New spreadsheet

Hi all,

Ive been working on a spreadsheet for the last few weeks and i would appreciate any feed back or comments. The tax rates are on sheet 2 but i havent incorporated a system for them to change automatically, similiarly the principle payment doesnt work either as i didnt intend on using this myself. So any suggestions would be graciously received.



  • Property Spreadsheet.xls
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Your tax calc is a bit simple, here is a formula for 2008-2009 rates. In this example the income is in cell E22. The amounts and rates could be in another worksheet if required to make changes easier.

=SUMPRODUCT(--(E22>={6001;34001;80001;180001}), (E22-{6000;34000;80000;180000}), {0.15;0.15;0.1;0.05})
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Off hand I'd say you're being too conservative with your rental increases over the years. Sure some years will be flat, but overall I think you should be plugging in a bigger average rise.

In my spreadsheets I've coupled the rental income to the property value. So even if it's a low yielding property when you buy it eg. only 3% - I assume that will remain constant, same as a 5% yield etc. May not be perfect, but I think it's more realistic otherwise after 10-20yrs you end up with skewed figures like properties that started out on a 7% yield that become a 2% yield, 3% becomes .5% etc.
The spreadsheet looks good. I'll have to take a better look at it later.

I'd probably be a bit more pessimistic with the figures:
  • I'd use around 3% for the inflation rate, which is roughly the averge level that Australia has had over the last the last ten to twenty years. Though 3.85% looks close to the long term (last century) average. :)
  • House price inflation looks high compared with wage rises. Over 25 to 30 years, this would see houses triple in value relative to wages. (The median house would then be worth twenty times the median wage.) I'd suggest pegging house prices at a level such that rental yield is somewhere between 5% and 10%, and inflating with wages. This is a more bearish take on Steve's calculation, who pegs rents to house prices.
  • The interest rate seems low, as it's based on the current, emergency level, rather than something closer to the long-term rate. I'd be inclined to base it on a longer term fix. So somewhere between 8 and 8.5%.