoing property costs is the estimate of the total amount per year to cover the per annum non-mortgage ongoing costs associated with a property, for example insurances, rates, body corporate fees and/or management fees.
  • The expected gross rent pa is the estimate of the total annual gross rent for the property (excluding costs and expenses such as insurance, rates, body corporate fees and/or management fees).
  • The government stamp duty, and other government fees and charges are calculated based on an investment property or vacant land as applicable in the State or Territory, for the state property is located in. Different rates of duty and fees apply for vacant land.
  • The calculations assume the user is not eligible for any additional rebates, for example a First Home Owner's Grant.
  • The calculator assumes that the user will receive the same gross annual rent per year and will pay the same ongoing costs per year over the life of the loan. The calculator therefore assumes no change in rent, ongoing costs or interest rates over time.
  • There has been no adjustment for inflation made within the calculations.

Calculator Assumptions

Length of Month

Months are assumed to be of equal length of 30 days. Accordingly, it is assumed that the interest charged per month remains constant. However, given some months are longer than others, the actual interest charged on a loan will vary depending upon the month and the convention used by the specific financial organisation providing the mortgage. Therefore the monthly repayment amount may vary by approximately 3%.

Number of Weeks & Fortnights in a Year

One year is assumed to contain exactly 52 weeks or 26 fortnights. Thus each year is assumed to have 364 days.

Repayment frequency

Repayments are assumed to be made on the last day of the month.

Total Interest Payable in Year 1

It is assumed that a full year’s repayments have been made. It is the interest component from year 1 that is used in the Potential Tax Concession calculation.

Other assumptions
  • Ongoing property costs are assumed to be evenly spread throughout the year. This means that the ongoing property costs are the same for each month of Year 1
  • It is assumed that interest on the loan is deductible for income tax purposes
  • The property is assumed to be mortgaged and classes as an investment property
  • This calculator assumes that a loan is required to partially fund the purchase of the investment property
  • The income tax payable used in the calculation is calculated using marginal tax rates only. No adjustment has been made for any other income tax based levies; for example HECS.

About this Investment Property - tab 1

Amounts shown are the net result of income after expenses and displayed as Positive Cashflow or Negative Cashflow. Result is based on prevailing Marginal Tax Rates per user, income amounts entered by the users and applicable rental incomes and property expenses. Expected Tax Benefits shown as Tax Savings or Tax Payable and are a result of negative gearing tax benefits obtained and NRAS refundable tax offsets and tax free cash payments being used. Stamp duty is assessed on vacant land if house and land package or on the total property value if home is only available under a single contract. Total market rental incomes shown if property is non-NRAS. If NRAS then a discounted amount is displayed in NRAS discounted rental field.

Rental Yield and Annual Growth - tab 2

Percentage displayed for rental yield is gross and determined using total weekly rental amount (if NRAS it is discounted by 20%) x 52 weeks and divided by the purchase price + stamp duty. Annual growth rate is determined using prevailing results from sources including RP Data and vary from month to month. Rule of 72 is determined by dividing the annual property growth rate by 72 and shows the expected years for the particular property to double in value.

Profit & Loss Calculations tab - tab 3

Loan amount includes purchase price of property + applicable stamp duty + $2,000 for legals and lenders fees. Interest rate used is the lower of the 4 major banks and can be either variable or fixed. Loan interest is the total of 12-months determined by the total loan amount multiplied by the interest rate. Depreciation amount has been determined by using sources including Washington & Brown. Investment expenses per annum include Council fees, Water fees, Insurances, NRAS fees as applicable, Body Corp fees as applicable, Strata fees as applicable and Property Management fees. Total deductions include the yearly loan interest + yearly depreciation + yearly investment expenses.

Single Year Cashflow - before and after comparison - tab 4

Users enter either their gross annual income amount to determine the before and after tax result or, if already investment property owners with reduced tax payable, the adjusted tax amount is entered to show further tax reductions that may apply to existing incomes. Ownership percentages are determined based on user incomes. Upshot amount shows tax savings or additional tax payable based on adjustments to marginal tax rates and does not include additional tax offsets ie NRAS RTO's.

Effect of this Property on Owners to be Debt Free & Positive Outcomes - tab 5 & 6

Upshot amounts determined using surplus amount from property applied to total debts (including debts listed on debt-table) and paying down the debt sooner resulting in a reduced loan term.

Projected capital growth is determined using suburb property growth rate over 10 years. Two values shown including the increase in property value and the amount of increase. Potential saving in home loan interest calculated by paying down home loan sooner. Surplus amounts continuing to be produced by the property when debts have been repaid in full and reinvested are shown here.

Disclaimer: Accessing and using any information from this site is on the condition you read and agree to the following. Before making any financial commitment to any property you should seek professional advice from a qualified and registered financial advisor. While every attempt is made to keep the information accurate and current, this site should be used to locate properties of interest to carry out further investigation as to the viability and suitability of the investment property to your personal situation. Indicative returns on investment are just that ‘indicative’ being based on information provided from third parties in regard to sale price and expected rent to be obtained. They are not deemed to be the final return once all other costs e.g legal fees, stamp duty, rental fees, utilities connections and the like associated with buying a new home are added in. Using links from this site to other web sites and the like means you are accessing information from sites we have no control over, we will not be held liable for any loss incurred from the use of information from this site and outbound linked sites. Management of Empower Housing Group and Empower Housing Group WA April 2014.

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