Most rental yield calculators show you gross yield and nothing else. This one works through the complete picture: rental income after vacancy, every deductible expense, mortgage interest under the restored 100% deductibility rules (from 1 April 2025), chattel depreciation, and the after-tax cashflow position accounting for New Zealand's rental loss ring-fencing rules. Fill in your property details below and get a complete income statement, all key return metrics, and a 10-year projection.
Enter your property details and costs on the left for a complete income statement, key return metrics, and 10-year projection
A property advertised with a 5% gross rental yield sounds straightforward. Take the annual rent, divide by the price, multiply by 100. But gross yield excludes every cost that stands between that rent and your actual pocket. Once you subtract property management fees (typically 8.5% of gross rent in New Zealand), council rates, insurance, maintenance, accounting fees, and mortgage interest, the net yield on that same property is often closer to 2% to 3%. Add in the tax treatment of any resulting profit or loss and the picture changes further.
This calculator works through the full picture, producing a complete property income statement that mirrors what your accountant would prepare for your tax return, plus a cashflow statement showing actual money in and out every year.
From 1 April 2025, mortgage interest is once again 100% deductible against rental income for residential investment properties in New Zealand. This follows a phased restoration: interest deductibility was removed entirely from 1 October 2021 for existing residential rentals, then restored to 50% from 1 April 2024, and fully restored to 100% from 1 April 2025.
For the 2025/26 and future tax years, you can deduct the full annual interest cost against your rental income. This significantly changes the tax position of many investment properties compared to the 2023/24 year when no interest was deductible at all. The calculator defaults to 100% deductibility but allows you to model the earlier years by selecting a different deductibility percentage.
Since 1 April 2019, rental property losses in New Zealand are ring-fenced. This means that if your rental property generates a taxable loss after all deductions including interest and depreciation, that loss cannot be offset against your other income such as your salary. The loss is carried forward and can only be applied against future rental income from any rental property you own.
This is a critical distinction from the pre-2019 position where a rental loss would reduce your total taxable income and create an immediate tax refund through the PAYE system. Under the ring-fencing rules, a landlord in the 33% tax bracket with a $10,000 rental loss does not receive a $3,300 refund today. Instead, that $3,300 benefit is deferred until the property generates a taxable surplus in a future year.
When a property shows a taxable loss, this calculator shows the deferred tax benefit (the eventual value of the carry-forward loss) separately from the current year cashflow, so you understand the complete picture without overstating the immediate benefit.
While residential building structures cannot be depreciated for tax purposes in New Zealand (this was removed in 2011), the movable fittings inside a rental property can still be depreciated. These are called chattels and they include carpet, curtains, blinds, heat pumps, water heaters, rangehoods, dishwashers, and other fixed appliances.
To claim chattel depreciation accurately, you need a chattel valuation report prepared by a registered valuer. The valuer assigns a separate value to each chattel and IRD-approved depreciation rates are applied. For a typical New Zealand rental property, annual chattel depreciation might range from $500 to $2,500 per year in the early years of ownership, reducing as the chattels depreciate to zero. The depreciation reduces your taxable rental income but does not reduce your cash cashflow, so it is a non-cash tax benefit.
Note that depreciation recapture rules apply when you sell the property. Any depreciation previously claimed on chattels is added back as income in the year of sale. However, this recapture typically occurs at a future point with a lower present value.
Gross yield is the simplest measure: annual rent divided by property value. It ignores all costs and is mainly useful for quick comparison between properties before deeper analysis.
Net yield refines the picture by subtracting all operating costs from income, but still before mortgage costs. This is the property's standalone income-generating performance independent of how it is financed. A property with a 4% net yield generates $4 of income after costs for every $100 of property value.
The capitalisation rate (cap rate) is the same as net yield when calculated on the full property value rather than just your equity. It is the measure most used by commercial investors for comparing properties of different sizes and prices.
The debt service coverage ratio (DSCR) measures how many times your NOI (net operating income before mortgage costs) covers your annual mortgage repayments. A DSCR above 1.0 means the property's income covers its mortgage. Below 1.0 means you are topping up from other income. Banks typically want to see a DSCR of at least 1.2 for investment property lending, though some lend at lower ratios.
Cash-on-cash return measures the after-tax annual cashflow as a percentage of the cash you have invested (your equity or deposit). This is the most useful measure of your actual financial return because it is based on the real cash position, not book values.
Principal repayments on a mortgage are not a cost of owning a rental property : they are forced savings. Every dollar of principal you repay increases your equity in the property by a dollar. This matters when reading a cashflow statement: a negative pre-tax cashflow partly caused by principal repayments does not mean the property is destroying wealth. It means you are building equity.
This calculator separates the interest and principal components of your mortgage repayment explicitly so you can see this distinction. A property that is cashflow-negative by $200 per month because of principal repayments is a fundamentally different position from one that is cashflow-negative because operating costs and interest exceed the rent.
NZ property managers typically charge 7% to 10% of gross weekly rent plus GST, though some charge a flat weekly fee. At 8.5% on a $550 per week rent, the annual management fee is approximately $2,428. This covers advertising, tenant screening, tenancy agreements, routine inspections, maintenance coordination, and rent collection. Some managers charge additional fees for re-letting, renewals, maintenance coordination, and court attendance.
Self-managed properties save this cost but require the landlord to comply with the Residential Tenancies Act, manage maintenance requests, conduct inspections, and handle any disputes. The Tenancy Tribunal can issue significant orders against landlords who fail to meet their legal obligations.
Yes. All rental income is taxable in New Zealand. You declare it in your annual tax return (IR3) and pay income tax at your marginal rate on any net rental income after all allowable deductions. If the property makes a taxable loss after deductions, that loss is ring-fenced under current law and cannot offset other income : it is carried forward against future rental income.
You can deduct the interest component of your mortgage repayments, but not the principal repayment. Principal repayments reduce your debt but are not an income tax deduction. From 1 April 2025, 100% of the interest cost is deductible for residential rental properties.
Fully deductible expenses include mortgage interest, council rates, insurance, property management fees, routine maintenance and repairs, accounting fees, advertising for tenants, body corporate levies, and chattel depreciation. Capital improvements : adding new features or significantly upgrading the property : are not immediately deductible but add to your cost base.
In most NZ cities, gross yields for residential rental properties currently range from about 3.5% to 6%, depending on the property type and location. Auckland tends to have lower yields due to high property prices relative to rents. Regional centres often offer higher yields. A gross yield of 5% or above is generally considered reasonable for a residential investment, though the net yield after costs is what really matters.
The bright-line test taxes any gain on the sale of a residential investment property if you sell within 2 years of purchasing it (reduced from 10 years for sales on or after 1 July 2024). The gain is added to your income and taxed at your marginal rate. The main home exclusion does not apply to investment properties. See the Bright-Line Test Calculator on this site for a full assessment of your position.
Interest-only mortgages reduce monthly repayments and improve short-term cashflow, because you are not paying down the principal each month. This is attractive from a cashflow management perspective. However, you build no equity through repayments and the full loan balance is owed at the end of the IO period. Principal-and-interest loans build equity over time but have higher repayments. Most NZ investors use IO loans for investment properties for cashflow management, though banks have become more restrictive about IO terms for investors in recent years.
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