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