Australia Rental Yield Calculator 2024

What is a good rental yield in Australia?

A "good" rental yield depends on location, investor goals, and market conditions. As a general benchmark, gross yields of 4–5% or above are considered reasonable in Australian capital cities, where capital growth potential is typically higher. Regional areas and outer suburbs often yield 5–7% gross but may have slower capital appreciation. Net yields (after expenses) are typically 1–2% lower than gross. Higher-yielding properties in remote areas may come with higher vacancy risk and lower liquidity. Many investors accept lower yields in Sydney or Melbourne on the expectation of stronger long-term capital growth.

How does negative gearing work in Australia?

Negative gearing occurs when your rental property expenses (including mortgage interest, rates, insurance, management fees, and depreciation) exceed the rental income. The resulting loss can be offset against your other income — such as salary — reducing your overall tax bill. For example, if your rental property generates a $10,000 loss and your marginal tax rate is 37%, you save $3,700 in tax. While this reduces the cash-flow shortfall, you still have a net out-of-pocket cost. The strategy makes most financial sense when combined with capital growth that outpaces the ongoing loss.

What expenses are tax-deductible for Australian investment properties?

Deductible expenses include: mortgage interest (not principal), council rates, water charges, land tax, property management fees, insurance, repairs and maintenance (not capital improvements), cleaning, advertising for tenants, body corporate/strata fees, depreciation on the building (capital works deduction, 2.5%/year for buildings after 1987) and plant and equipment (fittings). Capital improvements such as renovations are generally depreciated over time rather than deducted immediately. Borrowing costs such as loan establishment fees can be amortised over the loan term. Keep all records meticulously — the ATO scrutinises rental deductions closely.

What is the difference between gross and net rental yield?

Gross rental yield is simply the annual rent divided by the property price, expressed as a percentage. It ignores all costs and is useful for quick comparisons between properties. Net rental yield subtracts ongoing property expenses (but not mortgage interest) from annual rent before dividing by the property price, giving a more realistic picture of income. Cash-on-cash yield goes further and accounts for the actual cash invested (deposit plus costs) and all outgoings including mortgage — this is the most useful metric for comparing leveraged investment returns.