The opportunity-cost question, priced
Property vs Shares - same cash, both paths
Take the exact cash a property purchase requires - deposit, duty, costs - and run it down both roads: the leveraged deal with its real cash flows and tax regime, or compounding at your benchmark. After tax, both sides.
The two scenarios
After 10 years, the gap is
+$86,357
in favour of the property on $180,175 of cash, under these assumptions - not a recommendation either way.
The property
- Cash in
- $180,175
- Net position after sale & CGT
- +$235,812
- IRR
- 6.38%
The shares
- Cash in
- $180,175
- Gain after CGT (2026 rules)
- +$149,455
- CGT at sale
- $70,294
This comparison keeps the property side deliberately simple. The full audit prices it properly - duty, finance, the reform and CGT at exit.
Deal Auditor - in build, not yet available
Property side: full audit including regime tax effects, selling costs and CGT. Shares side: lump-sum compounding, CGT at sale under the enacted 2026 rules (gain to 1 Jul 2027 discounted, later gains CPI-indexed at a 2.5%/yr proxy plus the 30% minimum tax); dividends/franking not modelled. General information only.
What this comparison actually isolates
Property's edge is leverage: five-to-one gearing turns 5% growth into a 25% gross return on cash. Its costs are equally real - duty and buying costs up front, negative cash flow through the hold, agent fees and CGT at exit, and since May 2026 a tax treatment that differs by acquisition class. Shares run the same cash without leverage but without those frictions, with full liquidity throughout - though the 2026 CGT changes reach them too: gains accruing from 1 July 2027 are CPI-indexed with a 30% minimum tax on every asset class.
The honest answer moves with the assumptions - nudge growth or the share return and watch the gap swing. That sensitivity is the real lesson, and it's why our own mandate judges every deal against a written buy box including an IRR hurdle set against this exact opportunity cost.
Frequently asked questions
Is property or shares a better investment in Australia?
Neither, categorically - they win on different mechanics. Leveraged property turns modest price growth into large equity gains and, post-May-2026, its tax treatment depends heavily on acquisition class. A diversified share portfolio compounds unleveraged but liquid, with franking credits. Since the 2026 reform both sides face the same CGT framework for gains accruing from 1 July 2027: CPI indexation plus a 30% minimum tax, with the earlier slice banked at the 50% discount. This calculator puts one specific property deal against the same cash compounding at your chosen return, after tax on both sides, and lets the numbers speak.
Why does leverage matter so much for property?
Because you control the full asset with a fraction of the cash. A $750,000 property bought with $180,000 of cash that grows 5% adds $37,500 of value - a 20% return on your cash before costs. The same leverage magnifies losses and holding costs too, which is why the after-tax cash flow through the hold matters as much as the growth.
What return should I assume for shares?
The long-run total return of broad Australian index funds has historically been in the 8-10% range including dividends, but any figure is an assumption, not a promise. The default here is 8%; set your own. Franking credits and dividend taxation are not modelled - the shares side applies CGT at sale under the enacted 2026 rules, the same deemed-sale split, CPI indexation and 30% minimum tax as any other asset.
Is this comparison financial advice?
No. It is a mathematical comparison of two scenarios under assumptions you control, general information only. It does not consider your circumstances, risk tolerance or liquidity needs. Consider licensed advice before acting.