Calculate gross and net rental yield for any property in India. Compare your yield against city benchmarks to evaluate if the investment makes sense.
Understanding Rental Yield
Rental yield is the annual return on a property investment expressed as a percentage of property value. It helps compare rental properties like any other investment.
Gross Yield — Simple calculation, ignores all costs. Good for quick comparison.
Net Yield — Realistic figure after deducting maintenance (typically 1–1.5% of property value annually), property tax (0.1–0.5%), and vacancy allowance (5–10% of annual rent). Net yield is usually 0.5–1.5% lower than gross yield.
Frequently Asked Questions
A rental yield of 3–4% is average for residential property in Indian metros. Above 4% is good, above 5–6% is excellent. Commercial properties typically yield 6–9%. Tier-2 cities like Pune, Hyderabad, and Ahmedabad offer better yields than Mumbai or Delhi NCR.
Gross Rental Yield = (Annual Rent / Property Value) × 100. Net Rental Yield further deducts maintenance charges, property tax, and vacancy periods from annual rent before dividing by property value.
Yes, rental income is taxed under Income from House Property. You can deduct municipal taxes paid and claim a 30% standard deduction on net annual value. The balance is added to your total income and taxed at applicable slab rates.
Commercial properties offer higher yields (6–9%) but require larger investment and longer vacancy periods when tenants leave. Residential properties have lower yields (3–5%) but are easier to rent out and more liquid. For most retail investors, residential is safer, while commercial suits experienced investors with higher capital.