Finance
Loans, savings & money calculators
Rental Yield Calculator
Gross, net and cash-on-cash rental yield with per-geo purchase costs — and the UK Section-24 after-tax number incumbents bury. Accurate, instant and free — for UK · US · India.
What these mean:
What these mean:
What these mean:
UK rental: gross yield 6.00%, net yield 4.49%, cash-on-cash 2.12% (monthly pre-tax cash flow of £141). Invested capital £/$/₹267,000 on a 25% deposit. UK Section 24: post-tax cash-on-cash −1.32% at 40% marginal rate. Total-return IRR over 10 yrs at 3% capital growth: 24.7%.
Yield ladder
Gross → Net → Cash-on-cash each strip away more costs. Post-S24 adds the Section 24 tax wedge (UK only).
Section 24: the hidden tax trap
Total-return IRR
Running yield + capital appreciation, money-weighted over 10 years at 3%/yr capital growth. Cash invested: 25% deposit + purchase costs.
24.7%
annualised IRR (XIRR method, pre-CGT)
IRR is pre-CGT
How gross, net and cash-on-cash yield are calculated
Three yields measure a property deal at increasing honesty. Gross ignores every cost. Net deducts running costs over total invested capital. Cash-on-cash ROI deducts finance too, over the actual cash you put in. Per-geo purchase costs (UK SDLT incl. the 5% surcharge / US closing costs) are folded into the invested-capital base. Figures dated TY 2025/26.
Gross yield
annual rent ÷ price
(rent×12) / price × 100
- The headline one-liner — ignores every cost
- Useful only as a first screen
Net yield
after running costs
(rent − costs) / invested_capital × 100
- Invested capital = price + purchase costs
- Costs: management, maintenance, insurance, voids
Cash-on-cash ROI
after finance
(rent − costs − interest) / cash_invested × 100
- Cash invested = deposit + purchase costs
- Uses interest-only (capital repayment is equity, not a cost)
- 1The numbers behind the deal: £250,000 price, £1,250/mo (£15,000/yr) rent. SDLT £15,000 (5% surcharge + the 1-Apr-2025 nil-rate reversion to £125k) + ~£2,000 legal/survey = £17,000 purchase costs. Running costs £3,000/yr; 25% deposit £62,500 + interest-only mortgage £187,500 @ 5.5% = £10,312.50/yr interest.
- 2Gross → net → cash-on-cash: Gross = 15,000 / 250,000 = 6.0%. Net = (15,000 − 3,000) / 267,000 = 4.49%. Cash-on-cash = (15,000 − 3,000 − 10,312.50) / 79,500 = 1,687.50 / 79,500 = 2.12%.
- 3After Section 24 (higher-rate) — the flip: Interest is not deductible; tax = 12,000 × 40% − 2,062.50 (20% credit) = £2,737.50. After-tax cash flow = 1,687.50 − 2,737.50 = −£1,050/yr, i.e. post-S24 cash-on-cash = −1.32%. A "positive" 2.12% deal is loss-making for a higher-rate landlord.
Be explicit about the denominator
Section 24 — the after-tax number incumbents bury
Since April 2020, UK landlords cannot deduct mortgage interest as an expense — they get only a 20% basic-rate tax credit on it. For a higher-rate (40%) landlord, the gap between the 20% credit and the 40% marginal rate routinely flips a positive deal negative. Most calculators tuck this into an advanced tab; here it is the headline.
| Tax band | Tax on £12,000 profit | Less 20% credit (£2,062.50) | After-tax cash flow | Post-S24 cash-on-cash |
|---|---|---|---|---|
| Basic-rate (20%) | £2,400 | £337.50 | +£1,350/yr | ≈ +1.70% |
| Higher-rate (40%) | £4,800 | £2,737.50 | −£1,050/yr | −1.32% |
£250k example, £10,312.50 interest, £1,687.50 pre-tax cash flow, £79,500 cash invested. The same deal is +1.70% for a basic-rate landlord but −1.32% for a higher-rate one — the 20%-credit-vs-40%-marginal gap. England & NI; TY 2025/26.
Why the credit doesn't cover the tax
One tool for UK yield and US cap rate — with per-geo purchase costs
The same job has different names: rental yield in the UK, India and Australia; cap rate and cash-on-cash return in the US. UK-only incumbents ignore the US vocabulary entirely. This calculator bridges them and bakes in per-geo purchase costs so the invested-capital base is right wherever you buy.
UK
SDLT + 5% surcharge
SDLT with the +5% additional-property surcharge (from 31 Oct 2024), nil-rate band reverted to £125k (1 Apr 2025). Section 24 in force.
Scotland (LBTT) and Wales (LTT) differ.
US
cap rate / cash-on-cash
Cap rate = NOI ÷ price; cash-on-cash = annual pre-tax cash flow ÷ cash invested. Purchase costs = closing costs (~2–5%).
No Section 24 — mortgage interest deductible on Schedule E.
India
rent ÷ price + stamp
Rental yield = annual rent ÷ price; purchase costs include stamp duty + registration (state-varying).
Cross-links
Frequently asked questions
Gross yield = annual rent ÷ purchase price — the headline one-liner that ignores all costs. Net yield = (annual rent − annual running costs) ÷ total invested capital, where invested capital is the price plus purchase costs (stamp duty, legal, survey, refurb). Cash-on-cash ROI = (annual rent − running costs − annual mortgage interest) ÷ the actual cash you put in (deposit + purchase costs). For a £250,000 BTL at £1,250/month: gross 6.0%, net 4.49%, cash-on-cash 2.12%. Gross flatters a deal; net and cash-on-cash are where it really lives.
There is no single number — it depends on the geography, property type and your finance. As a rough UK guide, gross yields around 5–6% are common, with higher-yield regions in the north and lower yields (often 3–4%) in London and the south-east where capital growth substitutes for income. But gross yield is the wrong measure to judge a deal on: after running costs, finance and — crucially in the UK — Section 24 tax, a "healthy" 6% gross can become a negative cash-on-cash return. Always read the after-tax number, not the gross headline.
Since April 2020, Section 24 fully restricts mortgage-interest relief: interest is no longer a deductible expense, and you instead get a 20% basic-rate tax credit on it. For a higher-rate (40%) landlord this is devastating. On the £250k example with £10,312.50 interest, the landlord is taxed on the £12,000 pre-finance profit (= £4,800 at 40%) and gets only a £2,062.50 credit, so tax is £2,737.50 — turning a £1,687.50 pre-tax cash flow into −£1,050/year, i.e. a post-Section-24 cash-on-cash of −1.32%. The same deal stays positive (about +1.70%) for a basic-rate landlord. The 20%-credit-versus-40%-marginal gap is the single biggest real-world surprise, and most calculators bury it in an advanced tab.
Yes — purchase costs including SDLT are part of your invested capital, so they reduce net yield and cash-on-cash ROI. For a £250,000 second property in England/NI in 2025/26, SDLT is about £15,000: the +5% additional-property surcharge (effective 31 October 2024) applies across the bands, and because the standard nil-rate band reverted from £250,000 to £125,000 on 1 April 2025, a buyer now also pays standard duty on the £125k–£250k slice that was previously zero-rated. With ~£2,000 of legal and survey costs, total purchase costs are about £17,000. Scotland (LBTT) and Wales (LTT) use different bands.
US investors use "cap rate" and "cash-on-cash return" for the same job. Cap rate = net operating income ÷ purchase price (close to net yield), and cash-on-cash = annual pre-tax cash flow ÷ cash invested (the same as our cash-on-cash ROI). US purchase costs are closing costs (~2–5%) rather than SDLT, and there is no Section 24 equivalent — mortgage interest remains deductible against rental income on Schedule E. This calculator bridges the UK "rental yield" and US "cap rate / cash-on-cash" vocabularies on one page.
Method, assumptions & references
Methodology (TY 2025/26): gross yield = (rent×12)/price; net yield = (annual rent − running costs)/total invested capital; cash-on-cash ROI = (annual rent − costs − mortgage interest)/cash invested (deposit + purchase costs), interest-only. UK Section 24: mortgage interest is not deductible; relief is a 20% basic-rate credit, applied as a separate after-tax line. Worked example £250k BTL, £1,250/mo, SDLT £15,000 (5% surcharge + 1-Apr-2025 nil-rate reversion to £125k): gross 6.0%, net 4.49%, cash-on-cash 2.12%, post-Section-24 (higher-rate) −1.32%. SDLT bands vary by nation (England/NI shown; Scotland LBTT, Wales LTT differ) and change with budgets. Not tax or investment advice.
How we calculate this
Reviewed by Reckonist Editorial · Last reviewed 16 June 2026. Figures follow the methods and sources set out in our editorial standards.
Figures are dated TY 2025/26. UK SDLT shown for England & Northern Ireland including the +5% additional-property surcharge and the 1 April 2025 nil-rate-band reversion to £125,000; Scotland (LBTT) and Wales (LTT) use different bands. Section 24 mortgage-interest restriction (20% basic-rate credit) is fully in force. Tax bands, surcharges and closing-cost norms change with budgets — verify current rules before committing. This is general information, not tax or investment advice — consult a qualified property-tax adviser.
Keep going
Same-category tools follow this colour; a cross-category link keeps its own.