Cash-on-Cash Return Calculator NZ 2026/27

Quick answer: Cash-on-cash return is annual pre-tax cash flow divided by the cash you actually put in. On the worked example below, a $580,000.00 property with a $203,000.00 deposit and $3,500.00 of acquisition costs collects $33,280.00 of rent against $9,512.40 of operating costs and $27,855.05 of loan repayments, giving cash flow of -$4,087.45 on $206,500.00 invested, a cash-on-cash return of -1.98%. The gross yield is 5.74% and the net yield 4.10%, which is why the three must not be confused.

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.

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Updated  Current 2026/27 rates and legislation applied.
Three measures, three questions. Yield asks what the property returns and ignores your mortgage. This page asks what your cash returns each year. Our Equity Multiple Calculator asks what the whole investment returned by the time you sold. A property can look poor on this page and excellent on that one, which is the normal profile of geared New Zealand residential property.
Verification & Methodology
Cash-on-cash return = annual pre-tax cash flow / total cash invested. Cash invested is the deposit plus acquisition costs, not the deposit alone.
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.
The purchase
$
%
Most NZ banks require 30% or more for a residential investment property.
$
Legal, building report, LIM, valuation. Part of your cash invested.
The loan
%
yrs
Income and costs
$
$
$
$
$
Allowing nothing here is the most common way this calculation flatters a purchase.
% of rent
-1.98%
cash-on-cash return before tax
Cash invested
$206,500.00
deposit plus costs
Gross yield
5.74%
ignores the mortgage
Net yield
4.10%
after operating costs
After tax
-2.03%
cash-on-cash

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

Data sources: the rates and thresholds on this page are maintained against Inland Revenue. Figures are checked twice monthly.

Frequently asked questions

What is cash-on-cash return?

Cash-on-cash return is the annual pre-tax cash flow from a property divided by the cash you actually put into it. On the worked example, a $580,000 property bought with a $203,000 deposit and $3,500 of acquisition costs produces $33,280.00 of rent, $9,512.40 of operating costs and $27,855.05 of loan repayments, giving cash flow of -$4,087.45 against $206,500.00 invested, which is a cash-on-cash return of -1.98%.

How is cash-on-cash return different from rental yield?

Yield ignores the mortgage entirely. Gross yield is rent divided by purchase price, and net yield is rent less operating costs divided by purchase price, and neither is affected by how much you borrowed. Cash-on-cash return divides by the cash you actually committed and subtracts the loan repayments, so it answers a different question: what is my own money returning in cash. On the example the gross yield is 5.74% and the net yield 4.10%, while the cash-on-cash return is -1.98%. All three are correct and they measure different things.

Why is my cash-on-cash return negative?

Because the rent does not cover the outgoings plus the mortgage, which is the normal position for geared residential property in New Zealand at current interest rates. That is not automatically a bad investment: the return on a negatively geared property comes from capital growth and from the loan principal being repaid, not from cash flow. What a negative figure does tell you is exactly how much you must fund from your own income each year, which is the number to check you can sustain if rates rise or the property sits empty.

Should the deposit alone be the cash invested?

No. Include everything you paid to acquire the property that did not come from the loan: legal fees, a builder's report, a LIM, any valuation the bank required, and any immediate work needed before tenanting. On the example those add $3,500 to a $203,000 deposit. It is a small adjustment on one property but it is the honest denominator, and using the deposit alone systematically overstates the return.

Does interest-only lending improve cash-on-cash return?

It improves the measured return, because the principal portion of a repayment is not an expense, it is a transfer from cash into equity. Switching to interest-only removes that transfer from the cash flow and the cash-on-cash return rises immediately, even though the property has not become more profitable and you now owe the same amount indefinitely. This is a good example of why cash-on-cash return should never be read on its own.

How does tax affect cash-on-cash return in New Zealand?

Interest on residential rental property is 100% deductible from 1 April 2025, having been phased back up from the earlier limitation. Where rent less operating costs less interest produces a loss, that loss generally reduces your other taxable income and produces a refund, which softens the cash shortfall. Where it produces a profit, tax is payable and the after-tax return is lower than the pre-tax one. Note that residential rental losses are subject to the ring-fencing rules, so take advice on your own position.

What operating costs do people forget?

Maintenance is the big one. A property that has needed nothing for two years is not a property with no maintenance cost, it is a property with a deferred maintenance cost. Allowing nothing, or a token amount, is the most common way these calculations flatter a purchase. Others regularly missed are body corporate levies on units and apartments, the cost of vacancy between tenancies, letting fees, accounting fees, and compliance work under the healthy homes standards.

What is a good cash-on-cash return?

There is no benchmark that survives contact with the New Zealand market, because at current interest rates most geared residential property produces a negative figure. Comparing against a term deposit is not meaningful either, since a term deposit has no capital growth, no leverage and no risk of a tenant leaving. The honest use of this number is not to hit a target but to know the annual cash cost of holding the property, and to test whether you could still fund it if rates rose two percentage points.