Property vs Shares Calculator (Australia) — 2025

How the Property vs Shares Calculator Works

This calculator compares investing in a residential investment property (buy-to-let) versus an equivalent investment in shares, using the same starting cash and then equalising ongoing cash flows year-by-year so the comparison remains apples-to-apples. It models property costs (stamp duty, LMI, interest, ownership costs, sale costs), rental income, depreciation and tax effects, plus a shares portfolio that grows via capital growth and dividends (with optional margin leverage), tracking cost base via FIFO and applying CGT at sale (structure-aware).

Quick Start

1. Enter your loan amount, downpayment, and buying costs (auto-filled with stamp duty and common fees for your state).
2. Set LMI manually or let it calculate automatically based on loan-to-value ratio (LVR).
3. Adjust property appreciation, rental yield, occupancy, and ownership costs.
4. Set shares assumptions: capital growth, dividend yield, and optionally margin LVR + margin interest.
5. Select your Investor Structure (Individual / SMSF / Company) and set the relevant tax rates.
6. Run the model to see year-by-year results plus summary metrics (IRR, NPV, break-even year, and winner at retirement).

What You Control

• Loan and Downpayment: Mortgage amount and deposit %, which determine purchase price and LMI.
• Buying Costs: Includes stamp duty (state-specific, with First Home Buyer effects where applicable) plus editable common fees.
• LMI: Auto-calculated or manually overridden.
• Property Inputs: Appreciation, rental yield, ownership costs, agent fees, occupancy, and interest settings (including interest-only if enabled).
• Shares Inputs: Capital growth, dividend yield, and optional margin leverage (LVR) with margin interest.
• Investor Structure: Individual / SMSF / Company. This sets how income tax and CGT are applied on both property and shares to keep the comparison consistent.
• Timeframe: Years to retirement (projection horizon) and loan period.
• Pro Features: CSV export, scenario saving, and PDF report (requires Tepuy+ subscription).

Behind the Math (Step by Step)

1. Property Price: Calculated as loan_amount / [(1 - downpayment_percentage) * (1 + LMI_percentage)].
2. Upfront Cash: cash_upfront = downpayment + buying_costs. This same starting cash is used as the initial equity for the shares pathway.
3. Property Cash Flows: Each year, rental income minus ownership costs and interest produces a cash flow before tax. Depreciation reduces taxable income (negative gearing can reduce tax), producing a net cash flow after tax and principal effects.
4. Shares Portfolio Growth: Shares evolve via:
   • Capital growth: increases unit price each year.
   • Dividends: calculated on portfolio value, taxed at the applicable income tax rate, then reinvested.
   If margin is enabled, the portfolio can start leveraged based on the chosen margin LVR.
5. Margin Interest Funding (if used): Margin interest is paid yearly. The model first uses after-tax dividends to pay interest. If dividends are insufficient, the shortfall is funded by selling shares using FIFO, which can trigger CGT.
6. Fair Cash Treatment (Apples-to-Apples): Each year, the calculator makes sure both options affect your personal cash the same way:
   • If the property needs extra cash (for example, rent doesn’t cover the mortgage), the extra money is assumed to come from your salary. In the shares scenario, that same amount is invested into shares.
   • If the property produces extra cash, that money is assumed to go into your pocket. In the shares scenario, shares are sold so you receive the same amount of cash after tax.
   Share sales are tracked in the order they were bought and may trigger capital gains tax.
7. Taxes & CGT (structure-aware): The Investor Structure toggle applies tax rules to both property and shares:
   • Individual: assumes CGT discount equivalent to 50% taxable portion for assets held >12 months.
   • SMSF: assumes 2/3 taxable portion (i.e., 1/3 CGT discount) and optional 0% CGT at sale if “Pension phase at sale” is enabled.
   • Company: assumes 100% taxable portion (no CGT discount) at the company tax rate.
   Property CGT also reflects depreciation-adjusted cost base; shares CGT is based on FIFO lot gains.
8. Outputs: Year-by-year equity and (optionally) net cash if sold, plus summary metrics such as IRR, NPV (5%), break-even year, and winner at retirement.

Interpreting the Outputs

• Property Equity: Property value minus outstanding loan balance.
• Net Cash if Sold: Proceeds after CGT and sale costs (and repaying any margin loan on the shares side).
• IRR: Internal rate of return for each pathway across the projection horizon.
• NPV: Net present value discounted at 5%.
• Break-Even Year: The first year where the shares pathway exceeds property (or “No crossover”).

Worked Example

Example: A 40-year-old invests using a $400,000 loan, 10% downpayment, and $20,000 buying costs. The shares pathway starts with the same upfront cash and grows with your chosen capital growth and dividend yield (dividends reinvested). If margin is enabled, margin interest is paid yearly (dividends first, then FIFO sales if required). The model then equalises year-by-year cash flow differences between the property and shares paths to keep the comparison fair.

Limitations & Assumptions

• Assumes constant growth rates; real returns vary year-to-year.
• Stamp duty and LMI are simplified estimates; always verify with official sources or your conveyancer/broker.
• Tax is simplified to effective rates and CGT taxable portions; it is not a full tax return model.
• Shares transaction costs, bid/ask spreads, and broker fees are not explicitly modelled unless included via other inputs.
• All values assume a single currency (e.g., AUD).

Glossary

• LMI (Lenders Mortgage Insurance): Insurance often required when borrowing more than 80% of the property value.
• Negative Gearing: When deductible costs exceed rental income, potentially reducing taxable income.
• CGT (Capital Gains Tax): Tax on gains when selling an asset; the taxable portion depends on investor structure.
• LVR (Loan-to-Value Ratio): Loan amount divided by property value.
• Margin LVR: Margin loan balance divided by shares portfolio value.
• FIFO: “First In, First Out” method for determining which share lots are sold first for CGT.
• IRR: Internal rate of return across a stream of cash flows.
• NPV: Net present value of future cash flows discounted to today (here at 5%).

Related Tools

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