· Built around the Rental yield calculator
Photo: Jakub Zerdzicki on Pexels (free licence)
The estate agent's brochure says the flat "yields 9.6%". That number is true and almost useless: it is the rent divided by the price, before levies, rates, empty months, the bond and SARS. This post takes one ordinary buy-to-let - a R1.5 million sectional-title flat letting at R12 000 a month - and runs it through every sum a landlord meets: the rental yield, the tax on the rent, wear and tear on the furniture, the yearly escalation, what the tenant must earn (rent affordability) and the rules for the deposit. Each figure was checked against a published example before this went out.
Run your own numbers
The calculator below starts on the example flat: R1 500 000, R12 000 rent, R2 500 a month of running costs, one month empty a year, R300 000 deposit and a 20-year bond at 10.75% (prime is {{prime}} today). Change any figure - a cash buyer types the full price as the deposit.
The three yields - and which one matters
- Gross yield is a year's rent divided by the price. R12 000 x 12 = R144 000, over R1 500 000 = 9.60%. Agents quote this one because it is the biggest.
- Net yield takes off the costs and the empty months. R12 000 x 11 months let = R132 000, less R30 000 of levy, rates, insurance, upkeep and agent fees = R102 000, over R1 500 000 = 6.80%.
- Cash-on-cash is what your own money earns once the bond is paid. It is the only one that tells you whether the flat pays you or you pay the flat.
- None of these is after tax. SARS comes next.
Checked against published examples
Before publishing, CalcSA ran the same inputs through its calculators:
- Gross yield: a R2 000 000 property at R12 000 a month is 7.2% - the worked example on Accounter's South African rental yield calculator. Our rental yield calculator gives 7.20% (R144 000 / R2 000 000).
- Tax on rent: R450 000 salary plus a R5 000 rental profit costs R1 550 more tax - TaxTim's rental income tax example (Lerato: R120 000 rent less R115 000 of expenses, including R72 000 of bond interest). TaxTim worked it on the 2025/26 tables; our rental tax calculator on the 2026/27 tables also gives R1 550, because R450 000 and R455 000 both sit in the 31% band either year.
- Wear and tear: an R18 000 laptop, 3-year write-off, 8 months in use, 80% business use gives R3 200 in the first year and R4 800 a year after - TaxTim's wear-and-tear example. Our wear and tear calculator gives R3 200.00 and R4 800.00. The same page lists furniture and fittings at 6 years, as the SARS table does.
- Deposit refund deadlines - 7 days when nothing is owed, 14 days after the dwelling is handed back when there are deductions, 21 days when the tenant skips the inspection - match the Rental Housing Act s5(3) as quoted by the law-firm and agency articles in the sources.
Not verified from a primary source: the rent escalation sums are plain compounding (rent x 1.08 each year) checked by hand, not against a published example; and the SARS rental income page and the BGR 7 annexure were not opened for this post - the deductible expenses and the 6-year period come from the SARS text our calculators already cite and from TaxTim.
Worked example 1: the flat that does not pay for itself - yet
- Net rent: R8 500 a month - R102 000 a year over twelve months.
- Bond: R12 182.75 a month on R1 200 000 at 10.75% over 20 years (bond calculator).
- Shortfall: R3 682.75 a month, or R44 193 a year, out of your salary.
- Cash in: R308 700 - the R300 000 deposit plus R8 700 transfer duty (3% of the part above R1 210 000). Bond registration and transfer fees come on top.
- Cash-on-cash return: -14.32% before tax and before any growth in the price. The bet is that rent rises and the bond does not - which is what the next two examples are about.
Buy the same flat cash and there is no bond: the R102 000 net rent on R1 508 700 cash in is about a 6.8% return before tax. Compare that with what the cash would earn in a fixed deposit, and remember the flat can stand empty longer than one month.
Photo: Jakub Zerdzicki on Pexels (free licence)
Worked example 2: tax on the rent - with and without a bond
SARS adds rental profit to your other income and taxes it at your marginal rate. The rental tax calculator works out the tax with the rent and without it, on the 2026/27 tables.
- Owner with a bond, R480 000 salary: a R26 124 loss, R8 098 less tax. Rent averages R11 000 a month (R132 000 / 12, one month empty). Expenses are the R2 500 running costs plus R10 677 a month of bond interest - R128 127 in the first year. Rent less expenses is -R26 124, which comes off the salary: tax drops from R92 217 to R84 119.
- Only the interest is deductible, not the capital part of the bond. As the bond is paid down the interest falls, the loss shrinks and the rent turns into a taxable profit.
- Cash buyer, same salary: R38 530 tax on R114 000 profit. R12 000 x 12 less R2 500 x 12 = R114 000; tax on R594 000 is R130 747 against R92 217 - and R63 800 of it lands in the 36% band.
- Improvements are not expenses. A new kitchen adds to the base cost for capital gains tax when you sell; repairing the old one is deductible.
- Tax is not withheld from rent. It is assessed on your return, usually through provisional tax.
- High earners can have a loss ring-fenced under s20A - kept to offset future rental profit instead of the salary. Check before counting on the saving.
Worked example 3: furnishing the flat - wear and tear
- R60 000 of furniture, brought into use on 1 September: R5 000 deduction in the first tax year. SARS writes furniture and fittings off over 6 years, R10 000 a year, and the first year counts only the 6 months from September to February.
- At a 31% marginal rate that saves R1 550 in year one and R3 100 a year after (wear and tear calculator).
- A R6 500 fridge is written off in full in the year you buy it - an item under R7 000 that works on its own counts as a small item. At 31% that is R2 015 back.
- Add the wear and tear to the expenses in the rental tax calculator for the year it applies.
Escalation, affordability and the deposit
- At 8% a year, R12 000 becomes R13 996.80 in year three - R12 000, R12 960, R13 996.80. Over three years the tenant pays R467 481.60, which is R35 481.60 more than three flat years at R12 000 (rent escalation calculator).
- No law caps the escalation - the Rental Housing Act only says the lease must state it and it must be reasonable. An increase far above inflation is easier for a tenant to refuse at renewal (inflation calculator).
- A tenant paying R12 000 needs about R40 000 a month gross on the 30% rule (rent affordability calculator). The move-in cost with a one-month deposit is R24 000.
- The deposit must earn interest for the tenant. R12 000 held for 12 months at 5% grows to R12 613.94 - R613.94 that belongs to the tenant (rental deposit calculator).
- Skip the joint move-out inspection as a landlord and you lose the right to deduct anything - the dwelling counts as in good order and the full deposit plus interest is due.
30% of what? CalcSA's rent affordability calculator applies the share to gross income, as landlords' screening usually does. Rental-payment data firms describe the 30% guide against take-home pay, which is stricter: on R40 000 gross the take-home is well below R40 000, so R12 000 is more than 30% of it. Set the share lower in the calculator if you want the stricter test.
What these calculators leave out
- Price growth. Most buy-to-let returns depend on what the flat is worth when you sell, and on the CGT then. None of the yields above include it.
- Levy and rates increases. Running costs rise every year too - check the levy and property rates calculators.
- Rate changes. A 1% rise in prime on R1 200 000 adds hundreds of rand a month to the bond - and to the shortfall.
- Renting versus buying your own home is a different sum - see the rent or buy calculator.
Sources
- SARS, rates of tax for individuals, 2027 tax year (1 March 2026 to 28 February 2027) and the R17 820 primary rebate: sars.gov.za, read by CalcSA 16 October 2026.
- SARS Binding General Ruling 7 (wear and tear, section 11(e)) and its annexure of write-off periods, reproducing Interpretation Note 47: sars.gov.za, as cited by the CalcSA wear and tear calculator, read 16 October 2026. The annexure was not reopened for this post.
- Rental Housing Act 50 of 1999, sections 5(3) (deposit, interest, inspections, refund deadlines) and 5(6) (rent and escalation in the lease), as cited by the CalcSA rental deposit and rent escalation calculators; deadlines also as quoted by Mondaq, security deposits - where does it go and Jawitz, getting your rental deposit back, read 16 October 2026.
- Worked example, R450 000 salary + R5 000 rental profit = R1 550 extra tax: TaxTim, rental income tax calculator, read 16 October 2026.
- Worked example, R18 000 laptop = R3 200 first-year wear and tear; furniture and fittings 6 years: TaxTim, wear and tear calculator, read 16 October 2026.
- Worked example, R2 000 000 at R12 000 a month = 7.2% gross yield: Accounter, rental yield calculator, read 16 October 2026.
- The 30% rent-to-income guide, measured on take-home pay: PayProp, which SA city is the best deal for renters, read 16 October 2026.
- Prime 10.75% from 25 September 2026 and transfer duty (nil up to R1 210 000, then 3%): the SARB and SARS figures the CalcSA bond and transfer duty calculators use, checked 16 October 2026.
Calculators used in this post
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