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Rental Yield Calculator India 2026

Calculate net rental yield, total return (yield + appreciation), cash flow analysis with home loan EMI, tax implications, and make informed property investment decisions.

Rental Yield Calculator - Calculate property ROI and rental returns
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One Crore rupees

₹5L₹50Cr
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Twenty Thousand rupees

₹1K₹5L
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0%20%
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Fifteen Thousand rupees

₹

Five Thousand rupees

₹

Two Thousand rupees

Tax will be calculated on net rental income (after expenses)

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0%15%

With 10% annual increase, your rent will grow from ₹20.00 K to ₹51.87 K in 10 years. Yield calculation uses average rent over 10 years.

Net Rental Yield (Post-Tax)

2.37%

Annual Return on Investment

Total Return

7.37%

Rental Yield + Appreciation

Income & Expense Breakdown

Annual Rental Income(avg.)
₹3.82 L
Less: Annual Expenses- ₹44.00 K
Net Income (Before Tax)₹3.38 L
Less: Income Tax (30%)- ₹1.02 L
Net Income (After Tax)₹2.37 L

Return Composition

Rental Yield2.37%
Capital Appreciation5.00%
Total Return7.37%
Benchmark: 12% total return

Consider properties with 4.63% higher returns.

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Your Property Investment Growth

Watch your property value and rental income grow over 10 years

Property Value in 10 Years
₹1.63Cr
Gain: ₹62.9L
Total Income Earned (10 Yrs)
₹25.7L
After taxes & expenses
Total Wealth in 10 Years
₹1.89Cr
Property + Income

Each year you earn from two sources: Green bars show rental income you collect (after tax & expenses), Blue bars show how much your property value increases. Both grow annually - rent at 10%, property at 5%!

Rental Yield Calculation Formula

Understand the mathematical formulas used to calculate rental yield, total return, and investment performance for your property.

Annual Rent = Monthly Rent × 12

Example:

For a property rented at ₹20,000 per month

20,000 × 12
= ₹2,40,000

Variables:

Monthly Rent - Monthly rental income from the property

Total Expenses = Property Tax + Insurance + Maintenance + Other Costs

Example:

Property tax ₹15,000 + Insurance ₹10,000 + Maintenance ₹24,000 + Others ₹5,000

15,000 + 10,000 + 24,000 + 5,000
= ₹54,000

Variables:

Property Tax - Annual property tax paid to municipal corporation
Insurance - Annual property insurance premium
Maintenance - Annual maintenance costs (if owner pays)
Other Costs - Any other annual expenses

Net Income (Before Tax) = Annual Rent − Total Expenses

Example:

From annual rent of ₹2,40,000 with expenses of ₹54,000

2,40,000 − 54,000
= ₹1,86,000

Variables:

Annual Rent - Total yearly rental income
Total Expenses - All annual operating expenses

Tax Amount = Net Income (Before Tax) × Tax Slab Rate

Example:

For net income of ₹1,86,000 at 30% tax slab

1,86,000 × 0.30
= ₹55,800

Variables:

Net Income (Before Tax) - Rental income after expenses
Tax Slab Rate - Your income tax rate (0%, 5%, 10%, 20%, 30%, 30.9%)

Post-Tax Income = Net Income (Before Tax) − Tax Amount

Example:

From net income of ₹1,86,000 with tax of ₹55,800

1,86,000 − 55,800
= ₹1,30,200

Variables:

Net Income (Before Tax) - Income after expenses
Tax Amount - Income tax on rental income

Net Rental Yield % = (Post-Tax Income ÷ Property Value) × 100

Example:

For post-tax income of ₹1,30,200 on property worth ₹1,00,00,000

(1,30,200 ÷ 1,00,00,000) × 100
= 1.302%

Variables:

Post-Tax Income - Annual income after expenses and tax
Property Value - Purchase price or current market value of property

Total Return % = Net Rental Yield % + Appreciation Rate %

Example:

With 1.3% rental yield and 5% appreciation

1.3 + 5
= 6.3% total annual return

Variables:

Net Rental Yield % - Annual rental yield after tax
Appreciation Rate % - Expected annual property value growth

Net Monthly Cash Flow = Monthly Rent − Monthly EMI

Example:

Rent of ₹20,000 with EMI of ₹60,000

20,000 − 60,000
= −₹40,000 (shortfall to be paid from pocket)

Variables:

Monthly Rent - Monthly rental income
Monthly EMI - Home loan EMI payment

These formulas provide the mathematical foundation for the calculations. Actual results may vary based on rounding, compounding frequency, and specific lender policies.

Can Rental Income Pay Your Home Loan EMI?

A comprehensive analysis of renting out a leveraged property in Bangalore

The Scenario: A ₹80 Lakh Apartment in Whitefield, Bangalore

Rajesh, a 32-year-old software engineer, is considering buying a 2BHK apartment in Whitefield, Bangalore for ₹80 lakhs. He plans to rent it out while living in his company-provided accommodation. His goal: to build wealth through real estate while minimizing out-of-pocket expenses. Let's analyze if this strategy makes financial sense.

Property & Loan Details

Property Value
₹80,00,000
Down Payment (20%)
₹16,00,000
Home Loan Amount
₹64,00,000
Interest Rate
9% p.a.
Loan Tenure
20 years
Monthly EMI
₹57,565
Expected Monthly Rent
₹22,000
Monthly Shortfall
₹35,565

Year 1: The Reality Check

Income Side

Annual Rent (₹22,000 × 12)₹2,64,000

Expense Side

Annual EMI (₹57,565 × 12)₹6,90,780
Property Tax₹16,000
Society Maintenance₹18,000
Total Annual Expenses₹7,24,780
Net Annual Cash Outflow-₹4,60,780

Rajesh needs to pay ₹38,398 from his pocket every month to maintain this property.

The Silver Lining: Tax Benefits

Since Rajesh is in the 30% tax bracket, he can claim significant deductions:

Interest on Home Loan (Year 1: ~₹5,75,000)Tax saved: ₹1,72,500
Principal Repayment (Section 80C, limit ₹1.5L)Tax saved: ₹45,000
Total Tax Benefit (Year 1)₹2,17,500
Effective Monthly Burden After Tax₹20,273

(₹4,60,780 - ₹2,17,500) ÷ 12 = ₹20,273/month

10-Year Outlook: The Wealth Building Phase

Let's assume conservative growth: 5% annual rent increase, 6% property appreciation, EMI remains constant.

YearMonthly RentMonthly Burden
Year 1₹22,000₹20,273
Year 5₹28,130₹16,890
Year 10₹36,230₹12,140
Year 15₹46,650₹6,180
Year 20₹60,070₹0

By Year 20:

  • ✓ Loan fully paid off - Property worth ₹2.6 Cr (6% annual appreciation)
  • ✓ Monthly rental income: ₹60,070 (pure passive income)
  • ✓ Total invested from pocket over 20 years: ~₹30 lakhs
  • ✓ Net wealth created: ₹2.3+ crores

The Verdict: Is It Worth It?

Pros

  • ✓Forced savings through real estate
  • ✓Significant tax benefits reduce actual burden
  • ✓Property appreciation builds wealth
  • ✓Rent coverage improves over time
  • ✓Creates long-term passive income

Cons

  • ✗High monthly cash outflow initially (₹20K+)
  • ✗Property illiquid - can't exit easily
  • ✗Tenant management headaches
  • ✗Vacancy periods = full EMI burden
  • ✗Concentration risk in single asset

Final Recommendation:

This strategy works if:

  • 1.You have stable income and can afford ₹20-25K/month for 10+ years
  • 2.You're in 30% tax bracket (tax benefits are crucial)
  • 3.You believe in long-term real estate appreciation in that location
  • 4.You have 6-month emergency fund (for vacancy/repairs)
  • 5.You're comfortable with illiquidity for 15-20 years

Alternative: If cash flow is tight, consider investing the ₹20K/month in equity mutual funds via SIP. At 12% CAGR, this would grow to ₹1.8 Cr in 20 years with better liquidity and no EMI stress.

Key Takeaways

  • Rental income rarely covers full EMI in the first 10 years
  • Tax benefits are critical - reduce effective burden by 30-40%
  • Property appreciation is where real wealth is built, not rental yield
  • Rising rents gradually improve cash flow over 15-20 years
  • Only pursue if you have long-term horizon and stable cash flow

Who Should Avoid or Be Cautious

Rental yield investment may not suit everyone

Short-term Investors

Need money within 1-3 years? Rental properties have:

  • Low liquidity - takes time to sell
  • High transaction costs (stamp duty, brokerage)
  • Returns may not justify costs for short periods

Passive Income Seekers with No Buffer

Rental income isn't always stable:

  • Vacancy periods (1-3 months typical)
  • Tenant defaults or delays
  • Unexpected maintenance costs

Those Seeking Guaranteed Returns

Unlike FDs or bonds, rental properties have risks:

  • Property prices can fall
  • Rental demand varies by location
  • No guarantee of consistent tenants

Limited Capital Investors

Real estate requires significant upfront investment:

  • Down payment (20-30% for loans)
  • Stamp duty & registration (5-10%)
  • Emergency fund for repairs

Consider REITs (Real Estate Investment Trusts) if you want real estate exposure with lower capital, higher liquidity, and professional management.

Tax Implications on Rental Income

Understanding how rental income is taxed in India

How Rental Income is Taxed

Rental income is categorized as "Income from House Property" and is added to your total income.

  • Step 1: Calculate Gross Annual Value (GAV) - total rent received
  • Step 2: Claim 30% standard deduction on GAV
  • Step 3: Deduct municipal taxes paid
  • Step 4: Deduct home loan interest (if applicable)
  • Step 5: Remaining amount is taxed at your slab rate

Example Tax Calculation

Annual Rent (GAV):
₹2,40,000
Less: Standard Deduction (30%):
- ₹72,000
Less: Municipal Tax Paid:
- ₹15,000
Net Annual Value:
₹1,53,000
Tax @ 30% slab:
₹45,900

Additional Deductions Available

Home Loan Interest: Up to ₹2 lakhs per year for let-out property
Pre-construction Interest: 1/5th of interest paid during construction can be claimed over 5 years
Note: Section 80C benefits (principal repayment) not available for let-out property

Tips, Tricks & Hidden Charges

Maximize your rental yield and avoid common pitfalls

Pro Tips to Maximize Yield

Location Matters: Properties near IT parks, metro stations, hospitals yield 1-2% more
Furnishing: Semi-furnished properties fetch 15-20% higher rent than unfurnished
Target Corporates: Corporate leases offer stable, long-term tenancy at premium rates
Maintenance: Pass maintenance to tenant wherever possible to improve net yield
Buy Under-construction: 20-30% cheaper, rent out immediately after possession

Hidden Charges to Watch For

Society Dues: ₹2,000-₹8,000/month - often not included in maintenance
Vacancy Costs: Budget 1-3 months rent loss annually for tenant changes
Repair & Painting: ₹20,000-₹50,000 every 3-4 years between tenants
Brokerage: 1 month rent for finding new tenants (typically every 2-3 years)
Legal/Dispute Costs: ₹10,000-₹50,000 if tenant defaults or refuses to vacate

Rental Agreement Tip: Always use 11-month renewable agreements to avoid Rent Control Act complexities. Include clauses for rent escalation (5-10% annually), lock-in period, and notice period.

City-wise Average Rental Yields (2024-26)

Gross rental yields across major Indian cities and micro-markets

Hyderabad

7-10%
Kokapet, Narsingi8-10%
Gachibowli, Madhapur7-9%

Ahmedabad

5-7%
GIFT City6-8%
Bopal, SG Highway5-7%

Pune

4-6%
Hinjewadi, Wakad5-7%
Koregaon Park3-4%

Bangalore

3-5%
Whitefield, Sarjapur4-6%
Indiranagar, Koramangala2-3%

Chennai

4-6%
OMR, Pallikaranai5-7%
Anna Nagar, T Nagar3-4%

Kolkata

6-8%
New Town, Rajarhat6-8%
Salt Lake, EM Bypass5-6%

Mumbai

2-4%
Thane, Navi Mumbai3-5%
South Mumbai1.5-2%

Delhi-NCR

2.5-4%
Noida, Gurgaon3-4%
Central Delhi2-3%

Mumbai Suburbs

5-8%
Ulwe, Panvel6-9%
Virar, Vasai7-10%

Note: These are gross yields (before expenses and taxes). Net yields are typically 1-2% lower. Yields vary within micro-markets based on property quality, amenities, and tenant demand.

Frequently Asked Questions

Common questions about rental yield calculation and property investment

What is rental yield and how is it calculated?

Rental yield is the annual return you get from renting out a property, expressed as a percentage of the property's value. Net Rental Yield = [(Annual Rental Income - Annual Expenses - Tax) / Property Purchase Price] × 100. For example, if you earn ₹2.4L annually after expenses and taxes on a ₹1Cr property, your net rental yield is 2.4%.

What is considered a good rental yield in India?

In India, rental yields vary by city. Tier-2 cities like Ahmedabad, Hyderabad offer 5-8% gross yields, while metros like Mumbai, Delhi offer 2-4%. A good net rental yield (after all costs and taxes) is 3-5%. However, total return (rental yield + property appreciation) should ideally exceed 12% annually to beat alternative investments.

What is the difference between gross and net rental yield?

Gross Rental Yield = (Annual Rent / Property Value) × 100, without considering any expenses. Net Rental Yield accounts for all costs including property tax, maintenance, insurance, and income tax. Net yield is always lower but more realistic. For example, a 6% gross yield might become 3% net yield after expenses and taxes.

How do I calculate rental yield when I have a home loan?

With a home loan, focus on cash flow: Compare monthly rent vs EMI. If EMI is ₹60K and rent is ₹25K, you have a shortfall of ₹35K/month. The rental yield calculation remains same (based on property value, not loan amount), but you should also track net cash flow. Positive cash flow means rent covers EMI; negative means you pay from pocket.

Should property tax and maintenance be included in yield calculation?

Yes, always include all operating expenses. Property tax (annual), insurance, and maintenance (if owner-paid) significantly reduce your net yield. For example, annual expenses of ₹50K on a ₹1Cr property paying ₹2.4L rent reduces your gross 2.4% yield to net 1.9% (before income tax). Ignoring these costs gives unrealistic expectations.

How does income tax affect rental yield?

Rental income is added to your total income and taxed at your slab rate (0-30.9%). You can claim standard deduction of 30% on annual rental value and deduct municipal taxes, home loan interest (if applicable). Remaining income is taxed. For someone in 30% tax bracket earning ₹2L net rental income, tax is ₹60K, reducing actual yield further.

What is total return and how is it different from rental yield?

Total Return = Net Rental Yield + Property Appreciation Rate. While rental yield gives cash returns, property appreciation gives capital gains. For example: 3% rental yield + 6% annual appreciation = 9% total return. Investors should target 12%+ total return to justify real estate over mutual funds or other investments.

Which Indian cities offer the highest rental yields?

Based on 2024-26 data: Ahmedabad (GIFT City): 5-7%, Hyderabad (Gachibowli, Kokapet): 5-8%, Pune (Hinjewadi, Wakad): 4-6%, Bangalore (Whitefield, Sarjapur): 3-5%, Chennai (OMR, Pallikaranai): 4-6%. Metro cities like Mumbai, Delhi typically offer 2-4% due to high property prices. Tier-2 cities generally have better yields but lower appreciation.

How do I account for vacancy periods in rental yield?

Vacancy reduces effective rental income. Assume 1-2 months vacancy per year (8-17% vacancy rate). If monthly rent is ₹20K, annual rent is ₹2.4L, but with 2-month vacancy, effective rent is ₹2L. Use this lower figure in yield calculations. In high-demand areas, vacancy may be lower; in slower markets, budget for longer gaps.

Can rental yield be negative? What does it mean?

Yes, if your annual expenses and taxes exceed rental income, you have negative cash flow (especially common with high home loan EMIs). For example, if rent is ₹20K/month but EMI is ₹60K plus ₹5K expenses, you're paying ₹45K/month from pocket. This might still be acceptable if you expect strong property appreciation. Calculate total return to decide.

Should I include property appreciation in my yield calculation?

Property appreciation should be calculated separately as capital gains, not mixed with rental yield. However, for investment decisions, use Total Return (Rental Yield + Appreciation). For example, 3% rental yield looks poor alone, but if appreciation is 8%, total return of 11% is competitive. Track both metrics independently.

How often should I increase rent and by how much?

Typical practice in India is 5-10% rent increase annually or every 2 years, depending on lease agreement and market conditions. IT hubs like Bangalore, Pune see 8-10% annual increases. Use our calculator's 'Annual Rent Increase' feature to model long-term yields. Conservative investors should use 3-5% increase; aggressive can use 8-10% in growing areas.

What expenses can I claim as deductions on rental income tax?

You can claim: (1) 30% standard deduction on Net Annual Value, (2) Municipal/property taxes actually paid, (3) Home loan interest (if property is let out), (4) Repairs and maintenance (actual expenses). Insurance and other costs aren't directly deductible but reduce your net rental income. Consult a tax advisor for optimal structuring.

Is rental yield higher for commercial or residential properties?

Commercial properties typically offer 6-10% gross yields vs 2-5% for residential in same location. However, commercial has higher risks: longer vacancy periods, economic sensitivity, tenant fit-out costs. Residential is more stable with consistent demand. First-time investors should start with residential unless they have commercial property expertise.

How do I compare rental yield with other investments?

Compare total return (yield + appreciation) vs alternatives: FDs (7-8% fixed), Debt Mutual Funds (8-10%), Equity Mutual Funds (12-15% historical), REITs (6-9% dividend yield). Real estate needs 12%+ total return to justify illiquidity and effort. Use rental yield for cash flow planning; use total return for overall investment comparison.