Property ValueThis is the amount from Enter Property Valuation you entered for the investment(s) current value. Your Estimated Average Capital Growth % is applied to this value to estimate the value over the next ten years. Enter zero for Estimated Average Capital Growth %, Estimated Annual Rental Growth Rate and for Enter Inflation Rate, If you wish to compare using today's dollar value over the next ten years.
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BorrowingsThe amount for the first year is taken from the Enter Total Borrowings that you entered. The principal payments that you plan to make will reduce the borrowings over the following years. The borrowings should include any mortgages and any other money used to purchase the investment which you pay interest on.
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Borrowings %This value is calculated by dividing the Borrowings % by the Property Value and expressing it as a percentage.
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EquityYour equity is simply the Property Value minus your total Borrowings.
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Rental IncomeThe rental income is increased each year using the Estimated Annual Rental Growth Rate value that you entered.
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Capitalised YieldThis is the Rental Income divided by the Property Value and expressed as a percentage.
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Expenses (inflation adjusted)The expenses are increased each year using the Enter Inflation Rate that you entered. Enter a zero inflation rate to compare at today's values.
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Interest on BorrowingsThis is calculated on a monthly basis, with twelve months added together for the annual total. The interest incured for each month is treated as being paid in that month (i.e. not the following month when it is normally paid). The interest is calculated using the average interest rate that you entered. You may have several mortgages at different rates. Since this is only an estimating tool, take a guess at what your average interest rate will be for the next ten years, and calculate your possible cash flow etc.
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Principal PaymentsThis is calculated by taking the Enter Monthly Mortgage Payments then subtracting the Interest on Borrowings. This is the annual amount.
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Cash Flow Before TaxThis is calculated by taking the Rental Income then subtracting Expenses (inflation adjusted) and Mortgage Payments (total of principal & interest). This amount is what you would expect to see in your bank account before writing out the tax expense cheque.
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Building Depreciated ValueThis is the value at the beginning of the twelve month period and is what will be used in calculating depreciated in that year.
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Building Annual DepreciationThis is the total depreciation that is being charged for the twelve month period.
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Building Accumulated DepreciationThis is the total depreciation over the period being reviewed from the initial building depreciated value that was entered (Enter Building Value to be Depreciated).
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Chattels Depreciated ValueThis is at the beginning of the twelve month period and is what will be used in calculating depreciated in that year.
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Chattels Annual DepreciationThis is the total depreciation that is being charged for the twelve month period.
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Chattels Accumulated DepreciationThis is the total depreciation over the period being reviewed from the initial building depreciated value that was entered (Enter Chattel Value to be Depreciated).
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Taxable IncomeThis is calculated taking the Rental Income then subtracting Expenses (inflation adjusted), Interest on Borrowings and Building/Chattels Annual Depreciation. If the amount is negative then this will be used to calculate the amount of tax credits. Note that 'Cash Flow' only takes 'real' financial transactions into account i.e. excludes depreciation where taxable income includes depreciation.
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Return on Equity before TaxThis is calculated from your Taxable Income divided by your equity and expressed as a percentage. This figure can be compared with other types of investments such as placing your money in the bank or say in unit trusts.
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Estimated Tax PayableThis is calculated by taking your Taxable Income and multiplying by your Enter Your Effective Tax Rate. This is only a very rough guide.
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Income After TaxThis is calculated by taking your Taxable Income and subtracting Estimated Tax Payable.
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Return on Equity after TaxThis is calculated from your Taxable Income, substracting Estimated Tax Payable then dividing by your equity and then expressed as a percentage.This figure can be compared with other types of investments such as placing your money in the bank or say in unit trusts.
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Cash Flow After TaxThis to me is possibly the most important figure. It is calculated by taking the Cash Flow Before Tax then subtracting the Estimated Tax Payable. This figure will be more accurate if calculated from your property details as they are recorded on Property Returns.
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Enter Property Valuation. This may be the purchase price (if recently purchased or is a potential purchase), or a current valuation, or your best guess.
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Estimated Average Capital Growth %. Enter your estimated average annual capital growth for the next ten years. Enter zero if wanting to compare the next ten years at todays values.
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Enter Total Borrowings.Include total of all mortgages etc where the cost of the mortgages is to go against the income. You need to include all your borrowings (or loans or mortgages) even if they all have different interest rates.
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Enter Average Interest Rate.Enter your estimate of what the average annual interest rate for all your borrowings will be for the next ten years. Good luck.
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Enter Monthly Mortgage Payments.This should be the total (including interest and principal) monthly payment that you are paying or you plan to pay. The assumption is made that you either know what your monthly payments are, or that you know the cashflow you require and will alter the monthly payments accordingly. In this second case, you may determine you ideal cashflow, but because of factors such as your age, amount you are borrowing, length of term or other conditions imposed by the lender, your actual monthly payments may be different from your ideal. The Enter Average Interest Rate and Enter Monthly Mortgage Payments are used to calculate the future principal payments and borrowings.
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Enter Building Value to be Depreciated. Enter the value of the building(s) only (i.e. excluding land) that can be depreciated. Normally this is obtained from a valuation.
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Enter Building Depreciation Rate.Enter the current building depreciation rate or whatever rate you would like to use for the next ten years.
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Enter Chattel Value to be Depreciated.Enter the value of the chattels at the property that can be depreciated. This is excluding GST i.e. remove the GST component to determine the total value. Normally this is established by ???
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Enter Chattel Depreciation Rate.Enter the current chattel depreciation rate or whatever rate you would like to use for the next ten years.
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Total Expenses per Year.Enter your estimate of the average expenses per year to be used over the next ten years. This is excluding GST i.e. remove the GST component to determine the total expenses.
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Enter Annual Rent.Enter the current rental received (or to be received) per year. This is excluding GST i.e. remove the GST component to determine the total rents.
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Estimated Annual Rental Growth Rate.Enter your estimate of the annual rental growth rate to be used for the next ten years. Enter zero if wanting to compare the next ten years at todays values.
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Enter Inflation Rate.Enter your estimate of the average annual inflation rate for the next ten years. Enter zero if wanting to compare the next ten years at todays values.
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Enter Effective Tax Rate. Enter your best guess for what your average tax rate will be for the next ten years. This is a bit tricky as the tax rate will increase if the taxable income increases i.e. not all years will be at the same effective rate. Also you may go into different tax bands as income changes. This figure will be more accurate if calculated from your property details and other income as recorded on Property Returns.
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