Rental Yield Calculator
Calculate the rental yield on your property investment. Compare gross vs net yield, equivalent FD rate, and break-even period.
Gross Yield
3.6%
Net Yield
2.7%
Net Monthly Income
₹11,417
Income & Expense Breakdown
Investment Comparison
What is Rental Yield?
Rental yield is a measure of how much income a property generates relative to its value, expressed as a percentage. It helps you evaluate the return on your property investment from rental income alone (excluding capital appreciation). A higher rental yield means better cash flow from your investment. In India, rental yields typically range from 2-5% depending on the city and property type.
Gross vs Net Rental Yield
- Gross Yield = (Annual Rent ÷ Property Value) × 100. This is the simple calculation before accounting for any expenses.
- Net Yield = ((Annual Rent − Expenses) ÷ Property Value) × 100. This accounts for maintenance, property tax, insurance, vacancy, and other costs. Net yield gives you the true return on investment.
The difference between gross and net yield can be 1-2% or more, which is why it's important to calculate net yield before making investment decisions.
Rental Yield by City (Approximate)
- Bengaluru: 3.5-5% — highest yields among metros due to IT demand
- Chennai: 3-4.5% — steady demand from IT and manufacturing
- Pune: 3-4% — growing IT hub with affordable property
- Hyderabad: 3-4% — rapidly growing with new IT corridors
- Mumbai: 2-3% — high property prices reduce yields despite high rents
- Delhi NCR: 2-3.5% — varies significantly by micro-market
FAQ: What is a good rental yield in India?
A gross rental yield of 3-4% is considered average in Indian metros. Anything above 4% is good, and above 5% is excellent. However, you should always look at net yield after expenses. Compare your net yield with FD rates — if an FD gives you 7% and your net rental yield is only 2%, the property is not a great income investment (though capital appreciation may make up for it).
FAQ: How can I improve my rental yield?
You can improve rental yield by: (1) buying in areas with high rental demand (near IT parks, metro stations, universities), (2) furnishing the property — furnished apartments command 20-40% higher rent, (3) buying smaller units (1BHK/2BHK) which have higher yields than large apartments, (4) reducing vacancy by pricing rent competitively and maintaining the property well, and (5) negotiating lower maintenance charges.
FAQ: Is rental income taxable in India?
Yes, rental income is taxable under "Income from House Property." You can claim a standard deduction of 30% on the annual rent (no receipts needed), plus deduction for municipal taxes paid. If you have a home loan, you can also claim interest paid as a deduction up to ₹2 lakh under Section 24(b). The net rental income after deductions is added to your total income and taxed at your applicable slab rate.