Scenario â€“ Return on Investment Property

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Robbie B
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Post Count: 2,493
May 8, 2005 - 4:30 am
Hi Byron,
Why would you say that?
Do you not consider this a good conservative investment for a less experienced investor?
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.au

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dmichie
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@dmichie
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May 8, 2005 - 6:45 am
I would like to see results if the property only grew at a rate of 4% per annum
I would like to see these figures if the value of the property fell at a rate of 5% per annum over five years.
(Yes, I know this cannot possibly happen)
jsandso
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@jsandso
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May 9, 2005 - 2:28 pm
Hi Robert,
I believe that there is a little mistake in your results in regards to the capital gains calculation.
-$6,796.18 Capital Gains Tax (25%)
I got a different result and to confirm that my calculation is not to far off I searched for a calculator on the Internet and found one here http://www.cch.com.au/cgi-bin/cgt00isapi.dll/
which calculates $13,172 CGT, based on your figures.
I worked it out that way but not sure if it is correct:
Capital Gain $28,025.5 (50% of $56,051.00)
Total Income $80,000+$28,025.5 = $108,025.50
Tax on $108,025.50 = $38,104.37
Tax on $80,000 = $19,662.00
Difference (CGT) = $18,442.37
Could someone please explain the correct way to work out the CGT?
Robert could you please explain how you got this figures?
Effect of Inflation
-$1,370.64 Income Year 1
-$1,336.37 Income Year 2
-$1,302.96 Income Year 3
-$1,270.39 Income Year 4
-$1,238.63 Income Year 5
Robbie B
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May 9, 2005 - 2:40 pm
It is a 2.5% reduction in the value of his income as a result of inflation.
As for your figures, I calculated CGT at the highest marginal tax rate plus the medicare levy with a 50% discount. I am still looking at some of your other figures to work them out.
Remember, I am not an accountant so if there are mistakes, I apologise.
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.au

Investor Links
jsandso
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@jsandso
Join Date: 2003
Post Count: 44
May 10, 2005 - 1:49 pm
Just to answer my own question above about how to calculate the CGT using Roberts figures.
$56,051.00 Capital Gain
50% discount because property was held for more then 12 month
= $28025.50
With $80,000.00 Gross Income Jack is in the 47% tax bracket therefore
$28025.50 x 47% = $13,172 CGT
As usual it is simpler then I thought.
GrantH_1974
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@granth_1974
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May 10, 2005 - 9:25 pm
Jack would actually pay 48.5% (47% tax plus 1.5% medicare levy).
ssab
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@ssab
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May 11, 2005 - 2:09 pm
So what the calculations be under these conditions?
Year 1 10% growth (03)
Year 2 10% growth (04)
Year 3 -10% growth (05)
Year 4 -5% growth (06)
Year 5 -2% growth (07)
Taking brisbane as the example, can anyone rule out -10%(or more) growth this year and tapering off for the next few years(but being more in real terms with inflation counted).
At some point the growth will revert back to trend, as it always does.