Property vs Shares Calculator (Australia) — 2025

How the Property vs Shares Calculator Works

This calculator compares investing in a residential property (buy-to-let) versus an equivalent investment in shares, factoring in costs, taxes, and growth over time. It models property expenses (e.g., stamp duty, LMI, interest, ownership costs), rental income, negative gearing benefits, and capital gains tax (CGT), alongside a shares portfolio with reinvested cash flows. Use it to see which path better suits your financial goals.

Quick Start

1. Enter your loan amount, downpayment, and buying costs (auto-filled with stamp duty for your state).
2. Set LMI (Lenders Mortgage Insurance) manually or let it calculate automatically based on loan-to-value ratio (LVR).
3. Adjust property appreciation, rental income, and stock market appreciation to match your expectations.
4. Specify your tax bracket, retirement tax bracket, and years to retirement.
5. Hit Calculate to see year-by-year cash flows, net wealth, and key metrics like ROI and break-even points.

What You Control

• Loan and Downpayment: The mortgage amount and deposit percentage, which determine the property price and LMI.
• Buying Costs: Includes stamp duty (state-specific, with First Home Buyer concessions), transfer fees, and other costs.
• LMI: Lenders Mortgage Insurance, either auto-calculated or manually overridden for flexibility.
• Property Inputs: Appreciation rate, rental yield, ownership costs, and occupancy rate.
• Shares Inputs: Expected stock market appreciation rate for the alternative investment.
• Tax and Timeframe: Current and retirement tax brackets, loan period, and years to retirement.
• Pro Features: Interest-only loans, CSV export, and scenario saving (requires Tepuy+ subscription).

Behind the Math (Step by Step)

1. Property Price: Calculated as loan_amount / [(1 - downpayment_percentage) * (1 + LMI_percentage)].
2. Upfront Costs: Downpayment + buying costs (stamp duty, fees) = cash required to start.
3. Property Cash Flows: Rental income minus ownership costs, interest, and taxes, with negative gearing benefits from depreciation.
4. Shares Portfolio: Starts with the same upfront cash, grows at the stock market rate, and adjusts for property cash flow differences.
5. Taxes and CGT: Property and shares account for CGT (with 50% discount for assets held over 12 months) based on your tax brackets.
6. Outputs: Year-by-year equity, net cash if sold, ROI, IRR, NPV, and break-even year when shares overtake property (if applicable).

Interpreting the Outputs

• Property Equity: Property value minus outstanding loan balance each year.
• Net Cash if Sold: Cash after selling property or shares, accounting for CGT and sale costs.
• ROI and IRR: Simple return (CAGR) and internal rate of return for both property and shares.
• Break-Even Year: When shares’ net cash exceeds property’s (or “No crossover” if property stays ahead).
• NPV: Net present value of cash flows, discounted at 5%, to compare long-term value.
• Cash Flow Positive Year: When property’s rental income exceeds expenses and loan repayments (if applicable).

Worked Example

A 40-year-old with a $400,000 loan, 10% downpayment, and $20,000 in buying costs (including stamp duty) buys a property. LMI is $8,000 (auto-calculated). They expect 6.5% property appreciation, 4.5% rental yield, and 9% stock market growth. With a 32.5% tax bracket and 25 years to retirement, the calculator projects property equity, shares value, and compares net cash if sold, showing ROI and when shares might overtake property.

Limitations & Assumptions

• Assumes constant growth rates for property and shares; real-world returns fluctuate.
• Stamp duty and LMI are based on simplified Australian rules; check local regulations.
• Tax calculations assume Australian CGT rules (50% discount for long-held assets).
• Does not account for transaction fees on shares or maintenance costs beyond ownership inputs.
• All inputs must be in one currency (e.g., AUD); outputs match that currency.

Glossary

• LMI (Lenders Mortgage Insurance): Insurance paid when borrowing more than 80% of the property value, protecting the lender.
• Negative Gearing: When property expenses exceed rental income, reducing taxable income via deductions.
• CGT (Capital Gains Tax): Tax on the profit from selling an asset, with a 50% discount for assets held over 12 months in Australia.
• LVR (Loan-to-Value Ratio): Loan amount divided by property value, used to determine LMI.
• ROI (Return on Investment): Annualized return based on initial cash invested and final net cash.
• IRR (Internal Rate of Return): The rate at which cash flows’ net present value equals zero.
• NPV (Net Present Value): Value of future cash flows discounted to today, using a 5% rate.

Related Tools

• Mortgage Repayment Calculator (Australia): Plan your mortgage payments and interest.
• Offset vs Shares Calculator (Australia): Compare offset account savings vs investing in shares.
• Retirement Calculator (Australia & Worldwide): Estimate the capital needed for your retirement income goals.

FAQs

Disclaimer: This calculator provides general estimates based on the data you enter. Tepuy Solutions makes no guarantees about the accuracy, completeness, or suitability of the projections shown. The information is not intended as financial advice and should not be relied upon for investment decisions. Always seek guidance from a qualified and licensed financial advisor or accountant. Use of this tool constitutes acceptance of our full disclaimer.