What is a good rental yield?

Gross yields on Australian houses in capital cities commonly sit between three and four and a half per cent, while units and regional properties often reach five to six. Higher yields usually come with lower capital growth. Net yield after costs is the more useful comparison, and anything above three per cent is respectable.

What counts as a deductible expense?

Council and water rates, landlord insurance, strata levies, management and letting fees, repairs and maintenance, and the interest portion of the loan are all deductible against rental income. Principal repayments are not, and neither are improvements, which are added to the cost base or depreciated instead.

How does negative gearing actually work?

If deductible expenses including loan interest exceed the rent collected, the property makes a tax loss. In Australia that loss reduces your other taxable income, so you get back your marginal rate on it. You still fund the remainder of the loss yourself out of after-tax income.

Why is only the interest deductible and not the whole repayment?

Because the principal portion repays the money you borrowed, which was never income and is not an expense. Only the interest is a cost of holding the asset. This is why interest-only loans improve the reported tax position while leaving the debt untouched.

Should I include depreciation?

You should, and this calculator deliberately excludes it so the figures stay conservative. A depreciation schedule from a quantity surveyor typically identifies several thousand dollars a year of non-cash deduction on a newer property, which improves the after-tax weekly figure without changing the actual cash flow at all.

Is positive cash flow better than capital growth?

They are different strategies with different risks. Positive cash flow pays you to hold and protects you if rates rise, but those markets historically deliver weaker growth. Growth builds far more wealth over decades but requires you to fund the shortfall the whole way through. Match the choice to your income stability.

Investment Property Calculator

Australia· 2026-27

Calculates gross and net rental yield, weekly cash flow after vacancy and management fees, the deduction a rental loss generates against your other income, and the real after-tax weekly cost of holding the property. A 780,000 dollar purchase renting at 650 dollars a week shows a 4.33 per cent gross yield.

Enter your values

Purchase price

The contract price you expect to pay, not the advertised guide range.

Deposit

Cash you are putting in. Twenty per cent avoids lenders mortgage insurance in Australia.

Stamp duty and purchase costs

Transfer duty, conveyancing, building and pest inspections and loan establishment fees.

Interest rate

The investor rate quoted by your lender, which is usually higher than an owner-occupier rate.

Loan term in years

Thirty years is standard. A shorter term raises the repayment and worsens cash flow.

Weekly rent

What comparable properties in the same street are actually leased at, not the asking rent.

Vacancy allowance

weeks

Weeks a year you expect the property to sit empty between tenants. Two to four is realistic.

Property management fee

The agent's percentage of rent collected. Australian agencies typically charge 6 to 9 per cent.

Other annual costs

Council and water rates, landlord insurance, strata levies, repairs and the letting fee.

Your taxable income

Income before this property, used to value the deduction. Your notice of assessment has it.

Runs in your browser. Nothing you enter is stored or sent anywhere.

Results

Worked example. Edit the values and press Calculate

Gross rental yield

4.33%

Full annual rent divided by the price, before any cost.

Weekly rent for positive cash flow
$1,142.34
$492.34 a week more than now covers the loan repayment and running costs before tax.
Yearly price growth to cover the after-tax cost
2.30%
The property must rise by $17,952 a year in value, before selling costs and capital gains tax, just to repay what it costs you to hold.
Net rental yield
2.91%
After vacancy, management and running costs but before loan interest.
Loan amount
$624,000
Monthly loan repayment
$3,801.58
Rent collected a year
$32,500
50 weeks of rent after the vacancy allowance.
Running costs a year
$9,775
Management fee plus the other costs you entered.
Cash flow before tax
-$22,894.00
Negatively geared: you top it up from your own income.
Tax deduction from the rental loss
$4,942
At a 32% marginal rate including the Medicare levy.
After-tax cash flow a week
-$345.23
What the property costs or pays you every week once the refund is counted.
Cash invested at settlement
$194,000
Deposit plus stamp duty and purchase costs.
After-tax cash return on that money
-9.25%
Ignores capital growth, which is where most of the return usually comes from.

Gross rental yield: Annual rent divided by the price. Useful only for comparing properties quickly, because it ignores every holding cost.
Weekly rent for positive cash flow: The weekly rent at which rent collected, after vacancy and the management fee, covers your running costs and the full monthly loan repayment before tax. Below it you top the property up from your own income.
Yearly price growth to cover the after-tax cost: The yearly rise in the property's value, as a share of the price, needed just to make up what holding it costs you after the tax refund. Growth above this is your actual profit, before selling costs and capital gains tax.
Net rental yield: Yield after vacancy, management and running costs but before loan interest. Compare this against a term deposit rate.
Loan amount: Price less your deposit. This is what the repayment and the deductible interest are both calculated on.
Monthly loan repayment: Principal and interest at the rate and term you entered. Only the interest part is tax deductible.
Rent collected a year: Gross rent after allowing for weeks the property sits empty between tenants. Agents usually quote the full 52 weeks.
Running costs a year: Management fees plus rates, insurance, strata and repairs. These are deductible but they are still real cash going out.
Cash flow before tax: What the property adds to or takes from your bank account each year before any refund. Negative means you are subsidising it.
Tax deduction from the rental loss: The refund the loss generates against your other income at your marginal rate. It arrives once a year unless you vary your withholding.
After-tax cash flow a week: The honest weekly number. This is what holding the property really costs you, or pays you, every week.
Cash invested at settlement: Deposit plus stamp duty and costs. This money is locked up and is the base for any return calculation.
After-tax cash return on that money: Annual after-tax cash flow as a percentage of the cash you put in. Capital growth is excluded and is usually the larger part.

Why use this calculator

Agents quote gross yield because it is the flattering number, and it ignores every cost of actually owning the place. Once you deduct two weeks of vacancy, the agent's management fee, council and water rates, landlord insurance, strata levies and repairs, a headline yield above five per cent routinely lands closer to three.

Then the loan repayment arrives and turns a modest surplus into a weekly shortfall you fund from your salary. This calculator builds the number from the bottom up so you can see the shortfall before you sign, and it goes one step further by valuing the deduction that shortfall creates.

In Australia a rental loss offsets your other taxable income, so the property's true cost is the pre-tax shortfall less the tax you get back, and at a 39 per cent effective marginal rate that is a large difference. Knowing the after-tax weekly number is what tells you whether you can actually hold the asset long enough for growth to matter.

How to use it

Enter the price you realistically expect to pay rather than the advertised guide, which in many markets is deliberately low.
Enter the cash deposit you are contributing, remembering that anything under twenty per cent usually triggers lenders mortgage insurance.
Add stamp duty, conveyancing, building and pest inspections and loan fees as purchase costs, since these are cash you never get back.
Use the investor interest rate your lender has quoted, which sits above the owner-occupier rate, and set the loan term, normally thirty years.
Enter the weekly rent that comparable properties in the same street are actually leased at, not the asking price, and allow two to four weeks a year for vacancy.
Set the management fee your agent charges, typically six to nine per cent of rent collected.
Add council and water rates, landlord insurance, strata levies and a repairs allowance as other annual costs.
Finally enter your taxable income so the deduction is valued at your real marginal rate.

What each result means

Gross rental yield: Annual rent divided by the price. Useful only for comparing properties quickly, because it ignores every holding cost.
Weekly rent for positive cash flow: The weekly rent at which rent collected, after vacancy and the management fee, covers your running costs and the full monthly loan repayment before tax. Below it you top the property up from your own income.
Yearly price growth to cover the after-tax cost: The yearly rise in the property's value, as a share of the price, needed just to make up what holding it costs you after the tax refund. Growth above this is your actual profit, before selling costs and capital gains tax.
Net rental yield: Yield after vacancy, management and running costs but before loan interest. Compare this against a term deposit rate.
Loan amount: Price less your deposit. This is what the repayment and the deductible interest are both calculated on.
Monthly loan repayment: Principal and interest at the rate and term you entered. Only the interest part is tax deductible.
Rent collected a year: Gross rent after allowing for weeks the property sits empty between tenants. Agents usually quote the full 52 weeks.
Running costs a year: Management fees plus rates, insurance, strata and repairs. These are deductible but they are still real cash going out.
Cash flow before tax: What the property adds to or takes from your bank account each year before any refund. Negative means you are subsidising it.
Tax deduction from the rental loss: The refund the loss generates against your other income at your marginal rate. It arrives once a year unless you vary your withholding.
After-tax cash flow a week: The honest weekly number. This is what holding the property really costs you, or pays you, every week.
Cash invested at settlement: Deposit plus stamp duty and costs. This money is locked up and is the base for any return calculation.
After-tax cash return on that money: Annual after-tax cash flow as a percentage of the cash you put in. Capital growth is excluded and is usually the larger part.

The formula

Gross yield = (weekly rent multiplied by 52) divided by the purchase price, expressed as a percentage

Rent collected = weekly rent multiplied by (52 minus the vacancy weeks)

Running costs = other annual costs plus (rent collected multiplied by the management fee percentage)

Net yield = (rent collected minus running costs) divided by the purchase price

The monthly repayment uses the standard amortisation formula on the loan amount, where the loan equals the price minus the deposit.

Cash flow = rent collected minus running costs minus twelve monthly repayments

The rental loss for tax = first-year interest plus running costs minus rent collected, floored at zero, and only the interest portion of the repayment is deductible, never the principal

Tax deduction = rental loss multiplied by your marginal rate under the 2026-27 Australian brackets plus the 2 per cent Medicare levy

How this number is used in practice

The weekly after-tax figure is the one that decides whether you can hold the property. Growth takes years to arrive and none of it is available until you sell, so the question is not whether the property will be worth more in a decade but whether you can comfortably fund the shortfall every week between now and then.

A 250 dollar weekly gap is manageable on a strong income and a disaster if you lose a job or rates move up a point. Run the interest rate table and check that you could still fund the worst row, because rents adjust slowly while rates can move several times in a year.

Negative gearing is a consolation, not a strategy. A rental loss reduces your taxable income, so at a 39 per cent effective marginal rate the government funds about 39 cents of every dollar you lose, and you fund the other 61. That only makes sense if the capital growth exceeds the accumulated after-tax losses, which is a bet on the market rather than on the property's income.

Positively geared properties, more common in regional markets and in units, pay you to hold them but historically deliver weaker growth. Neither approach is automatically right, and the choice should follow your income stability and time horizon rather than a slogan.

Two costs consistently missing from optimistic spreadsheets are depreciation and the true repairs bill. Depreciation on a newer building and its fittings can add several thousand dollars a year of non-cash deduction, which improves the after-tax position materially and is worth a quantity surveyor's report to quantify.

Repairs, on the other hand, are chronically understated. A hot water system, a stove, carpets and an oven all fail eventually, and budgeting a flat one per cent of the property value each year is closer to reality than the few hundred dollars most first-time investors pencil in.

Worked examples

A 780,000 dollar house with a 156,000 dollar deposit at 6.15 per cent, renting at 650 dollars a week
4.33 per cent gross yield, 3.20 per cent net yield and 246.68 dollars a week out of pocket after tax
A 480,000 dollar regional unit with a 96,000 dollar deposit renting at 520 dollars a week
5.63 per cent gross yield and a positive 55.09 dollars a week before the tax position is counted
The same 780,000 dollar house bought with a 300,000 dollar deposit instead
The weekly shortfall after tax falls to 21.95 dollars because the loan is far smaller

When people use it

Testing whether a property will be positively or negatively geared before you bid
Comparing the real after-tax weekly cost of two properties in different price brackets
Working out how much larger a deposit needs to be for the property to pay for itself
Stress testing the cash flow against an interest rate two points higher
Checking whether the advertised gross yield survives contact with vacancy and management fees

Tips

Use the rent comparable properties are actually leased at, not the asking rent. Asking rents in a soft market can sit ten per cent above achieved rents.
Budget four weeks of vacancy, not two, in any market where listings are rising. An empty month costs more than a year of management fees.
Get a quantity surveyor's depreciation schedule on anything built in the last twenty-five years. It often pays for itself in the first year.
Set aside one per cent of the property value each year for repairs. Appliances and hot water systems fail without warning and always at the worst time.
Ask the ATO about a PAYG withholding variation if the property is strongly negatively geared, so the refund arrives fortnightly rather than in a lump sum after June.
Never buy for the tax deduction alone. Losing a dollar to save 39 cents only works if capital growth covers the other 61 cents.

What it assumes, and where it stops being accurate

Assumes an Australian residential investment property with a principal and interest loan at a fixed rate. Interest-only loans improve early cash flow and cost more overall.
Excludes depreciation on the building and fittings, which is a non-cash deduction that can add thousands to the annual tax benefit.
Excludes capital growth and capital gains tax on sale, including the 50 per cent discount available on assets held longer than twelve months.
Excludes lenders mortgage insurance, which applies when the deposit is under twenty per cent and can add tens of thousands to the loan.
Assumes the rental loss can be fully offset against your other income in the same year and that you are the sole owner. Joint ownership splits both the loss and the benefit.
Rent is assumed flat for the year with no increase, and the vacancy allowance is spread evenly rather than clustered at a lease expiry.
The marginal rate uses the 2026-27 resident brackets plus the 2 per cent Medicare levy and ignores the low income tax offset, the Medicare levy surcharge and any study loan repayment.

Terms used on this page

Gross yield: Annual rent as a percentage of the purchase price, before any expense is deducted.
Net yield: Annual rent less running costs as a percentage of the purchase price, before loan interest.
Negative gearing: Holding an investment whose deductible costs exceed its income, producing a loss that offsets other taxable income.
Vacancy rate: The share of the year a rental property sits empty between tenants.
Lenders mortgage insurance: A one-off premium protecting the lender when the deposit is below twenty per cent. It protects the lender, not you.
Depreciation schedule: A quantity surveyor's report setting out the deductible decline in value of a building and its fittings.

Questions people ask

What is a good rental yield?: Gross yields on Australian houses in capital cities commonly sit between three and four and a half per cent, while units and regional properties often reach five to six. Higher yields usually come with lower capital growth. Net yield after costs is the more useful comparison, and anything above three per cent is respectable.
What counts as a deductible expense?: Council and water rates, landlord insurance, strata levies, management and letting fees, repairs and maintenance, and the interest portion of the loan are all deductible against rental income. Principal repayments are not, and neither are improvements, which are added to the cost base or depreciated instead.
How does negative gearing actually work?: If deductible expenses including loan interest exceed the rent collected, the property makes a tax loss. In Australia that loss reduces your other taxable income, so you get back your marginal rate on it. You still fund the remainder of the loss yourself out of after-tax income.
Why is only the interest deductible and not the whole repayment?: Because the principal portion repays the money you borrowed, which was never income and is not an expense. Only the interest is a cost of holding the asset. This is why interest-only loans improve the reported tax position while leaving the debt untouched.
Should I include depreciation?: You should, and this calculator deliberately excludes it so the figures stay conservative. A depreciation schedule from a quantity surveyor typically identifies several thousand dollars a year of non-cash deduction on a newer property, which improves the after-tax weekly figure without changing the actual cash flow at all.
Is positive cash flow better than capital growth?: They are different strategies with different risks. Positive cash flow pays you to hold and protects you if rates rise, but those markets historically deliver weaker growth. Growth builds far more wealth over decades but requires you to fund the shortfall the whole way through. Match the choice to your income stability.

Use this with

Investment Property Calculator answers one part of the question. These pick up where it stops: Property Rental Yield Calculator, Negative Gearing Calculator, Stamp Duty Calculator, Capital Gains Tax Calculator and Mortgage Calculator.

Where these figures come from

Australia· 2026-27Last reviewed 2026-09·How we build and check calculators

Figures and rules on this page follow Australian law and ATO guidance.

ATO: Tax rates for Australian residents. Income tax brackets for 2026-27
MoneySmart - Home loans and property. Australian guidance on investment borrowing and property costs
Australian Bureau of Statistics. Residential property price and rental market data
Reserve Bank of Australia - interest rate statistics. Published investor lending rates

Investment Property Calculator produces an estimate for general information. It is not financial, tax, medical, legal or engineering advice. read the full disclaimer. Spotted a wrong number? Report it and it gets fixed. The form picks up this calculator and the inputs you used.