Australian Rental Yield Calculator
Work out the rental yield on an investment property — gross and net yield computed from purchase price, rent, and expenses in AUD.
AU Rental Yield Calculator
Gross & Net Yield · Negative Gearing · ATO 2025–26
Loan interest is fully deductible per ATO
Cash Flow Summary
PER YEARRental yield summary
A plain-English read of the property's rental performance — using ATO 2025–26 rates, the current RBA cash rate, and ABS CPI inflation.
Cash flow breakdown
Cash flow shows the actual money received and paid each period. A positive cash flow means the property is positively geared; a negative cash flow means it is negatively geared.
Where the rent goes (annual)
Tax impact on rental income
Rental income must be declared in the year the tenant pays it. Per the ATO Rental Properties Guide 2025, rental income is assessable income and the net amount (after deductible expenses) is taxed at the marginal rate. If expenses exceed income (negative gearing), the loss reduces total assessable income under the rules that apply to properties held before Budget night 12 May 2026.
In the 30% bracket. Applied to net rental income (or loss) added to other taxable income.
Additional tax owed on the rental profit at the marginal rate.
ATO 2026–27 marginal tax rates (resident)
| Taxable Income (incl. net rental) | Rate |
|---|---|
| AUD 0 – 18,200 | 0% |
| AUD 18,201 – 45,000 | 15% |
| AUD 45,001 – 135,000 | 30% |
| AUD 135,001 – 190,000 | 37% |
| AUD 190,001+ | 45% |
Yield benchmark
Compare net rental yield against official Australian benchmarks — the ABS CPI inflation rate and the RBA cash rate. A yield above both benchmarks indicates the property is delivering a positive real return before income tax.
Rental Yield Formulas, Deductions & Tax Rules
ATO-confirmed rules and ABS / RBA benchmark data for Australian investment property in the 2025–26 financial year. All figures sourced from official government data.
Benchmark Rates (May–Jun 2026)
Official benchmark figures used in this calculator's yield comparison.
Typical Cost Ranges
Illustrative cost ranges commonly applied in this calculator. Actual costs vary by location, property type and provider.
Yield Guideposts
Illustrative yield guideposts used in this calculator. Actual local yields should be verified against current real estate market reports.
Positive Gearing Profit
Rental income exceeds total expenses. The property generates a cash surplus each year, and that surplus is taxable income.
- Property generates surplus cash each year
- Net rental income added to assessable income
- Surplus taxed at the marginal tax rate
- Generates ongoing income rather than relying on capital growth
- Easier to hold long-term — no top-up required
Negative Gearing Loss
Total expenses exceed rental income. The loss is offset against other taxable income, reducing the overall tax bill, but the property runs at a cash deficit.
- Property runs at a cash deficit each year
- Rental loss offset against salary or other income (rules applying for 2025–26)
- Tax saving = loss × marginal rate
- Excess loss carried forward indefinitely
- Relies on capital growth for total return
ATO-Deductible Rental Expenses 2025–26
According to the ATO Rental Properties Guide 2025, rental expenses fall into three categories — immediately deductible, capital expenditure (depreciable or added to cost base), and not deductible. Only expenses for periods the property is genuinely available for rent are claimable.
Immediately Deductible (Revenue Expenses)
Claimed in full in the income year incurred.
Capital Expenditure (Not Immediately Deductible)
Either depreciated over time, or added to the CGT cost base.
Depreciation 2025–26 — Division 40 & Division 43
Australia allows two distinct depreciation regimes for rental property. Both are claimed annually on the tax return and reduce taxable rental income — but they cannot be claimed as immediate deductions.
Division 43 — Capital Works
Building structure and fixed items (walls, roof, floors, plumbing, electrical wiring). Depreciated on a straight-line basis at 2.5% per year over 40 years.
| Construction Date | Rate |
|---|---|
| After 15 Sep 1987 | 2.5% p.a. |
| 18 Jul 1985 – 15 Sep 1987 | 4% p.a. |
| Before 18 Jul 1985 | Not claimable |
Division 40 — Plant & Equipment
Removable assets (appliances, carpets, blinds, hot water systems, air conditioners). Each asset depreciated over its ATO-set effective life.
| Asset | Effective Life |
|---|---|
| Carpet | 8 years |
| Hot water system | 12 years |
| Dishwasher | 8 years |
| Air conditioner | 10–15 years |
CGT & Cost Base on Eventual Sale
Capital Gains Tax applies when an investment property is sold. The gain (sale proceeds minus cost base) is added to assessable income in the year of sale and taxed at the marginal rate. Under the rules applying for the 2025–26 financial year, individuals and trusts who held the property for more than 12 months are eligible for the 50% CGT discount. See the Budget 2026–27 reform notice below regarding changes from 1 July 2027.
What goes into the cost base
| Component | Treatment |
|---|---|
| Purchase price | Included |
| Stamp duty | Included |
| Legal fees (purchase) | Included |
| Building inspection | Included |
| Capital improvements | Included |
| Selling costs (agent, legal) | Reduces proceeds |
| Repairs (already deducted) | Excluded |
| Loan interest (already deducted) | Excluded |
CGT calculation example
− Cost base AUD 625,000
= Gain AUD 175,000
× 50% discount = AUD 87,500 assessable
ATO 2025–26 Marginal Tax Rates (Resident)
Net rental income (or loss) is added to other assessable income and taxed at the resident marginal rates below (ATO 2026–27; the 16% first-bracket rate was reduced to 15% from 1 July 2026).
| Taxable Income (incl. net rental) | Rate | Tax on This Income |
|---|---|---|
| AUD 0 – 18,200 | 0% | Nil |
| AUD 18,201 – 45,000 | 15% | 15¢ for each AUD 1 over AUD 18,200 |
| AUD 45,001 – 135,000 | 30% | AUD 4,020 + 30¢ for each AUD 1 over AUD 45,000 |
| AUD 135,001 – 190,000 | 37% | AUD 31,020 + 37¢ for each AUD 1 over AUD 135,000 |
| AUD 190,001+ | 45% | AUD 51,370 + 45¢ for each AUD 1 over AUD 190,000 |
Frequently Asked Questions
Common questions about Australian rental property yield, negative gearing, ATO-deductible expenses and CGT — answers verified against official ATO and ABS guidance.
Rental yield is the annual return from a property investment expressed as a percentage of the property's value. It tells you how much income the property generates relative to what was paid for it.
Yield is one of the two main drivers of property investment returns — the other being capital growth. A property with strong yield provides ongoing income; one with low yield depends on its value rising over time to justify the investment.
ASIC MoneySmart — Buying an Investment PropertyGross rental yield = Annual Rent ÷ Purchase Price × 100. Uses rent alone before any expenses — quick but misleading.
Net rental yield deducts all operating expenses (management fees, rates, insurance, repairs, strata, loan interest) from rent before dividing by purchase price.
Example: A property with 5.6% gross yield may only deliver 3.4% net yield once expenses are accounted for. Net yield provides the more accurate basis for comparing investments.
ASIC MoneySmart — Buying an Investment PropertyThere is no universal answer — it depends on location, strategy, and whether measuring gross or net yield. As a general framework:
- A net yield above the RBA cash rate (4.35% p.a., effective 6 May 2026) means the property outperforms a risk-free cash deposit.
- A net yield above the ABS CPI inflation rate (3.5% in the 12 months to July 2026) means purchasing power is preserved.
Regional and capital-city gross yields vary significantly by suburb, property type and market conditions — current local data should be checked against published real estate market reports for the specific area being considered.
RBA Cash RateVacancy reduces effective annual rent and directly lowers yield. If a property is vacant for 3 weeks per year, the effective vacancy rate is approximately 5.8% — meaning rent is collected for only 49 of 52 weeks.
The calculation is: Effective Rent = Annual Gross Rent × (1 − Vacancy %). A 4% vacancy allowance on AUD 33,800 annual rent reduces effective rent to AUD 32,448.
A vacancy buffer of typically 2–5% is commonly applied when estimating yield for standard residential properties.
ASIC MoneySmart — Buying an Investment PropertyPurchase-price yield reflects the actual capital deployed and measures the return on that investment. It is the most common figure quoted when assessing the original purchase decision.
Using current market value gives the "running yield" or "current yield", which shows what return the property would deliver if purchased today at current prices.
Both figures are useful: purchase-price yield measures performance of the actual investment, while market-value yield helps compare against alternative purchases.
ASIC MoneySmart — Buying an Investment PropertyAccording to the ATO, a property is negatively geared when total deductible expenses (including loan interest) exceed the rental income received. The resulting net rental loss can be offset against other income — such as salary or wages — reducing overall taxable income and providing a tax saving at the marginal rate.
If other income is insufficient to absorb the full loss, the remainder carries forward to the next income year.
Budget 2026–27 update (not yet law). Under the 12 May 2026 Federal Budget, negative gearing will be limited to new builds from 1 July 2027. Properties held before 7:30pm AEST on 12 May 2026 are grandfathered. For established properties bought after Budget night, rental losses will only offset residential property income — not other income such as wages — from 1 July 2027, subject to legislation.
ATO — Budget 2026–27 Tax ReformRental income must be declared in the year the tenant pays it. Per the ATO Rental Properties Guide 2025, the net amount (income minus deductible expenses) is taxed at the marginal income tax rate — the same rate as salary or wages — and added to other assessable income.
ATO 2026–27 resident marginal rates: 0% (up to AUD 18,200), 15% (AUD 18,201–45,000), 30% (AUD 45,001–135,000), 37% (AUD 135,001–190,000), 45% (above AUD 190,000).
The 50% CGT discount does not apply to rental income.
ATO Rental Properties Guide 2025The tax saving from negative gearing equals the rental loss × marginal tax rate.
Example: If the property is negatively geared by AUD 10,000 and the marginal rate is 37%, the estimated annual tax saving is AUD 3,700. This reduces the out-of-pocket cost from AUD 10,000 to AUD 6,300 per year.
This saving only partially offsets the cash shortfall — the investment still requires ongoing cash outflows and ultimately relies on capital growth to generate an overall positive return.
Budget 2026–27 (not yet law). The ability to offset rental losses against other income (such as wages) will be limited to new builds and to properties held before 7:30pm AEST on 12 May 2026, from 1 July 2027. The example above reflects rules applying for 2025–26.
ATO — Budget 2026–27 Tax ReformNo. The 50% CGT discount only applies to capital gains when disposing of a CGT asset held for more than 12 months.
Rental income is ordinary income and taxed at the full marginal rate — the CGT discount does not reduce tax on rent in any way.
When the rental property is eventually sold, any capital gain on the sale (proceeds minus cost base) may be eligible for the 50% discount if held by an individual or trust for more than 12 months.
ATO CGT DiscountYes. According to the ATO, if other assessable income is insufficient to absorb the full rental loss in the current year, the excess loss can be carried forward indefinitely and offset against income in future income years.
Unlike capital losses (which can only offset capital gains), rental losses from negatively geared property can offset any type of assessable income including salary, business income, or investment income — under the rules applying for 2025–26.
Budget 2026–27 (not yet law). For established residential properties bought after 7:30pm AEST on 12 May 2026, carried-forward rental losses will only be able to offset residential rental income (not other income such as wages) from 1 July 2027.
ATO — Budget 2026–27 Tax ReformWhen an investment property is sold, any capital gain (sale price minus cost base) is subject to Capital Gains Tax. The cost base includes the purchase price plus acquisition costs (stamp duty, legal fees, building inspection).
Per the ATO, individuals and trusts who held the property for more than 12 months are eligible for the 50% CGT discount — only half the gain is assessable. The capital gain is separate from rental income and is calculated in the year of sale.
Budget 2026–27 reform (not yet law). From 1 July 2027, the 50% CGT discount will be replaced with cost base indexation and a minimum 30% tax rate on capital gains. Transitional arrangements apply: the 50% discount continues for gains arising before 1 July 2027. Investors in new residential property may choose between the existing CGT discount and the new regime on disposal.
ATO — Budget 2026–27 Tax ReformAccording to the ATO Rental Properties Guide, immediately deductible expenses include:
- Loan interest (interest portion only)
- Property management fees
- Council rates
- Water rates
- Landlord insurance
- Repairs and maintenance (to restore existing condition)
- Strata / body corporate fees
- Advertising for tenants
- Accounting fees related to the rental property
These are deductible in the income year incurred.
ATO Rental Properties Guide 2025Yes — but only the interest component, not principal repayments. According to the ATO, interest on the loan used to purchase, improve, or repair a rental property is fully deductible from when the property is available for rent.
If the loan is split between private and investment use (e.g., a refinanced home loan), only the investment portion's interest is deductible.
For an AUD 480,000 loan at 6.5% p.a., the annual interest deduction is approximately AUD 31,200.
ATO Rental ExpensesNo — stamp duty and legal fees on the purchase are not immediately deductible against rental income.
According to the ATO, these are capital costs and are instead added to the CGT cost base of the property. This means they reduce any taxable capital gain when the property is eventually sold.
Acquisition costs such as stamp duty, conveyancing, and building inspection fees are all capital items that form part of the cost base — they benefit the investor at sale, not during ownership.
ATO Rental Properties GuideThis is one of the most important distinctions in rental property tax. According to the ATO:
- Repairs restore an asset to its original condition and are immediately deductible (e.g., fixing a broken door, patching a wall).
- Improvements make the property better than it was and are capital expenditure — they must be depreciated over time (typically 2.5% p.a. under Division 43 capital works).
Example: Replacing a broken hot water system is a repair; installing a new dishwasher where there was none before is an improvement.
ATO Rental Properties GuideYes, but it depends on the property type and what is being depreciated. According to the ATO, two types of depreciation apply:
- Division 43 (Capital Works): Deduct 2.5% per year of the construction cost of the building (not land). Available for properties built after 15 September 1987.
- Division 40 (Plant & Equipment): Claim the decline in value of depreciating assets like appliances, carpets, and blinds.
Since May 2017, second-hand depreciating assets cannot be claimed by individual investors. A Quantity Surveyor report identifies the depreciation amounts that can be claimed. Depreciation is not included in this calculator.
ATO Rental Properties GuideProperty management fees in Australia typically range from 7% to 10% of rent collected, applied to the effective rent (after vacancy) rather than gross rent. The fee covers tenant selection, rent collection, routine inspections, and maintenance coordination.
In addition, most agents charge a letting fee (usually 1–2 weeks' rent) when a new tenant is placed. Some agents also charge lease renewal fees, inspection fees, and EOFY statement fees.
Per the ATO, all management fees directly related to a tenanted property are fully deductible.
ATO Rental Properties GuideYes. According to the ATO, if part of the main residence is rented out — including through platforms like Airbnb or Stayz — the rental income must be declared in the tax return.
A proportion of household expenses (mortgage interest, rates, insurance, repairs) can be claimed based on the floor area rented.
Important: Renting part of the main residence may reduce or eliminate the main residence CGT exemption on that portion when it is sold.
ATO Rental IncomeThis is the central trade-off in Australian property investment:
- High-yield properties (typically regional, outer suburban, or older units) provide positive or near-neutral cash flow — easier to hold but may offer lower capital growth.
- High-growth properties (typically inner-city, premium suburbs) often deliver low yields and require cash top-ups each year (negative gearing), relying on strong capital appreciation over time.
The choice depends on income level, risk tolerance, tax position, and investment horizon. Neither strategy is universally superior — both involve different risk-and-return profiles.
ASIC MoneySmart — Buying an Investment PropertyThe RBA cash rate (currently 4.35% as of May 2026) affects rental property investment in two main ways:
On yield: A higher cash rate raises the "hurdle rate" — the minimum yield investors expect to justify property over risk-free savings. This tends to compress property prices or lift rental yields over time.
On loan costs: Higher cash rates mean higher mortgage interest rates, increasing the annual interest deduction — potentially worsening cash flow but increasing the negative gearing tax benefit.
RBA Cash RateYes — the entity structure affects tax treatment significantly:
- Individuals: Rental losses offset personal income (under rules applying for 2025–26); rental profits taxed at marginal rate; 50% CGT discount on eventual sale if held 12+ months.
- Trusts: Income distributed to beneficiaries at their marginal rates; 50% CGT discount passed through on eligible gains.
- Companies: Rental income taxed at the corporate rate; no 50% CGT discount available; losses cannot be distributed to shareholders.
For most Australian property investors, holding property in personal name or a trust (for asset protection and flexible distribution) is most common. Always seek advice from a registered tax agent before choosing a structure. Budget 2026–27 reforms to negative gearing and the 50% CGT discount (from 1 July 2027, subject to legislation) will affect each structure differently.
ATO Rental Properties Guide 2025Inflation of 3.5% p.a. (ABS CPI, 12 months to July 2026) affects rental property in two ways:
As an erosion risk: If net rental yield is below the CPI rate, the real purchasing power of rental income is declining — effectively going backwards in real terms even when receiving cash.
As a tailwind: Inflation typically lifts both rents and property values over time, potentially improving yield and capital gain. A property with low current yield may still produce strong total returns if rental income grows with inflation over a long holding period.
ABS CPIImportant Disclaimer
For educational and informational purposes only. This calculator produces estimates of gross and net rental yield, gearing position, and tax impact based on the inputs provided and ATO 2026–27 marginal tax rates (the 16% first-bracket rate was reduced to 15% from 1 July 2026). Benchmark figures use the ABS CPI annual inflation rate of 3.5% (12 months to July 2026) and the RBA cash rate of 4.35% (effective 6 May 2026). Calculations apply the negative-gearing and CGT rules in force for properties held before Budget night (7:30pm AEST, 12 May 2026), and exclude depreciation (Division 43 and Division 40), Medicare Levy (2%), land tax, GST, capital works deductions, state-specific levies, and CGT on eventual sale.
Budget 2026–27 reforms — not yet law. On 12 May 2026 the Government announced that negative gearing will be limited to new builds from 1 July 2027, and that the 50% CGT discount will be replaced with cost base indexation and a 30% minimum tax on capital gains. Properties held before Budget night are grandfathered for negative gearing; the 50% CGT discount continues for gains arising before 1 July 2027. These reforms are subject to legislation and have not been included in calculator outputs. Refer to ATO Budget 2026–27 Tax Reform and Treasury Budget 2026–27.
No warranty of accuracy. While Money Snap takes reasonable care to source figures from official authorities (ATO, ABS, RBA, ASIC MoneySmart), this calculator is provided "as is" without any express or implied warranty as to accuracy, completeness, timeliness, or fitness for any particular purpose. Rates, thresholds, and policies change frequently — figures shown may be out of date, and individual circumstances, deductions, ownership structures, and property-specific factors not captured by the inputs may materially affect actual investment returns and tax obligations.
Not financial advice. Information provided is general in nature only and does not take into account personal objectives, financial situation, or needs. Results do not constitute financial, tax, legal, or investment advice and use of this calculator does not create an advisory relationship. Before acting on any figure shown, obtain personal advice from a registered tax agent (Tax Practitioners Board), a licensed financial adviser, or seek formal computation directly from the ATO.
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Official data sources
Tax rates: ATO 2026–27 (16% first rate reduced to 15% from 1 July 2026)