A 4.77% Gross Yield That Costs $331 a Week Before Tax

A $720,000 house renting for $660 a week has a gross yield of 4.77%. On most listings that reads as a decent number. On an 80% interest-only loan at 6.75%, the same house takes $331 a week out of the owner's account before tax. After tax at a 37% marginal rate, an owner who held or had contracted the house before the Budget announcement at 7:30pm AEST on 12 May 2026 still pays in $164 a week. An investor who bought the same established house after that cut-off pays $164 for now and, with no other residential property income, the full $331 from 1 July 2027.

Gross yield is the figure in the advertisement. The weekly top-up is the figure in the bank statement. They describe the same property and they are rarely quoted together.

Every figure below comes from Plintha's deterministic finance engine, the same code behind every analysis on this site. The exact inputs are published alongside this post, so anyone can re-run them.

The property

• Purchase price: $720,000, an established house in Queensland
• Weekly rent: $660 ($34,320 a year), a 4.77% gross yield
• Loan: 80% LVR, so a $576,000 interest-only loan on a $144,000 deposit
• Interest rate: 6.75%. This is an illustrative investor rate, not a quote. The Reserve Bank's cash rate target has been 4.60% since its 29 September 2026 decision, and lenders price investor loans above it by different margins.
• Marginal tax rate: 37%, which on the ATO's 2026–27 resident rates applies to taxable income above $135,000. The Medicare levy of 2% is not modelled.

Where $660 a week goes

Gross yield is rent divided by price. It contains no costs at all. The engine's year-one ledger for this house looks like this:

Two things stand out. First, interest alone is more than the rent: $38,880 against $34,320. The property is behind before a single running cost is paid. Second, running costs take $12,674, which leaves $21,646 of rent and brings the net yield down to 3.01%.

Together, interest and running costs come to $51,554 a year. The rent covers about two-thirds of that. The remaining $17,234 is the $331 a week the owner supplies from salary.

Land tax is not in these figures. It depends on the land value and on what other land the investor holds in the same state, so it sits outside the weekly number and can add to it.

What tax gives back

The ATO's rental property guidance lists interest, council rates, agent fees, insurance and repairs among the expenses that may be deducted in the income year they are incurred. A building may also carry a capital works deduction, which is a paper deduction with no cash attached. The engine estimates that at $6,300 a year for this house; a quantity surveyor's report would refine it, and older buildings can have little or none left.

That lifts the tax loss to $23,534. At a 37% marginal rate the refund is $8,708 a year, or $167 a week, and the top-up falls from $331 to $164, which is $8,526 a year.

Who receives that refund now depends on the purchase date. Under the negative gearing changes announced in the 2026–27 Budget:

• Held, or under contract, before 7:30pm AEST on 12 May 2026: the old rules continue. The weekly top-up is $164.
• Established dwelling bought after that cut-off: the loss still offsets salary for the rest of 2026–27, so the figure is $164 for now. From 1 July 2027 the loss is quarantined. It can only be used against income from residential property, including capital gains, and the unused part carries forward. With no other residential property income, the weekly top-up becomes the whole $331, or $17,234 a year.
• New build: keeps the salary offset. The engine puts the same price and rent at $79 a week, helped by larger depreciation on a new structure. A new build is a different asset with its own risks, so that is not a like-for-like comparison.

The deduction is not lost under quarantining. It is deferred. A deferred deduction does not fund this week's shortfall, though, so the cash figure is the one that leaves the account. We cover the rules in negative gearing after the 2026–27 Budget.

What moves the number

Each row changes one input and leaves the rest alone.

Rent moves it less than expected. An extra $40 a week lifts the gross yield from 4.77% to 5.06% and cuts the top-up by $35 for the post-Budget buyer and $22 for the grandfathered owner. Part of every extra rent dollar goes to management and vacancy, and for an owner who gets the refund, a smaller loss also means a smaller refund.

The interest rate moves it most. A rate one percentage point lower is worth $110 a week to the post-Budget buyer and $70 to the grandfathered owner. The same arithmetic runs in reverse when rates rise.

A bigger deposit buys a smaller top-up. Going from an 80% to a 70% loan takes $72,000 more cash up front and reduces the weekly cost by $93 or $59. That is a trade between money committed today and money committed weekly, not a saving.

The tax bracket matters only where the refund exists. On the ATO's 30% rate, which covers taxable income from $45,000 to $135,000, the grandfathered owner's top-up is $196, which is $32 a week more than at 37%. For the post-Budget established buyer the bracket makes no difference from 1 July 2027: the figure is $331 either way.

Vacancy is not a rounding error. Four extra empty weeks in a year push the weekly figure to $196 and $382.

How high would the yield need to be?

On this loan and this cost model, rent of $1,060 a week, a 7.66% gross yield, produces a pre-tax surplus of only $21 a week, so the break-even rent sits just below that.

The reason is arithmetic rather than anything particular to this house. Interest on an 80% interest-only loan at 6.75% comes to 5.4% of the purchase price each year. Any property on those loan terms with a gross yield below 5.4% collects less rent than its interest bill before a single running cost is paid, so the owner funds part of it every week before tax. A lower rate or a bigger deposit moves that line, as the table above shows. That is not a verdict on the property. A weekly top-up can be a deliberate cost of holding an asset for growth. It is simply a cost that the yield figure does not show.

What these numbers don't cover

• Your rate. 6.75% is an assumption. Each lender prices differently, and the table shows how sensitive the result is.
• Your costs. Insurance, rates, water and maintenance are the engine's standard allowances, not quotes for a specific house.
• Principal. This is an interest-only loan. Principal-and-interest repayments take more cash each week and are not deductible beyond the interest.
• Growth. Nothing here says whether the property is worth holding. The top-up is the price of holding it, and capital growth is uncertain.
• Tax detail. Other income, other properties, ownership structure and the Medicare levy all change the refund.

To see the weekly figure for a specific property, with its own price, rent and loan, run it through Plintha's analysis.

This article is general information and analysis, not financial, tax, credit or legal advice. It does not take into account your objectives, financial situation or needs. Figures use the assumptions stated above (80% LVR, 6.75% interest-only, 37% marginal tax rate, Queensland, Plintha's standard operating-cost model) as at 12 October 2026 and will change if any of those change. Confirm your own position with a registered tax agent or licensed adviser.