Does this property pencil over 10 years?

The cashflow-flip year depends on the gap between rent growth and interest costs plus inflation on cash outlays. With a 95% LVR interest-only loan and typical capital-city assumptions (5% growth, 3% rent growth, flat rates), most properties flip positive in year 6–9 as principal starts paying down and rent indexation compounds. A 70–80% LVR P&I loan flips sooner. The calculator above shows your exact flip year at the scenario bands — run all three to form a range.

Sydney + Melbourne have averaged ~5–6% nominal pa over 30 years; Brisbane, Perth, Adelaide are in similar bands depending on the cycle; smaller capitals and regionals are more volatile with long flat periods followed by catch-up. We use 3% for the conservative band (below long-run inflation), 5% for the base (long-run average), 7% for the stretch (post-lockdown boom conditions). Your suburb-specific read matters more than the national average — use the explorer tool for that.

Historically rent growth has tracked wage growth — 2.5–3.5% pa on the long average. Post-2021 it spiked to 7–12% in major cities during the vacancy crunch and is now normalising. We use 2.5% conservative / 3% base / 4% stretch. Actual rent growth in your suburb is the better input if you have it — pull it from the suburb explorer.

Whatever your actual loan structure will be. IO saves cashflow now and defers principal paydown — so cashflow flip comes sooner but year-10 equity is lower. P&I bites earlier on cashflow but builds equity faster. Most investors use IO for 3–5 years then roll to P&I; that’s how the calculator is configured by default (5-year IO). Principal repayments are not deductible, only interest is (s8-1) — the refund doesn’t change between IO and P&I for the same rate.

A leveraged 80% LVR IP in a capital city historically delivered 8–12% IRR over rolling 10-year windows — composed of ~3% net cashflow yield and ~5–7% capital growth compounded, boosted by leverage. Anything over 12% IRR needs above-average growth or above-average yield. Under 6% suggests the property is better replaced with shares. The calculator solves IRR explicitly from your cashflow vector so you can compare against your alternatives.

Very. On a $600K loan, +1% rate = +$6,000/yr in interest cost, which reduces after-tax cashflow by ~$3,780/yr at 37% marginal rate. Over a 10-year hold that’s $37,800 of additional out-of-pocket. The scenario chips include a +100bps shock at year 3 (conservative scenario); run it to see your flip year shift. Rate resilience is why we recommend leaving $1,000+/mo of headroom in the buying power tool.

10 years is the right horizon for investment decisions because: (1) it covers a full property cycle in most AU markets, (2) your personal circumstances are too uncertain to project beyond it, (3) the CGT 50% discount applies after 12 months so holding longer doesn’t add a tax benefit, (4) rent and growth assumptions compound unreliably past 10 years. Think of this as a 10-year read with an optional re-run every 2–3 years as actuals come in.

Yes. The year-10 exit box subtracts CGT from the sale proceeds, applying the 50% discount (s115-25), reducing the cost base by accumulated Div 43 depreciation claimed during the hold (s110-45(2)), and taxing the discounted gain at your marginal rate. For a joint-owner split, each partner is taxed at their own rate. The tool surfaces the CGT figure explicitly so the net proceeds and IRR reflect the real after-tax number.

Gross yield = annual rent ÷ purchase price (ignores everything else). Net yield = (rent − cash costs) ÷ purchase price (ignores leverage, tax, growth). IRR = the annualised return on your actual cash invested over the full hold, including deposit, ongoing topups, and net sale proceeds. IRR is the honest number — it accounts for when cash went in and out. A 4% gross yield property can deliver 10%+ IRR if leveraged and growing; a 7% gross yield property can deliver 3% IRR if it never grows. Always compare IRR, not yield.

It’s worth holding any investment whose 10-year IRR exceeds your alternatives net of risk. Negative gearing is a cashflow state, not a verdict — plenty of 10-year winners spent 4–5 years negatively geared while equity built and rent caught up. The question isn’t ‘am I negatively geared’ — it’s ‘is the IRR after CGT at sale above ~7–8% nominal’. Run the conservative scenario above. If IRR is still over 7%, the NG years are the cost of admission, not a red flag.