The formulas
Gross yield = (monthly rent × 12) ÷ price × 100 Net income = monthly rent × 12 × (1 − vacancy %) − (levies + rates + other costs) × 12 − annual maintenance Net yield = net income ÷ price × 100 Annual cash flow = net income − bond repayments × 12
Tax on rental income
Rental income is added to your taxable income. Rates, levies, insurance, agent fees, repairs and the interest portion of your bond are generally deductible against it. If expenses exceed rent, the loss can usually be set off against other income, subject to SARS rules.
Worked example
R1.2 million sectional-title flat let for R10 000
Gross yield is 10%. After a 4% vacancy allowance and R44 400 a year in costs, the net yield is 5.9%.
Annual figures
- Rental income (12 months)
- R120 000.00
- Less vacancy allowance (4%)
- −R4 800.00
- Less levies, rates, other expenses and maintenance
- −R44 400.00
- Net rental income
- R70 800.00
Frequently asked questions
What is a good rental yield in South Africa?
There is no single benchmark — yields vary widely by area and property type. Compare the net yield with what you could earn in a low-risk investment, and remember that capital growth adds to the total return.
What is the difference between gross and net yield?
Gross yield is annual rent divided by the property price. Net yield deducts vacancies and running costs such as levies, rates, insurance, agent fees and maintenance, so it shows what the property really earns.
Should I include the bond in the yield?
Usually not. Net yield measures the property itself, regardless of how it is financed. The calculator shows your cash flow after the bond separately.