Cash-on-Cash Return Calculator NZ 2026/27
This calculator answers the question a geared property investor actually cares about: what is the cash I committed returning me each year? Yield cannot answer that, because yield divides by the purchase price and ignores the mortgage entirely, so two investors buying the identical property with a 20% deposit and a 60% deposit have the same yield and completely different experiences. Cash-on-cash return divides by the cash you genuinely put in, being the deposit plus the legal fees, building report, LIM and any valuation, and it subtracts the loan repayments along with every operating cost. The result is the annual cash return on your own money. It is normally negative on geared New Zealand residential property at current interest rates, and that is worth understanding rather than avoiding: the return on such a property comes from capital growth and from the loan principal reducing, not from cash in hand, and the negative figure is simply the annual cost of holding it. The page also shows the after-tax position, because interest on residential rental property has been fully deductible since 1 April 2025 and a cash loss usually generates a tax refund that softens it. Gross and net yield are shown alongside so you can see exactly how the three measures differ. Figures are indicative planning estimates, not investment or tax advice.
Gross yield = annual rent / purchase price. Net yield = (annual rent less operating costs) / purchase price. Neither is affected by borrowing, which is exactly why they differ so much from cash-on-cash return.
Loan repayments are calculated as a standard table mortgage using the monthly rate and term, or as interest only. Note that the principal portion of a table repayment is not an expense: it converts cash into equity, so it reduces cash-on-cash return without reducing your wealth.
Interest deductibility: 100% of interest on residential rental property is deductible from 1 April 2025. The after-tax figure applies your marginal rate to (rent less operating costs less interest), and treats a loss as producing a tax benefit at that rate.
Residential rental loss ring-fencing applies in New Zealand, which can defer rather than allow a loss against other income. The after-tax figure here is indicative only; take advice on your own position.
Depreciation on buildings is not claimable for residential rental property, so no depreciation deduction is modelled. Chattels depreciation may be available separately.
Last verified: July 2026, against Inland Revenue guidance on residential property deductions.
Cash flow for the year
| Rent ($640.00 a week) | $33,280.00 |
| Less council rates | $2,900.00 |
| Less insurance | $1,750.00 |
| Less body corporate | $0.00 |
| Less maintenance | $2,200.00 |
| Less management (8%) | $2,662.40 |
| Net operating income | $23,767.60 |
| Less loan repayments ($2,321.25 a month) | $27,855.05 |
| Annual pre-tax cash flow | -$4,087.45 |
| Per week | -$78.60 |
The three measures side by side
| Gross yield (rent / price) | 5.74% |
| Net yield (net operating income / price) | 4.10% |
| Cash-on-cash return (cash flow / cash in) | -1.98% |
The first two ignore your mortgage entirely. Only the third reflects how the purchase was funded.
After tax
| Net operating income | $23,767.60 |
| Less interest (year one, fully deductible) | $23,437.38 |
| Taxable profit or loss | $330.22 |
| Tax at 33% | $108.97 |
| After-tax cash flow | -$4,196.42 |
| After-tax cash-on-cash return | -2.03% |
Only interest is deductible, not the principal portion of a table repayment. Residential rental losses are subject to ring-fencing rules, so a loss may be carried forward rather than offset against other income.
Why Yield Cannot Answer This Question
Two investors buy the same $580,000 house at the same rent. One puts in a 35% deposit, the other pays cash. Both properties have an identical gross yield of 5.74% and an identical net yield of 4.10%, because yield divides by the purchase price and takes no notice of borrowing at all.
Their experiences are nothing alike. The cash buyer collects the entire net operating income of $23,767.60 a year on $580,000 committed. The geared buyer collects the same income, pays $27,855.05 of it to the bank, and is $4,087.45 a year out of pocket on the $206,500 they committed.
Cash-on-cash return is the measure that separates them, because it divides by the cash actually invested and subtracts the loan repayments. It is the number that tells you what your own money is doing.
Worked Example: A Negative Number That Is Not A Bad Investment
Take the defaults. A $580,000.00 property bought with a 35% deposit of $203,000.00 plus $3,500.00 of legal, LIM and building report costs, so $206,500.00 of cash invested. The remaining $377,000.00 is borrowed over 30 years at 6.25% on principal and interest, which is $2,321.25 a month or $27,855.05 a year.
The property rents for $640.00 a week, which is $33,280.00 a year. Rates take $2,900.00, insurance $1,750.00, maintenance $2,200.00 and management at 8% takes $2,662.40, so operating costs are $9,512.40 and net operating income is $23,767.60.
Cash flow is $23,767.60 less $27,855.05, which is -$4,087.45 for the year, or $78.60 a week out of your own pocket. Against $206,500.00 invested that is a cash-on-cash return of -1.98%.
That figure looks alarming and mostly is not. Of the $27,855.05 paid to the bank, $23,437.38 was interest and roughly $4,417.67 was principal, which did not leave your wealth at all: it moved from cash into equity. The property is costing you about $79 a week to hold, and in exchange the loan is shrinking by around $4,400 a year and any capital growth accrues to you on the full $580,000 rather than on the $203,000 you put in.
The Principal Repayment Is Not An Expense
This is the most important thing to understand about cash-on-cash return, and it is a genuine weakness of the measure.
A table mortgage repayment has two parts. The interest is a real cost that leaves permanently. The principal is a transfer: your cash becomes your equity. Cash-on-cash return treats both identically, because it only counts cash movements, so it penalises a property for paying down its own debt.
Switch the same loan to interest only and the annual repayment falls to $23,562.50, cash flow improves to $205.10 and the cash-on-cash return turns positive at about 0.10%. Nothing about the property changed. You simply stopped building equity. Try it with the repayment type selector above and watch the headline number move.
That is why this measure should be read alongside total return rather than on its own. Our Equity Multiple Calculator captures the whole result including the sale, and our Investment Property Cashflow Calculator goes deeper on the year-by-year position.
After Tax, The Loss Is Usually Smaller Than It Looks
Interest on residential rental property became fully deductible again from 1 April 2025, having been progressively restored after the earlier limitation. On the example, the year one interest of $23,437.38 is deductible against the $23,767.60 of net operating income, leaving a taxable profit of just $330.22 and tax of $108.97 at a 33% marginal rate.
So the after-tax cash flow is -$4,196.42 and the after-tax cash-on-cash return is -2.03%. In this particular case tax makes the position marginally worse, because the property is just barely taxable on paper while being cash negative.
Push the interest rate up or the rent down and the picture inverts: a taxable loss generally produces a benefit at your marginal rate, which softens the cash shortfall. One important caveat: residential rental losses in New Zealand are ring-fenced, meaning they generally cannot be offset against your salary or other income and are instead carried forward against future rental income. That timing difference matters, and it is worth advice.
Where These Calculations Go Wrong
Using the deposit alone as cash invested. Legal fees, a builder's report, a LIM and a bank valuation are real money you will never see again. On the example they add $3,500 and reduce the return.
Allowing nothing for maintenance. A roof, a hot water cylinder and a kitchen all have finite lives, and a year with no maintenance spend is a year of accrual rather than a year of no cost. A property that has needed nothing for three years is more likely to need something than less.
Ignoring vacancy and letting fees. Two weeks empty between tenancies is roughly 4% of the annual rent gone, plus a letting fee. This page uses rent collected, so reduce the weekly figure if your property realistically sits empty part of the year.
Forgetting compliance. The healthy homes standards impose requirements on heating, insulation, ventilation, moisture and draught stopping for residential tenancies, and meeting them costs money that belongs in maintenance.
Reading the number without the interest rate. A cash-on-cash return calculated at 6.25% tells you nothing about your position at 8.25%. Move the rate up two points and see whether you could still fund the shortfall from your income, because that is the scenario that actually forces people to sell.
Related NZ Property Investment Calculators
- Investment Property Cashflow Calculator: the full year-by-year cash position in more detail.
- Rental Yield and Investment Calculator: gross and net yield on their own, ungeared.
- Cap Rate Calculator: the valuation measure used to price the asset itself.
- Equity Multiple Calculator: total return across the whole hold, including the sale.
- Rental Cash Flow Calculator: a simpler weekly view of the same cash position.