Rental Yield Calculator: Work Out the Gross and Net Yield on Your Property

Rental yield is the annual rent a property earns, expressed as a percentage of what the property is worth. It is the property equivalent of a dividend yield or the interest rate on a fixed deposit: it tells you how much income your capital produces each year, before counting any change in the property’s price.

There are two versions, and this rental yield calculator shows both. Gross yield = (monthly rent × 12) ÷ property value × 100. Net yield = (monthly rent × 12 − annual expenses) ÷ property value × 100. Gross yield is what brokers quote. Net yield is closer to what you actually earn.

Take the calculator’s default: a ₹2 crore flat, ₹55,000 a month in rent and ₹60,000 a year in expenses. Annual rent is ₹6.6 lakh, so gross yield is 3.30%. Subtract the ₹60,000 and net yield is 3.00%.

Use the current market value, not what you paid years ago, when you are deciding whether to keep a property. A flat bought for ₹80 lakh that is now worth ₹2 crore may yield 8% on your original cost, but the ₹2 crore you could release by selling is earning only 3.3%. That is the number to compare against other investments.

• Property value (₹25 lakh to ₹50 crore): the current market value, or the all-in price if you are evaluating a purchase. For a purchase decision, consider adding stamp duty and registration to the value, since that is the real capital you commit.
• Monthly rent (₹10,000 to ₹10 lakh): the rent a comparable unit actually gets in that building or society, not the asking rent on a listing site. Ask two local brokers what recent deals closed at.
• Annual expenses (₹0 to ₹20 lakh): costs you pay as the owner, mainly society maintenance and property tax. Add insurance and a repair allowance if you want a truer net figure.

The outputs are gross yield (the headline), net yield, annual rent, and the benchmark band of 2.5%–4.5% for India’s premium residential segment. A gross yield inside that band is normal for a good Indian city flat. Above it, check whether the rent is realistic. Below it, you are betting almost entirely on appreciation.

Say you are looking at a ready 3BHK in Whitefield, Bengaluru, for ₹1.6 crore. Similar flats in the society rent for ₹45,000 a month. Maintenance is ₹4,500 a month (₹54,000 a year) and property tax is ₹18,000 a year, so annual expenses are ₹72,000.

Enter those numbers. Annual rent is ₹5.4 lakh. Gross yield is 3.38%, inside the benchmark. Net yield is 2.93%. So far, a respectable Bengaluru rental. Now add what the calculator leaves out.

The broker’s 3.4% has become 1.8% in your pocket in a year with one vacancy. That is below what a savings instrument pays. The flat can still be a good investment, but only if Whitefield prices keep rising. Be clear-eyed that you are buying an appreciation bet with a small income attached.

Rent does grow. Leases commonly escalate about 5% a year. After five annual escalations, ₹45,000 becomes about ₹57,400 a month, a gross yield of 4.31% on the original ₹1.6 crore. That helps, though if the property has appreciated too, the yield on its current value will have moved much less.

It depends on the asset class. Residential yields are low in India because prices have run ahead of rents in most metros for years. Commercial property yields more because tenants are businesses on longer leases, but it needs a larger ticket and carries different risks.

For an Indian flat, a gross yield around 3.5% or more in a good location is healthy. Under 2.5%, rent barely covers the holding costs and your return is almost all price growth. A residential yield well above 4.5% is worth a second look: sometimes it is a genuine value pocket, and sometimes the rent figure is optimistic or the building has problems that suppress its price.

Commercial example, purely hypothetical: an office unit in Gurgaon bought for ₹1.2 crore and leased at ₹80,000 a month gives an 8.00% gross yield and 7.50% net after ₹60,000 of annual costs. Compare that with the Whitefield flat’s 2.93% net. The trade-off is that a vacant office can sit empty for many months, and one tenant leaving takes 100% of your income with it.

Gross yield is useful for comparing listings quickly. Net yield is what you should decide on. The difference comes from these costs:

• Society maintenance charges, often the largest recurring cost in a gated project.
• Municipal property tax.
• Vacancy between tenants; budget about one month a year.
• Brokerage on re-letting, often about one month’s rent.
• Repairs, repainting and appliance replacement between tenancies.
• Home insurance.
• Income tax on the rent.

Rental income is taxed under “Income from house property”. You start with the annual rent, subtract municipal taxes actually paid to get the net annual value, and then take a flat 30% standard deduction for repairs and upkeep, whatever you actually spent. The balance is added to your income and taxed at your slab rate. If the property has a home loan, interest is deductible against that rental income; under the new regime (now the default), a resulting loss cannot be set off against your other income. These are the rules in force for FY 2025-26; confirm the details for your case with a CA.

Many residential leases in India are 11-month leave-and-licence agreements, which means rent is renegotiated, and brokerage sometimes paid again, more often than a long lease would suggest.

• Vacancy. The tool assumes 12 months of rent every year. One empty month cuts gross yield by about a twelfth.
• Re-letting brokerage and repairs, unless you add them to annual expenses yourself.
• Income tax on rent. Net yield in the tool is pre-tax.
• Financing cost. If you bought with a home loan, the EMI interest usually exceeds the rent on an Indian flat. The yield says nothing about your cash flow.
• Appreciation. Yield is only the income half of your return; the tool doesn’t estimate price growth.
• Rent escalation. It uses today’s rent only.
• Purchase costs. Stamp duty, registration and interiors raise the capital you commit, which lowers your true yield unless you add them to property value.
• A fixed benchmark. The 2.5%–4.5% band is for India’s premium residential segment and does not apply to commercial property or Dubai.

• Using the asking rent from a listing site. Asking rents are often well above closed deals. Use what comparable flats actually let for.
• Quoting yield on the original purchase price. It flatters an old investment and hides that the capital could earn more elsewhere.
• Buying an under-construction flat for rental income. There is no rent until possession, and your money is tied up in the meantime.
• Assuming a “guaranteed rental” or “assured return” scheme from a developer is equivalent to market yield. The rent is often built into a higher price.
• Ignoring the loan. A 3% yield against an 8.5% example loan rate means every rupee borrowed costs more than it earns in rent.
• Comparing Dubai gross yields with Indian net yields. Compare like with like, and include service charges, which can be high in Dubai.

We use yield as a valuation check, not a reason to buy. When a corridor’s yields fall well below its peers, it often means prices have run ahead of what tenants will pay. That is a warning sign for new buyers, even if headlines are bullish. When yields sit at the top of the band in a location with jobs and infrastructure arriving, the price may have room to catch up.

For a client who wants income first, we point them to commercial property or to markets like Dubai rather than pretending an Indian flat will deliver it. For a client who wants a home that also appreciates, we accept a 3% yield and focus the diligence on the corridor’s growth drivers. To reach 4% gross on a ₹1.6 crore flat, rent would need to be about ₹53,300 a month. If that isn’t realistic in the building, don’t model it.