Australia · Property investment
Work out gross and net rental yield, plus the marginal tax rate benefit if the property runs at a loss.
Yield & gearing result
Tax benefit = net rental loss × your marginal tax rate (incl. 2% Medicare levy), based on the 2026-27 resident tax brackets applied to your other taxable income. Zero if the property is positively geared.
Gross rental yield is simply annual rent divided by property value — it's the headline number in most listings because it's easy to compare across properties without knowing anyone's individual costs. Net rental yield is more useful for your own decision-making: it subtracts your actual annual outgoings (council rates, insurance, property management fees, maintenance) and loan interest from the rent before dividing by property value. Two properties with identical gross yields can have very different net yields once real holding costs are factored in.
A property is negatively geared when your deductible costs — loan interest, rates, insurance, agent fees, maintenance, and depreciation where applicable — exceed the rent it brings in, producing a net rental loss for the year. Under the ATO's rules for rental properties, that loss can generally be offset against your other taxable income (salary, wages, business income), reducing your overall tax bill. It's a genuine tax benefit, but it doesn't turn a loss into a profit: you're still out of pocket for the loss itself, just less so after the tax saving.
Say a $650,000 property rents for $550 a week ($28,600 a year), with $8,000 in annual outgoings and $32,000 in loan interest. Gross yield is $28,600 ÷ $650,000 = 4.4%. Net rental position is $28,600 − $8,000 − $32,000 = −$11,400, a net loss. For an investor on the 37% marginal bracket (39% including the Medicare levy), the tax benefit is roughly $11,400 × 39% ≈ $4,446 — meaning the true after-tax cost of holding the property that year is closer to $6,954, not the full $11,400 cash shortfall.
Investors broadly split into two camps, and this calculator doesn't take a side. Higher-yield properties — often regional, older, or lower-priced — tend to produce stronger rental cash flow relative to purchase price, sometimes at the cost of slower capital growth. Negatively geared properties — often inner-city or higher-priced — usually run at a cash flow loss partly offset by the tax benefit, with the investment case resting more on capital growth than rental income. Which approach suits you depends on your cash flow tolerance, borrowing capacity, and how long you plan to hold.
This tool estimates the ongoing holding-period position only: yield and the annual tax benefit of a rental loss. It doesn't model depreciation deductions (which can meaningfully change your net position without any actual cash outlay), land tax on the property (see the Land Tax Calculator), or capital gains tax when you eventually sell (see the Capital Gains Tax Calculator). Treat this as one input into a much bigger picture, not a full investment analysis.
Advertised rental yields are almost always gross figures, calculated on asking price rather than what the property actually sells for, and they rarely disclose whether the rent quoted is currently achieved or an optimistic estimate. Two properties both marketed at "5% yield" can have very different real outcomes once you factor in actual rent achieved, vacancy periods between tenants, and your specific loan terms. Always rebuild the gross figure yourself from the actual numbers before comparing properties, rather than trusting a headline percentage in a listing.
The yield figures above assume the property is tenanted 52 weeks a year, which is rarely the reality. Even a well-managed property typically has some vacancy between tenancies — two or three weeks is common, longer in a soft rental market. A property advertised at a 5% gross yield assuming full occupancy might realistically run closer to 4.7-4.8% once a typical vacancy allowance is factored in. Build a vacancy buffer into your own cash flow planning rather than assuming 100% occupancy every year.
Buying the property: check the Stamp Duty Calculator for the upfront acquisition cost. Holding it: the Land Tax Calculator for the ongoing state tax. Selling it: the Capital Gains Tax Calculator for the disposal tax treatment.