Rental Yield

An ₹80 lakh flat renting at ₹22,000: gross yield = ₹2,64,000 ÷ ₹80,00,000 = 3.30%. Now the honest version: one vacant month leaves 11 months of rent (₹2,42,000), minus ₹30,000 of maintenance and property tax = ₹2,12,000 — a net yield of 2.65%, or about ₹17,667 a month. The same ₹80 lakh in a 7% FD pays ₹5,60,000 a year — more than two and a half times the net rent. The property's investment case rests entirely on appreciation.

Indian residential property grosses 2–3.5% in most cities; commercial runs 6–9%. Nobody buys a flat for the rent — the return case is appreciation, and the rent merely offsets holding costs. If someone pitches a flat as an "income investment", check their arithmetic against this page.

One extra vacant month, a repainting between tenants, a lift-repair special levy — and a 3.3% gross yield becomes a sub-2% net yield. Always budget vacancy and society dues before comparing against anything; the gross number flatters every property.

Rental income is taxed at your slab after a flat 30% standard deduction and municipal taxes. Home-loan interest under Section 24(b) is deductible against it — fully, for a let-out property, with no ₹2 lakh cap (loss set-off against other income is capped at ₹2 lakh a year). A 30%-slab landlord keeps roughly 79% of the net rent.

When prices climb faster than rents, yields compress. A city where yields have fallen to 2% is an expensive city — the market is pricing in appreciation that may or may not arrive. Comparing yield across cities and across years tells you more about valuations than any launch brochure will.