Property Breakeven Point Calculator

Property Breakeven Point Calculator

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Capital growth potential verses rent return can be vary greatly between properties. When you invest in a negatively geared property you need capital growth to recover you holding costs, this calculator tells you just how much capital growth is required for the property to breakeven. You can then compare breakeven points to determine which property has the most potential. This calculator allows you to compare apples with oranges, CBD with regional, upmarket with common. Having reduced all potential properties to their breakeven point it should be pretty clear which one is the most likely to achieve the necessary capital growth.

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While the cash flow calculation is accurate the conclusion, breakeven percentage, does require some estimation. The breakeven point is the percentage of capital growth required per year to recover the out of pockets of holding the property, after tax is taken into account. The idea is to use this percentage to compare properties with different rates of return and capital growth potential. Say for example you were looking at a property in Brisbane and a property in Caboolture. The capital outlay and rent return would be very different but if you use this calculator to test each property against its own breakeven point and then compare the percentages you will have a good idea of which is the better investment. So for example if both properties required 3% capital growth a year to breakeven you would probably choose the Brisbane property if you felt CBD offers a better capital gain. This calculator allows you to compare apples with oranges, CBD with regional, upmarket with common.

For more information on the Breakeven Point and your property investments refer to Winning Property Tax Strategies written by Julia Hartman B.Bus, CPA, CA, Registered Tax Agent and Noel Whittaker AM FCPA FAIM CTA CFP.

Note: This is an MS Excel file; for help using BAN TACS Accountants Excel Calculators and Spreadsheets go to our BAN TACS Excel Help page.

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