Australia Rental Yield Calculator
Calculate investment property rental yield and returns. Shows gross yield, net yield after expenses and cash-on-cash return for rental properties.
Annual Expenses
Income Summary
Annual Expenses
Gross Yield (Annual)
3.47%
(Gross rent / property value)
Net Yield (Annual)
2.28%
(Net income / property value)
Cash-on-Cash Return (20% down)
11.40%
(Annual net / down payment)
Monthly Net Income
$1139.93
Annual Net Income
+ $13679.20
Important Notes:
- Does not include mortgage interest or loan repayment
- Does not account for capital growth or depreciation
- Does not include body corporate fees (units)
- Vacancy rates vary by property and market
- Management fees and expenses vary by location
- Consult a tax accountant for negative gearing deductions
Gross Yield vs Net Yield
Gross rental yield = annual rent / property price x 100. A property bought for $700,000 renting for $560/week ($29,120/year) has a gross yield of 4.16%. Net yield subtracts ongoing costs: rates ($2,500/year), insurance ($1,200), property management (8% of rent = $2,330), repairs/maintenance (around 1% of value = $7,000), strata if apartment. Net yield typically 1-2% below gross.
Australian residential rental yields have been low by international standards for years - 3-5% gross is common in major cities, sometimes lower in Sydney/Melbourne. Investors typically rely on capital growth rather than yield for returns. The combined return (yield + capital growth) historically averages 8-10%/year over decades.
Negative Gearing Math
Australian investment properties are typically negatively geared - rental income doesn't cover expenses, and the loss is deductible against other income. On a $700k property with 80% loan at 6.2% interest, interest alone is $34,720/year. Plus rates, insurance, property management, depreciation. Total deductible costs $50-55k vs $29k rent = $20-25k loss against income.
At a 37% marginal rate, that $20-25k tax loss returns $7,400-9,250 cash via reduced tax. The investor still loses $13-16k cash per year on the property. Negative gearing makes sense only if expected capital growth covers the cash loss; in flat or declining markets, the strategy fails.
Capital Growth vs Yield
Different markets favour different strategies. Sydney/Melbourne historically high capital growth, low yield. Brisbane/Perth balanced. Regional towns often higher yield (5-7%) but slower capital growth. Investors choose based on goals - cash-flow-positive properties produce immediate income; growth properties build wealth over decades.
Higher-yield regional properties also carry more risk - tenant turnover, vacancy periods, capital appreciation lower. Mining-town properties in particular have boom-bust cycles tied to commodity prices. Diversifying across markets reduces risk; many serious investors hold properties in 3-5 different cities/regions.
Tax Implications and Depreciation
Investment property income is fully taxable; expenses are fully deductible (interest, rates, insurance, repairs, agent fees). Depreciation is the killer non-cash deduction - you can claim 2.5% per year on the building structure (capital works) plus diminishing value on fittings (carpets, blinds, appliances). A $700k property might generate $7-12k of depreciation deductions in the first decade.
Capital gains on sale are taxed at marginal rate with 50% discount if held over 12 months. Building depreciation claimed gets recaptured in the cost base calculation, increasing the gain. The [Australia Capital Gains Calculator](/australia-capital-gains-calculator) handles the disposal math; ongoing rental analysis lives here.
Frequently Asked Questions
What's a good rental yield in Australia?
5%+ gross is good in major capitals, 6-8% in regional. Anything below 4% gross is tight on cash flow without strong capital growth assumptions. Calculate net yield (after all costs) for the real picture - net yield 2-4% is more honest for most properties.
Should I positive or negative gear?
Depends on your tax bracket and goals. High-income earners benefit more from negative gearing's tax deduction. Lower-income earners get less back. Positive gearing means immediate cash flow but no tax benefit. Both are legitimate strategies - many investors transition from negative to positive geared over time as rents rise and loans pay down.
Can I claim travel to inspect my property?
No - travel costs to inspect rental property were removed as a deduction in 2017. Real estate agent inspection fees remain deductible. Property managers handle most inspections; trying to inspect personally and claim mileage no longer works.
What's a Body Corporate or Strata fee?
Apartments and townhouses have ongoing fees for shared building maintenance, insurance, common-area utilities. Range $1,000-7,000+/year depending on building size and amenities. Always factor these in - they substantially reduce net yield on apartments vs houses.
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