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Nerida recently purchased a rental property for $350,000. She expects that she should be able to charge a rent based on a gross return of

  1. Nerida recently purchased a rental property for $350,000. She expects that she should be able to charge a rent based on a gross return of 6% p.a. What is the amount of rent that she would charge?

  • If ongoing costs of owning the property amount to $3,500 p.a., calculate her net income return after costs. Assuming Nerida has not borrowed any funds to acquire the property and her marginal tax rate is 32.5% plus Medicare levy, calculate her after-tax return on the rental income.

  • If instead Nerida borrowed $200,000 on interest-only terms to acquire the property and has to pay interest of 6.5% p.a., what is the after-tax return on the rental income. 

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