LRBA calculator

  1. Property & loan
  2. Interest & costs
  3. Tax & inflation
  4. Graph
  5. Summary
  1. Property & loan
  2. Interest & costs
  3. Tax & inflation
  4. Graph
  5. Summary
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Property

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Loan

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  1. Property & loan
  2. Interest & costs
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Interest

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Costs

 
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Tax

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Inflation

 
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Net realised assets

Term Non-super Super Difference
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Net realised assets

Year Non-super Super Difference
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The LRBA calculator is designed to help you understand the pros and cons of borrowing to invest in property inside super or outside super. LRBA stands for Limited Recourse Borrowing Arrangement. Calculations assume the continuation of the tax and superannuation laws effective as at 1 July 2016.

Upfront capital:
Upfront capital is calculated as the property price, plus total upfront costs, less the loan amount. Where the total upfront costs assumption is different inside versus outside superannuation, a different amount of upfront capital will be required under each option. The loan amount inside superannuation will be adjusted accordingly.

Loan repayments:
All positive net cash flows from the property are assumed to be used to repay the loan.

Cash flows:
After the loan is fully repaid, any positive cash flows are invested at the cash rate (assumed to be CPI + 2.0%). Where cash flows are negative, these are assumed to be separately funded at an interest rate equal to the respective loan interest rate.

Net income:
Net income is calculated as rental income, plus earnings on the cash flow balance (if any), less interest payments, ongoing costs and income tax.

Capital gains after tax:
Capital gains are calculated as the change in the property price less upfront costs, capital gains tax and sales costs.

Net realised assets:
Net realised assets are calculated after sale of the property and full loan repayment. It is net of sales costs, CGT (if applicable) and includes any residual cash flow balance. It is assumed that no stamp duty event occurs at windup of the LRBA in super.

Compliance:
It is assumed that the super fund is a complying taxed superannuation fund and any LRBA is established in line with ATO rulings, SIS legislation and the Trust Deed of the SMSF.

InputComment
Purchase price Enter the property purchase price excluding on costs (e.g. stamp duty)
Capital growth pa The annual percentage increase in the value of the property.
Initial rental yield Initial year's rent expressed as a percentage of the property price. The property is assumed to be rented throughout the projection period.
Rental growth pa The annual percentage increase in rent.
Borrowed amount Enter the loan amount
Interest rate pa Enter the interest rate on the loan used to purchase the property. You may select a different interest rate to apply outside (non-super) and inside superannuation (super).
Upfront ($) Enter the total upfront costs including stamp duty, inspections and conveyance. You may select different upfront costs to apply outside (non-super) and inside superannuation (super).
Ongoing ($) Enter the total maintenance costs including insurance, property management costs, rates and utilities. You may select different ongoing costs to apply outside (non-super) and inside superannuation (super).
Sales (%) Costs incurred on sale of the property (e.g. agent commission) expressed as a percentage of the property sale price.
Tax rate Select the relevant tax rate to apply to taxable income (before CGT). For Non-super, it is the marginal tax rate (including Medicare levy). For Super, it is either 15% or 0% depending on whether the fund is in accumulation or pension phase.
CGT on sale This is an option to include or exclude Capital Gains Tax (CGT). CGT can be excluded reflecting that the asset will be realised in pension phase (super) or a small business CGT exemption applies (outside super). If CGT applies the model assumes that a CGT discount of 50% applies outside superannuation and 33.3% inside. Marginal tax rate increases are applied to CGT calculations.
Depreciation pa The annual dollar depreciation amount is assumed to be tax deductible and reduces the property's CGT cost base.
CPI pa The CPI rate is the assumed inflation rate and is used to convert future dollars into today's dollars. The total ongoing costs are indexed with CPI.
See figures in This is an option to see the results in future dollars or today's dollars (i.e. adjusted for CPI).

This calculator is a software program developed by Macquarie Group Limited and its related bodies corporate (collectively referred to below as "Macquarie", "we", "us" or "our"). Macquarie is the owner of the copyright in this calculator.

The following are terms of use of this calculator:

  1. We have made no default assumptions in this calculator. You may change all the assumptions to reflect the scenario you are trying to model.
  2. The purpose of this calculator is to help financial services professionals decide whether to borrow to invest in property inside super or outside super.
  3. This calculator is a model only and is not a prediction of your financial outcomes or a substitute for professional advice. Your financial outcomes will depend on external factors such as tax, superannuation laws, investment earnings and inflation.
  4. This information is provided for the use of financial services professionals only. In no circumstances is it to be used by a person for the purposes of making a decision about a financial product or class of financial products.
  5. You must not (i) copy, disassemble, reverse engineer, reproduce, adapt or otherwise attempt to derive, tamper or modify the software program code of the calculator, (ii) sell, licence or in any way distribute or transmit the calculator to your customers and/or other third parties, and (iii) copy or use in any way Macquarie's name and all associated trademarks which may appear on the calculator; you acknowledge that to do any such acts would constitute an infringement of our intellectual property rights in the calculator and its trademarks, and may cause errors in the calculator and any calculations generated.
  6. While we have used all reasonable care in preparing this information, where it includes assumptions and information provided by third parties which we are not able to independently verify, we do not accept responsibility for incorrect assumptions, errors or omissions by those third parties.
  7. To the extent the law allows us to, we will not be responsible for any loss (including, without limitation, loss of data, interruption to business, loss of profits and loss of investments) arising directly or indirectly from use of the calculator.
  8. This software has not been designed for any particular investor and has been prepared in good faith and without assuming a duty of care. No guarantee, warranty, or representation is given or implied as to the reliability or accuracy of the information used to compile each index or each calculation.
  9. Macquarie does not give taxation advice. The application of taxation laws to each client depends on that client's individual circumstances. Accordingly, clients should seek independent professional advice on taxation implications before making a decision about a financial product or class of financial products.
  10. Before using the calculator you should read the Notes detailing the assumptions, if any, used in the calculator.
  11. SMSF trustees should ensure they receive expert advice, not only in relation to the compliant establishment of LRBAs, but on an ongoing basis.