How to calculate net rental yield after taxes
Net rental yield after taxes is calculated as follows: (Annual rent - Charges - Tax impact) / Acquisition price x 100. In Belgium, the tax impact is based on the indexed cadastral income increased by 40%, not on the actual rent received. Net yield typically falls between 2 and 4%, compared to 4 to 7% gross.
The detailed formula:
| Step | Calculation |
|---|---|
| 1. Gross annual rent | Monthly rent x 12 |
| 2. Annual charges | Property tax + insurance + maintenance + management + vacancy |
| 3. Net income before taxes | Step 1 - Step 2 |
| 4. Tax base | Indexed CI x 1.40 |
| 5. Additional tax | Tax base x marginal PIT rate |
| 6. Net income after taxes | Step 3 - Step 5 |
| 7. Net yield | (Step 6 / Acquisition price) x 100 |
The acquisition price includes the purchase price, notary fees (registration duties + fees) and any renovation works needed before letting.
Worked calculation example
Apartment purchased for EUR 250,000 in Brussels (total cost including fees: EUR 280,000). CI: EUR 1,200. Rent: EUR 1,100/month.
| Item | Annual amount |
|---|---|
| Gross rent | EUR 13,200 |
| Property tax | -EUR 1,100 |
| Landlord insurance | -EUR 350 |
| Maintenance/repairs | -EUR 500 |
| Vacancy (1 month/3 years) | -EUR 367 |
| Net income before taxes | EUR 10,883 |
| Indexed CI x 1.40 (1,200 x 2.1763 x 1.40) | EUR 3,656 |
| Additional PIT (marginal rate 50%) | -EUR 1,828 |
| Net income after taxes | EUR 9,055 |
| Net yield | 3.23% |
Gross vs net yield:
| Type | Formula | Example result |
|---|---|---|
| Gross | Annual rent / Purchase price | 5.28% |
| Net before taxes | (Rent - Charges) / Total price | 3.89% |
| Net after taxes | (Rent - Charges - Tax) / Total price | 3.23% |
Charges to include in the calculation
Recurring charges:
- Property tax (precompte immobilier): varies by municipality (EUR 600 to 2,000/year for a CI of EUR 1,200)
- Landlord insurance: EUR 250 to 500/year depending on coverage
- Maintenance and repairs: allow 1 to 2% of the property price per year
- Management fees: 5 to 8% of rent if using an agency, 0 if self-managed
- Vacancy: 3 to 5% of annual rent (1 month every 2-3 years)
- Co-ownership charges: EUR 500 to 1,500/year depending on common charges
Do not confuse net yield with cash flow: if the property is financed by a mortgage, loan repayments are not a yield charge but a cash flow item. Mortgage interest is not deductible from private rental income in Belgium.
Use our yield calculator to automatically factor in the property tax rate for your municipality and the current CI indexation coefficient.
Regional specifics
Brussels-Capital Region
Brussels property tax is moderate (base rate 1.25%, no provincial surcharges). Registration duties are 12.5% (reduced rate of 0% up to EUR 600,000 for primary residence under certain conditions). Net yield is often lower due to higher purchase prices.
Walloon Region
Property tax varies but is often higher (significant municipal surcharges in some cities). Registration duties are 12.5% (reduced rate of 3% for modest incomes). Lower purchase prices allow higher gross yields, but proportionally heavier charges reduce the net gap.
Flemish Region
The base rate is higher (3.97%) but additional surcharges are generally lower. Registration duties are 12% (reduced rate of 1% for first and only residence). Flanders often offers the best price-to-yield ratio for rental investment.
Articles 7 to 13 CIR 92 (property taxation), regional legislation on registration duties — Texts on Justel