Gross rental yield is annual rent divided by the property’s value, turned into a percentage. Net rental yield does the same thing but subtracts the property’s operating expenses from the rent first. Both measure income relative to price rather than the property’s likely future value — they tell you what a property earns now, not what it might be worth later. Here are both formulas, where they come from, and a worked example using placeholder numbers only.

What’s the difference between gross and net rental yield?

Gross rental yield is the simpler of the two:

Gross rental yield = annual gross rent ÷ property value × 100

Net rental yield takes the same starting point but deducts what it actually costs to hold the property before dividing:

Net rental yield = (annual gross rent − annual operating expenses) ÷ property value × 100

Gross yield is quicker to calculate and easier to compare across properties at a glance. Net yield is more representative of what actually reaches you, because two properties charging the same rent can have very different holding costs.

How do I calculate gross rental yield?

Take the weekly rent, multiply by 52 to get an annual figure, divide by the property’s value, and multiply by 100 to get a percentage.

Worked example (example only, not a market figure — these are round illustrative numbers, not a typical or expected yield): say a property is valued at $500,000 (example only, not a market figure) and rents for $500 a week (example only, not a market figure).

• Annual rent = $500 × 52 = $26,000
• Gross yield = $26,000 ÷ $500,000 × 100 = 5.2% (example only, not a market figure)

That figure is a gross yield — it hasn’t accounted for a single expense yet.

How do I calculate net rental yield?

Net yield starts from the same annual rent figure, but subtracts operating expenses before dividing. Defence Housing Australia — the Australian Government’s property investment body — lists what generally sits in that expenses figure for its own investors: the property manager’s fee, insurance, council rates, water rates, and body corporate or strata fees where they apply. Other costs an investor might include are repairs and maintenance, land tax, and any other regular holding costs not otherwise separated out.

Continuing the same worked example (all figures example only, not market figures): if annual operating expenses come to $8,000,

• Net yield = ($26,000 − $8,000) ÷ $500,000 × 100 = 3.6% (example only, not a market figure)

The gap between the two — 5.2% gross versus 3.6% net in this illustration — is entirely the expenses. That gap varies property to property, which is why a gross figure alone can be a misleading way to compare two properties.

Why does it matter whether I use purchase price or current value?

“Property value” in both formulas can mean either what you paid for the property or what it’s worth today, and the two give different results as a property’s value moves over time. A yield calculated against the original purchase price is sometimes called a yield on cost; a yield calculated against current market value is a running or current yield. Neither is wrong, but they answer different questions, and mixing them up — comparing a yield-on-cost figure for one property against a current-value yield for another — produces a comparison that isn’t really apples to apples. Whenever you see a yield figure, check which denominator was used before you compare it to anything else.

Where do investors usually get this wrong?

As at July 2026, neither Moneysmart nor the ATO publishes a rental yield formula on their own websites — the definitions above come from a Reserve Bank of Australia speech that documents the standard gross-yield calculation, and from Defence Housing Australia’s investor resources for the net-yield formula and its expense list.

For how rental yield fits into the wider decision between growth and yield, see our guide on property investment in Australia.