Rental Yield Calculator Australia 2026-27
Gross and net rental yield, the cash flow after mortgage interest, and the cash-on-cash return on the deposit — with vacancy, management fees and running costs taken off before anything is called income.
Gross yield is annual rent over the property value, which is the number every listing quotes and the least useful one: it ignores every cost.
| Gross rent | $44,200.00 |
|---|---|
| Expenses | -$15,536.00 |
| Vacancy | -$1,700.00 |
| Mortgage interest | -$46,800.00 |
| Cash flow | -$19,836.00 |
How the rental yield calculator works
Gross yield is annual rent over the property value, which is the number every listing quotes and the least useful one: it ignores every cost. Net yield takes vacancy, management fees and running costs off the rent first. Cash flow goes one step further and subtracts mortgage interest, and it is the number that decides whether you can hold the property — a 5% gross yield and a negative cash flow are perfectly compatible. Cash-on-cash return measures that cash flow against the deposit you actually put in, which is the honest return on the money at risk. A shortfall here is negative gearing: Australia lets a rental loss reduce your other income in the same year, so a loss before tax can be smaller after it, and depreciation on the building and fittings adds a deduction that costs you no cash. That is a real benefit and it is not a reason to buy a loss-making property — the deduction returns your marginal rate, not the whole loss.
Formula: gross yield = annual rent ÷ value · net yield = (rent − vacancy − costs) ÷ value · cash flow = net rent − mortgage interest · cash-on-cash = cash flow ÷ deposit
How rental yield is calculated on investment property
Gross yield formula
Gross rental yield = (Annual rental income ÷ Property value) × 100. For a $650,000 property renting at $500/week: ($500 × 52) ÷ $650,000 × 100 = 4.0% gross yield.
| Property value | Weekly rent | Annual rent | Gross yield |
|---|---|---|---|
| $400,000 | $380 | $19,760 | 4.9% |
| $500,000 | $420 | $21,840 | 4.4% |
| $600,000 | $500 | $26,000 | 4.3% |
| $750,000 | $600 | $31,200 | 4.2% |
| $1,000,000 | $750 | $39,000 | 3.9% |
Rental yield examples by city and property type — 2025
| City/area | Typical property price | Weekly rent | Gross yield |
|---|---|---|---|
| Sydney inner ring | $1,200,000 | $800 | 3.5% |
| Sydney outer west | $700,000 | $550 | 4.1% |
| Melbourne inner | $900,000 | $650 | 3.8% |
| Brisbane established | $650,000 | $600 | 4.8% |
| Adelaide metro | $550,000 | $500 | 4.7% |
| Perth metro | $600,000 | $580 | 5.0% |
| Regional NSW | $450,000 | $420 | 4.9% |
Gross yield vs net yield — what the numbers really mean
Typical annual costs on a $600,000 property
Management fees: $2,000–$2,800 (8–10% of rent). Council rates: $1,200–$2,000. Water: $400–$800. Insurance: $1,000–$1,500. Maintenance (1% rule): $6,000. Total: approximately $11,000–$13,000/year.
Impact on net yield
A 4.5% gross yield on a $600,000 property with $12,000/year in costs produces: ($27,000 − $12,000) ÷ $600,000 = 2.5% net yield. This is significantly lower than the gross figure and is the true income return before mortgage interest.
By cityRental yield comparison across Australian capital cities — 2025
These figures are indicative ranges for established residential property. Yields vary significantly by suburb, property type, and condition.
| City | Typical gross yield range | Growth outlook | Comment |
|---|---|---|---|
| Sydney | 2.5–4.0% | Moderate | High prices compress yields |
| Melbourne | 2.8–4.2% | Moderate | Slight oversupply in some apartments |
| Brisbane | 4.0–5.5% | Strong | Strong population growth supports rents |
| Adelaide | 4.2–5.2% | Strong | Undersupply driving rent growth |
| Perth | 4.5–5.5% | Strong | Mining sector supports demand |
| Hobart | 3.8–4.8% | Moderate | Tourism effects on rental market |
| Darwin | 5.5–7.0% | Variable | High yields but volatility risk |
Negative gearing — when costs exceed rental income
What is negative gearing?
A property is negatively geared when the rental income is less than the interest payments and deductible expenses. The loss can be offset against other income, reducing your taxable income — and therefore your income tax.
Tax benefit calculation
If your investment property produces a $10,000 net loss and your marginal tax rate is 37%, the tax saving is $3,700 — effectively reducing the out-of-pocket cost to $6,300. However, negative gearing only makes financial sense if capital growth exceeds the after-tax annual loss.
Risk
Negative gearing relies on capital growth to produce an overall profit. A property that neither grows in value nor generates positive cash flow is a poor investment regardless of the tax concession.
Positive gearingPositive gearing — when rental income exceeds costs
What is positive gearing?
A property is positively geared when rental income exceeds all costs including mortgage interest. The surplus is assessable income and taxed at your marginal rate. Positive gearing generates immediate cash flow.
Where to find positive cash flow
Positively geared properties are more common in regional areas, higher-yield cities (Brisbane, Adelaide, Perth), and older established markets where prices have not escalated as rapidly as rents. Dual-occupancy properties, multi-unit investments, and commercial property often produce stronger cash flows.
FAQFrequently asked Frequently asked questions
Where these figures come from
Property and mortgage figures on this page are drawn from the Reserve Bank of Australia (rate data), APRA (serviceability and lending rules), the ATO (CGT and rental rules), and State Revenue Offices (stamp duty).
- Mortgage & variable-rate data — RBA — Lenders' Interest Rates (F6).
- Lending serviceability buffer (3%) — APRA — Prudential Practice Guide APG 223.
- Capital gains tax & main residence — ATO — Capital gains tax.
- Negative gearing & rental income — ATO — Rental properties.
- Stamp duty (NSW example) — Revenue NSW — Transfer duty.
- First Home Owner Grant schemes — FirstHome.gov.au.
Last checked: July 2026. Rates and thresholds are reviewed against the source of record each November, when annual adjustments for the following tax year are published.
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$600k property — $520 /wk rent 4.5% gross yield
A $600,000 property renting at $520/week generates a 4.5% gross yield ($27,040 /yr). After typical costs (~$12,000 /yr), the net yield is approximately 2.5–3.0%.
| Gross annual rent | $27,040 |
|---|---|
| Gross yield | 4.5% |
| Est. annual costs | ~$10,000–$14,000 |
| Net yield estimate | ~2.5–3.0% |
| Weekly rent covers mortgage? | $520 /wk vs ~$850 /wk repayment |
| Cash flow position | Negatively geared |
- Increase rent $20/wk Add $1,040 /yr gross
- Tax benefit on loss At 32.5% marginal rate
- Capital growth needed ~5%+ pa to profit overall
- Review rent annually CPI + local vacancy
- Compare: Brisbane equivalent Same $ might yield 4.5–5%
$800k property — $600 /wk rent 3.9% gross yield
A $800,000 property renting at $600/week generates a 3.9% gross yield ($31,200 /yr). This is below the typical 4–4.5% considered reasonable for an investment, but Sydney/Melbourne inner-ring properties often trade at this yield level.
| Gross annual rent | $31,200 |
|---|---|
| Gross yield | 3.9% |
| Est. annual costs | ~$13,000–$17,000 |
| Net yield estimate | ~2.2–2.8% |
| Cash flow (6.2% mortgage) | ~−$1,500–$2,000/mo |
| Tax deduction (32.5% tax) | ~$6,000–$8,000/yr |
- Capital growth needed for profit 6%+ pa to justify
- Sydney inner alternative Higher yield in outer ring
- Offset account benefit Reduces interest cost
- Rent increase potential Check local market
- Hold long-term Rent grows, yield improves
Brisbane metro rental yield 4.0–5.5% gross yield
Brisbane residential investment properties currently yield 4.0–5.5% gross — significantly above Sydney and Melbourne. Strong population growth and relative affordability make it a popular yield play in 2025.
| Gross yield range | 4.0–5.5% |
|---|---|
| Net yield range | ~2.5–4.0% |
| Median property price | ~$650,000 (2025) |
| Weekly rent (median) | ~$600–$650/wk |
| vs Sydney comparable | 1.0–2.0% higher yield |
| Capital growth (2023-25) | Strong outperformance |
- Best yielding suburbs Outer ring, near infrastructure
- Vacancy rates (2025) Very low — strong demand
- New supply risk Monitor approvals
- Interstate migration Sustained demand driver
- Compare: Adelaide, Perth Similar yield, similar growth
Negatively geared investment property Income < costs (tax benefit)
A negatively geared property has rental income below total costs (including interest). The annual loss is deductible against your other income, reducing income tax. This only makes financial sense if capital growth exceeds the after-tax annual loss.
| What negative gearing means | Rental income < costs |
|---|---|
| Tax saving (32.5% rate) | 32.5c per $1 of loss |
| Example: $10k loss/yr | $3,250 tax saving |
| Net out-of-pocket | $10,000 − $3,250 = $6,750 |
| Required capital growth | Must exceed $6,750/yr |
| Risk | Depends entirely on growth |
- On a $700k property growing 5% $35k gain vs $6.75k cost
- If growth is flat Annual loss every year
- vs positive cash flow property Trade yield for growth
- Sell within 5yr? May not recover transaction costs
- Tax changes risk Policy can change
Net yield — gross yield minus costs Gross − 1.5–2.5% typical
Net rental yield deducts all ongoing property costs from gross rent. A 4.5% gross yield typically becomes 2.5–3.5% net after management fees, council rates, insurance, and maintenance.
| Gross yield | Total rent ÷ property value |
|---|---|
| Net yield | (Rent − costs) ÷ property value |
| Typical annual costs ($600k) | ~$10,000–$14,000 |
| Gross 4.5% → net estimate | ~2.5–3.5% |
| Management fees | 7–10% of gross rent |
| 1% maintenance rule | $6,000 /yr on $600k property |
- Reduce management fee Self-manage or negotiate rate
- Insurance review Compare annually
- Minimise vacancy Strong presentation + market rent
- Depreciation schedule Offsets income tax (new properties)
- Net yield benchmark 3%+ net considered reasonable
City yield comparison — Sydney vs Brisbane 3–3.5% vs 4.5–5.5%
Sydney gross yields average 3–3.5% in 2025 due to high property prices relative to rents. Brisbane yields 4.5–5.5% reflecting better rent-to-price ratios. Higher yield cities often also have stronger rental demand.
| Sydney gross yield | 3.0–3.5% |
|---|---|
| Melbourne gross yield | 3.0–4.0% |
| Brisbane gross yield | 4.5–5.5% |
| Adelaide gross yield | 4.2–5.2% |
| Perth gross yield | 4.5–5.5% |
| Regional AU gross yield | 5–7%+ |
- Higher yield: higher income Positive cash flow more likely
- Lower yield: capital growth? Sydney/Melbourne track record
- Diversify by city? Different yield/growth profiles
- Regional: vacancy risk Check local vacancy rates
- Yield compression risk Popular areas: prices rise faster than rents
$400k property — rental yield scenarios Typical $380–$450 /wk rent
For a $400,000 property in regional or outer-suburban areas, typical weekly rent is $380–$450. At $420 /wk, the gross yield is 5.46% — strong for this price range.
| Property value | $400,000 |
|---|---|
| Weekly rent | $420/wk |
| Annual rent | $21,840/yr |
| Gross yield | 5.46% |
| Net yield (after costs est.) | ~3.8–4.2% |
| Monthly costs est. | ~$500–$700/mo |
- At $380/wk? Gross yield 4.94% — still good
- At $450/wk? Gross yield 5.85% — excellent
- Vacancy risk? Strong demand at $400k market
- Property management fee? 7–10% of rent = $29–$42/wk
- Capital growth outlook? Regional: varies widely
$500k property — rental yield scenarios Typical $450–$550 /wk rent
For a $500,000 property, typical rent is $450–$550/week. At $500 /wk, the gross yield is 5.2%. This price point is common in regional cities and outer suburbs of major capitals.
| Property value | $500,000 |
|---|---|
| Weekly rent | $500/wk |
| Annual rent | $26,000/yr |
| Gross yield | 5.2% |
| Net yield est. | ~3.5–4.0% |
| Monthly mortgage ($400k loan at 6.2%) | ~$2,448/mo |
- Positive cash flow? Depends on loan size and costs
- Negative gearing threshold? When costs > rent
- Capital growth potential? $500k in growth markets: moderate
- Depreciation schedule? New builds add tax benefit
- Management: self-manage vs agent? Agent: 7–10% of rent
$600k property — rental yield scenarios Typical $530–$650 /wk rent
For a $600,000 property, typical rent is $530–$650/week. At $580 /wk, the gross yield is 5.02%. This is a common inner-regional or outer-metro purchase.
| Property value | $600,000 |
|---|---|
| Weekly rent | $580/wk |
| Annual rent | $30,160/yr |
| Gross yield | 5.02% |
| At $500/wk? | 4.33% — below benchmark |
| Net yield est. | ~3.2–3.8% |
- Brisbane vs Sydney at $600k? Brisbane: better yield + growth currently
- Depreciation? New property: $5,000-$10,000 /yr depreciation
- Rental demand at $600k? Middle-market: strong rental demand
- Interest deductibility Negative gearing on excess costs
- 5yr capital growth outlook Location-dependent
$700k property — rental yield scenarios Typical $600–$750 /wk rent
For a $700,000 property, typical rent is $600–$750/week. At $650 /wk, the gross yield is 4.82%. This is typically a metro property with moderate capital growth potential.
| Property value | $700,000 |
|---|---|
| Weekly rent | $650/wk |
| Annual rent | $33,800/yr |
| Gross yield | 4.82% |
| Monthly mortgage ($560k at 6.2%) | ~$3,420/mo |
| Cash flow at $650 /wk rent | Negative — typical for metro investment |
- Tax deduction on shortfall Negative gearing reduces income tax
- Capital growth offset Metro property: 5–7% growth potential
- At $700 /wk rent? 4.92% — borderline
- Depreciation benefit $8,000–$15,000 /yr on new builds
- Gross vs net yield gap? $600k in costs = net yield 3.3%
$800k property — rental yield scenarios Typical $700–$900 /wk rent
For an $800,000 property, typical rent is $700–$900/week. At $750 /wk, the gross yield is 4.87%. Sydney/Melbourne inner suburbs commonly see lower yields at this price point.
| Property value | $800,000 |
|---|---|
| Weekly rent | $750/wk |
| Annual rent | $39,000/yr |
| Gross yield | 4.87% |
| Sydney equivalent? | Often $650–$700 /wk = 4.2% gross |
| Brisbane equivalent? | Often $750–$800 /wk = 4.9–5.2% |
- Sydney at $800k: typical yield 3.0–3.5% gross
- Brisbane at $800k: typical yield 4.5–5.0% gross
- Invest where yield is better? Brisbane, Adelaide, Perth currently
- CGT: both cities long-term Sydney 7% p.a. avg; Brisbane 6% p.a.
- Depreciation? $10,000–$18,000 /yr new house
Sydney inner: $1.2M–$2M property yield 2.5–3.5% gross
Sydney's inner suburbs command property values of $1.2M–$2M+ but rental yields of only 2.5–3.5% gross — among the lowest in Australia. Cash flow is typically very negative.
| Price range | $1.2M–$2M |
|---|---|
| Gross yield | 2.5–3.5% |
| Net yield | 1.5–2.5% |
| Weekly rent on $1.5M? | ~$750–$900/wk |
| Cash flow | Negative — typically −$1,500–$3,000/mo |
| Annual shortfall | ~$18,000–$36,000 |
- Strategy: capital growth Sydney inner relies on 6–8% p.a. growth
- Negative gearing? Significant tax deduction at this price
- 15yr return history Strong — but highly variable short-term
- Interest-only for investors Lower repayment — manage cash flow
- Consider elsewhere? Brisbane/Perth better yield + recent growth
Sydney outer: $700k–$1M property yield 3.5–4.5% gross
Sydney outer suburbs offer somewhat better yields of 3.5–4.5% gross at $700k–$1M. Infrastructure investment and population growth make some areas attractive for total return.
| Price range | $700k–$1M |
|---|---|
| Gross yield | 3.5–4.5% |
| Net yield | 2.0–3.5% |
| Cash flow | Still typically negative |
| Growth drivers | Infrastructure, population growth |
| Weekly rent ($800k) | ~$550–$650/wk |
- Western Sydney infrastructure Metro trains, Badgerys Creek airport
- Capital growth potential Above Sydney average in some corridors
- Distance from CBD Trade-off for better yield
- Tenant profile? Family-friendly suburbs: low vacancy
- Compare vs Brisbane at same price Brisbane better yield + growth currently
Melbourne inner: $900k–$1.5M property yield 2.8–3.8% gross
Melbourne inner suburbs show gross yields of 2.8–3.8% at $900k–$1.5M. Like Sydney, very negative cash flow is typical. Melbourne had weaker recent capital growth vs Brisbane/Perth.
| Price range | $900k–$1.5M |
|---|---|
| Gross yield | 2.8–3.8% |
| Net yield | 1.8–2.8% |
| Recent capital growth (2023–24) | Weak — flat to small declines |
| Land tax in VIC | Progressive — investment property cost |
| Weekly rent ($1M) | ~$550–$700/wk |
- VIC land tax impact Significantly higher than other states
- Melbourne affordability? Better than Sydney — entry point lower
- Compare to Brisbane? Brisbane: better yield + growth (2023–25)
- VIC duty: highest in AU? Yes — significant purchase cost
- Long-term Melbourne case Infrastructure + population growth
Melbourne outer: $550k–$750k property yield 4.0–5.0% gross
Melbourne outer suburbs offer gross yields of 4.0–5.0% at $550k–$750k. Growth corridor areas (Casey, Wyndham, Whittlesea) have seen strong rental growth and moderate price growth.
| Price range | $550k–$750k |
|---|---|
| Gross yield | 4.0–5.0% |
| Net yield | 2.5–3.5% |
| Growth corridors? | Casey, Wyndham — infrastructure investment |
| VIC land tax? | Still applies — higher than other states |
| Weekly rent ($600k) | ~$470–$540/wk |
- Population growth areas Strong rental demand in growth corridors
- New property + depreciation $8,000–$12,000 /yr on new builds
- VIC stamp duty + land tax Total ongoing cost is higher than other states
- Interest deductibility Negative gearing tax benefit
- Compare to Brisbane outer? Similar yield, Brisbane has better capital growth recently
Adelaide: $450k–$650k property yield 5.0–6.0% gross
Adelaide offers gross yields of 5.0–6.0% at $450k–$650k — some of the best yield in a major capital city. Population growth and affordability have driven strong recent capital growth and rental rises.
| Price range | $450k–$650k |
|---|---|
| Gross yield | 5.0–6.0% |
| Net yield | 3.5–4.5% |
| Capital growth (2023–25) | Among the strongest major capitals |
| Rental vacancy rate? | Very low — under 1% |
| Weekly rent ($550k) | ~$530–$600/wk |
- Adelaide total return case Excellent yield + capital growth combo
- Property management cost 7–9% of rent
- Tenancy legislation? SA tenancy law is landlord-balanced
- New builds? Land packages in outer Adelaide
- Compare to Brisbane? Similar yield, different growth profile
Perth: $500k–$700k property yield 4.5–6.0% gross
Perth offers gross yields of 4.5–6.0% at $500k–$700k. Recent strong capital growth (2022–24) has compressed yields somewhat from the 7%+ seen in 2020–21. Perth remains the highest-yielding major capital in 2025.
| Price range | $500k–$700k |
|---|---|
| Gross yield | 4.5–6.0% |
| Net yield | 3.0–4.5% |
| Capital growth (2023–25) | Excellent — some of the best in AU |
| Vacancy rate? | <1% — extremely low |
| Weekly rent ($600k) | ~$540–$640/wk |
- Economy driver Iron ore and mining sector
- Population growth Strong interstate migration
- WA stamp duty? Lower duty than VIC, similar to QLD
- No land tax on PPOR WA land tax mainly commercial
- Yield compression ahead? Prices rising faster than rents — expect compression
Regional AU gross yield — 5–8%+ Higher yield, higher vacancy risk
Regional Australian property offers gross yields of 5–8%+, substantially higher than capital cities. However, vacancy risk, capital growth uncertainty, and lower liquidity must be weighed carefully.
| Gross yield range | 5–8%+ |
|---|---|
| Capital growth? | Highly variable — location dependent |
| Vacancy risk | Higher than capital cities |
| Liquidity? | Harder to sell quickly |
| Mining/tourism towns? | Extreme yield — extreme risk |
| Tree-change/sea-change areas? | Demand driven by lifestyle migration |
- Research vacancy rate first Must be below 3% for investment
- Population growth or decline? Key long-term indicator
- Economic base? Diversified vs single employer
- Regional hubs (Ballarat, Geelong, etc) Often good risk/yield balance
- Compare to capital city alternative Lower price × higher yield = interesting total return
Neutral cash flow — at what yield? Depends on LVR and interest rate
Neutral gearing occurs when rental income exactly equals all outgoing costs (interest, management, rates, insurance, maintenance). At 6.2% interest rate and 80% LVR, neutral gearing requires approximately a 5.5–6.5% gross yield.
| Definition | Rent = all property costs |
|---|---|
| At 6.2% rate, 80% LVR? | Need ~5.5–6.5% gross yield |
| At 4.0% rate (2020–21)? | 4.0–5.0% gross was neutral |
| Current market difficulty? | Hard to achieve neutral in Sydney/Melbourne |
| Positive cash flow possible? | Brisbane, Adelaide, Perth — more achievable |
| After depreciation? | Depreciation can push neutrally-geared to positive |
- Calculate your own breakeven (Interest + costs) ÷ property value = required yield
- Depreciation impact? New property: $8–15k /yr softens cash flow
- Interest rate sensitivity 1% rate rise shifts breakeven by ~0.8%
- Principal repayment? IO vs P&I changes cash flow calc
- Tax refund timing Negative gearing tax back at end of year
Positive cash flow — yield exceeds all costs Rare in Sydney/Melbourne — achievable elsewhere
Positive cash flow occurs when rental income exceeds all property costs. In major capitals, this is rare. It is achievable in Brisbane, Adelaide, Perth, and regional areas — or with a large deposit reducing interest costs.
| Definition | Rent > all property costs |
|---|---|
| When achievable? | Large deposit (low loan) + high yield |
| Brisbane: possible at $550k? | At 5.2% yield: often borderline |
| Perth/Adelaide? | More achievable at current yields |
| Regional at 7% yield? | Often positive — risk varies |
| SMSF advantage | 0% tax on income — easier to achieve |
- Strategy: 30–40% deposit Reduces interest costs significantly
- Interest-only vs P&I? IO preserves positive cash flow
- Depreciation treatment Adds tax benefit on top
- Risk: positive gearing? Rent income taxed at marginal rate
- Combined with SMSF? Most tax-efficient property investment vehicle
$1M property — yield required for neutral Need ~5.8% gross yield
For a $1,000,000 investment property with 20% deposit ($200k) and $800k loan at 6.2%, total annual costs are approximately $56,000 (interest $49,600 + costs $6,400). Neutral gearing requires approximately $1,077/week rent — a 5.6% gross yield.
| Property value | $1,000,000 |
|---|---|
| Loan ($200k deposit) | $800,000 |
| Annual interest (6.2%) | ~$49,600/yr |
| Other annual costs est. | ~$6,400/yr |
| Total annual costs | ~$56,000/yr |
| Required weekly rent for neutral | ~$1,077 /wk (5.6% yield) |
- Sydney $1M typical rent? $700-$900 /wk -- significantly negative
- Brisbane $1M typical rent? $800-$950 /wk -- still slightly negative
- Depreciation softens shortfall $12-20k /yr on new property
- Tax refund on shortfall At 37%: 37c back per dollar loss
- Capital growth thesis $1M must grow >6% to justify
Worked examples
| Inputs | Gross Rental Yield | Note |
|---|---|---|
| 900,000 property let at 850 a week | 4.91% | 4.91% gross, 3.00% net, and negative cash flow after interest |
| The same rent on a 650,000 property | 6.8% | yield is a ratio — the cheaper property yields 6.80% |
| Bought outright, no mortgage | 4.91% | cash flow turns positive the moment interest goes |
FAQFrequently asked questions
What is a good rental yield in Australia?
A 'good' yield depends on your investment goal. In Sydney, 3–4% gross is typical. In Brisbane and Adelaide, 4–5.5% is achievable. Investors focused on capital growth accept lower yields; those focused on income target higher yields, often in regional or higher-yield markets.
What is the difference between gross and net yield?
Gross yield uses raw rental income. Net yield deducts ongoing costs (management fees, council rates, insurance, maintenance). A 4.5% gross yield may be only 2.5–3% net after costs. Use net yield for genuine return comparisons.
Does negative gearing make property investing worthwhile?
Negative gearing reduces your tax bill if you make a loss. But the underlying investment must produce capital growth to be profitable — negative gearing alone does not make a poor investment good. The tax saving only partially offsets the cash loss.
How does rental yield affect borrowing capacity?
Lenders count rental income at 80% of gross rent when assessing your borrowing capacity. A $26,000 gross rent becomes $20,800 in assessable income. If costs exceed rental income (negative gearing), the shortfall is treated as a monthly commitment reducing your maximum loan. Sources
The sources behind this calculator
- Revenue NSW — Transfer duty — the NSW transfer duty scale the rent-vs-buy page applies, alongside each other state's published scale
- Moneysmart — Buying a house — the upfront costs of buying: deposit, duty, lenders mortgage insurance and conveyancing
- Moneysmart (ASIC) — the regulator's guidance on buying, borrowing and lenders mortgage insurance
Last checked: September 2026. Duty scales are the state revenue offices' own; they change at each state budget and are verified against the office when they do.