NZ Rental Property Cash Flow Calculator

This calculator projects the full after-tax cash flow of a New Zealand rental property, reflecting the 100% mortgage interest deductibility restored from 1 April 2025 and the ring-fencing rules that still apply to rental losses. You enter your weekly rent and vacancy rate, your loan balance, interest rate and remaining term, plus the property value for yield. You then add annual operating costs: council rates, insurance, property management fees, repairs and maintenance, accounting fees, and chattels depreciation, before selecting your marginal tax rate. Results appear across three tables: effective rental income and taxable income or loss once interest, opex and depreciation are deducted; tax payable, or, if you make a loss, confirmation it is ring-fenced and carried forward rather than offsetting your salary; and the actual cash flow, showing the principal and interest split, operating costs, tax paid, and net annual and weekly cash flow, alongside gross and net rental yield. A results banner flags whether you are running positive or topping up from other income, common in the early years of NZ property ownership. Tax profit and cash flow differ, since principal is not deductible and depreciation is not a real cash cost, so treat every figure as an indicative estimate, as actual results depend on interest rates, vacancy, maintenance and future tax law changes.

Updated  100% interest deductibility active. Building depreciation 0%. Ring-fencing still applies.
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Rental income

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%
Typical NZ is 2-4%. High-demand cities can be lower. Regional or specialty properties may be higher.

Mortgage

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%
$
Used only for gross yield - doesn't affect tax or cash flow.

Annual operating expenses

$
$
%
$
$
$
See our Chattels Depreciation Calculator to work this out. Common total is $2k-$5k/year.

Your tax situation


Tax vs cash flow - two different pictures

A common confusion: tax profit is NOT the same as cash flow. Mortgage interest is a deductible expense, but principal repayments are not. Conversely, depreciation is a deductible expense but no actual cash changes hands. This calculator shows both views side by side.

Ring-fencing rules (Income Tax Act 2007 s EL 1-20)

Even with 100% interest deductibility restored, rental losses are ring-fenced. This means:

  • You CAN'T use rental losses to reduce tax on your salary or wages.
  • Losses carry forward to offset future rental income or bright-line gain on sale.
  • You choose either portfolio ring-fencing (losses pooled across all your rentals) or property-by-property ring-fencing. The choice is locked in after your first year.
  • Ring-fencing doesn't apply to most companies whose core business isn't residential property.

Operating expenses checklist

Deductible: council rates, insurance (building + landlord), property management fees, advertising for tenants, repairs and maintenance (not improvements), accountant fees, legal fees for leases, travel to inspect property, utilities you pay, chattels depreciation, body corporate fees for investment properties.

NOT deductible: principal repayments on mortgage, capital improvements (extensions, new deck - add to cost base), purchase-related legal fees (cost base), private use portion, your own labour on maintenance.

Sources

Cash flow projections are indicative only. Actual results depend on interest rate changes, vacancy, maintenance surprises, and tax law. Most investors find year 1-5 cash flow is negative even at healthy yields - the rationale is typically long-term capital growth, not current cash return.

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Frequently asked questions

Is mortgage interest 100% deductible for NZ rentals in 2026?

Yes. Full interest deductibility was restored on 1 April 2025 for ALL residential rental properties, regardless of when you purchased them or when you drew down the loan. This reverses the Labour-era interest limitation rules that had phased out deductions between 2021 and 2024. New builds (Code Compliance Certificate issued on or after 27 March 2020) have had 100% deductibility throughout the transition period. For the year ending 31 March 2026 and onwards, you can deduct every dollar of rental mortgage interest.

What is ring-fencing of rental losses?

Under sections EL 1-20 of the Income Tax Act 2007, rental losses from residential properties cannot offset your other income (salary, wages, business income). Instead, the loss is 'ring-fenced' and carried forward to offset future rental income from the same property, portfolio, or a taxable disposal (e.g. bright-line gain). Ring-fencing still applies in 2026 even with full interest deductibility restored. The choice between portfolio ring-fencing (losses pooled across all rentals) and individual-property ring-fencing is made in your first year and cannot be changed.

Can I depreciate the building?

No. Building depreciation was removed for all buildings (including commercial) from the 2024/25 income year. Previously, commercial buildings had 2% depreciation restored between 2020 and 2024 as a Covid recovery measure, but that has also been removed. You CAN still depreciate chattels: carpet, curtains, light fittings, furniture, heat pumps, hot water cylinders, appliances, etc. See our Property Chattels Depreciation Calculator for rates and methods.

What expenses can I claim against rental income?

Allowable deductions include: mortgage interest (100% from April 2025), council rates, insurance, repairs and maintenance (not improvements), property management fees, advertising to find tenants, legal fees for preparing leases, accountant fees, chattels depreciation, travel to inspect the property (but not commuting from home), and utilities you pay (if applicable). You cannot deduct: principal repayments on the mortgage, capital improvements (these add to cost base), private expenses, or purchase-related legal fees (these go to cost base too).

What is a good rental yield in NZ?

There's no universal answer, but most NZ residential rentals have gross yields of 3% to 6% (rent divided by property value). Auckland tends to be lower (3-4%) because of high property prices. Regional centres like Palmerston North, Invercargill, and Whanganui often yield 5-7%. Net yield (after expenses) is typically 1-2 percentage points below gross. Many NZ rentals run negative cash flow in the early years, especially at today's interest rates - investors rely on capital growth rather than income. Always model both cash flow and capital scenarios before buying.