The Can I Afford an Investment Property? tool provides an estimate of how much an investment property will cost.
It combines the cash operating revenue, rent, and the cash operating expenses, with the change in the amount of income tax paid to measure the net change in the investor's income due to owning the investment property.
It is important to recognise that the results are only rough estimates and should not be treated as financial advice. Before making any investment decisions you should consult your financial adviser.
Assumptions
* Cash operating expenses are assumed to be evenly spread throughout the year. This means that the cash operating expenses are the same for each month of year 1.
* It is assumed the investor has an interest only loan. This means that the loan repayments only consist of the interest for the period. It is assumed that they are deductible for tax purposes.
* When calculating the "Change in tax paid" only the marginal tax rates applicable to Australian residents are used. The calculator does incorporate the Medicare Levy of 1.5 percent but does not take any other factors which can influence the amount of tax paid, such as HECS contributions, any rebates, deductions, levies and surcharges into account.
* A building allowance is calculated for investment properties constructed after 18 July 1985. For buildings where construction began between 19/7/1985 and 15/9/1987, building allowance is 4 percent of the construction cost, for 25 years after construction. For investment properties where construction began after 15/9/1987 the building allowance is 2.5 percent of the construction cost, for 40 years after construction.
* The calculator does not consider the depreciation allowance, from the depreciable items contained in the investment property, which may accrue to the owner of an investment property.
read more here
http://www.yourmortgage.com.au/calculators/can_i_afford_investment_property/
