Yield, cash flow, and bright-line tax for your NZ rental property.
Annual net cash flow
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Gross yield
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Annual rental income
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Annual interest cost
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Bright-line tax (if applicable)
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Your breakdown
Updates live as you type
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Amount
Gross yield versus net yield
Gross yield is annual rent divided by purchase price, expressed as a percentage. It is quick to calculate and useful for comparing properties at a glance. Net yield subtracts all operating costs (rates, insurance, management fees, maintenance, and mortgage interest) from annual rent before dividing by the purchase price. Net yield is the number that actually determines whether a property is cash-flow positive or negative. Many NZ investment properties have positive gross yields but negative cash flows once a typical 70 to 80% LVR mortgage is factored in.
Mortgage interest deductibility in 2025
From 1 April 2025, residential rental property owners can deduct 100% of mortgage interest against rental income. This restores a deduction that was phased out in 2021 and then progressively reintroduced from 2023. The full deduction materially changes the after-tax cash flow picture for leveraged investors and makes the rental income tax calculation more straightforward. This calculator applies interest as a fully deductible expense against rental income for the current tax year.
Bright-line test: selling within 2 years
From 1 July 2024, the bright-line period for residential property is 2 years. If you sell within 2 years of purchase and the property is not your main home, the profit is taxable at your marginal rate. This calculator shows the estimated bright-line tax if you enter a sale price and hold the property for less than 2 years. For properties held longer, no bright-line tax applies under current law, though normal income tax rules still apply if IRD considers you a property dealer or developer.
Frequently asked questions
What is a good rental yield in New Zealand?
Gross yields in New Zealand vary widely by region. Auckland and Wellington central suburbs often yield 3% to 4.5% gross, while provincial cities such as Whanganui or Invercargill can yield 6% to 8% gross. Net yields after rates, insurance, maintenance, and management fees are typically 1.5 to 2 percentage points lower than the gross figure. A property with positive cash flow after all costs and mortgage interest is rare in Auckland but more achievable in lower-priced markets.
Is mortgage interest deductible for rental properties?
From 1 April 2025, mortgage interest is 100% deductible for residential rental properties, including existing stock. This follows a phase-in that started at 50% deductibility in the 2023/2024 income year, rising to 75% in 2024/2025, and reaching full deductibility in 2025/2026. New builds have been fully deductible throughout. Always confirm the current position at ird.govt.nz.
What is the bright-line test?
The bright-line test taxes gains on residential property sold within 2 years of purchase (from 1 July 2024). If you sell within 2 years and the property is not your main home, the gain is taxable at your marginal income tax rate. The gain is sale price minus purchase price minus any deductible improvements. The main home exemption applies if the property has been your main home for most of the ownership period.
How are rental income and losses taxed?
Rental income is added to your other income and taxed at your marginal rate. Deductible expenses include rates, insurance, property management fees, repairs and maintenance, and from 2025/2026 the full mortgage interest. If expenses exceed rental income, the resulting loss can in most cases be offset against other income, reducing your overall tax bill. Ring-fencing rules that limited loss offset have been repealed.