Here’s the short answer: a “good” rental yield in Singapore is best judged on net yield, not the headline gross figure. Gross yield is just annual rent divided by price; net yield is what’s left after property tax, maintenance, mortgage interest, agent fees, vacancy and income tax. Net yield is almost always much lower than gross — and it’s the number that tells you whether the property actually beats simply investing your money instead.
📊 Gross yield: the easy headline number
Gross yield is the figure agents quote most often because it’s simple and flattering. You take the annual rent and divide it by the purchase price.
Say you buy a condo for $1,500,000 and rent it out for $4,500 a month. That’s $54,000 a year. Divide $54,000 by $1,500,000 and you get a gross yield of 3.6%. It sounds tidy, but it quietly ignores every cost of actually owning and renting the place.
🧾 What net yield subtracts
Net yield is gross yield minus the real costs of being a landlord. The big ones in Singapore are:
- Property tax — a rented-out home is taxed at the higher non-owner-occupied rates, progressive from 12% up to 36% on its Annual Value (well above owner-occupied rates).
- Maintenance and MCST — monthly condo fees, repairs and replacements.
- Mortgage interest — if you financed the purchase, the interest portion of your repayments is a real drag on returns.
- Agent fees and vacancy — commission to find a tenant, plus the months the unit sits empty between leases.
- Income tax on the net rent — rental income is taxed at your marginal rate, on either your actual expenses or a 15% deemed deduction (plus mortgage interest).
Strip all of that out and the return shrinks fast. That’s why net yield matters: it reflects the cash that genuinely lands in your pocket.
🔢 A worked example: gross vs net
Take that same $1,500,000 condo earning $54,000 a year, or 3.6% gross. Now layer in the costs as rough round numbers: property tax based on the Annual Value at the higher non-owner-occupied rate, MCST and maintenance, agent commission spread over the lease, plus a month or so of vacancy. Suppose these come to around $14,000 a year. The rent before financing and tax is now $40,000.
Next, mortgage interest. If you borrowed to buy, the interest alone can easily run to tens of thousands a year, swallowing much of what’s left. And on whatever net rent remains, you still pay income tax at your marginal rate. Once all of that is counted, a 3.6% gross yield can fall to a net yield of well under 2% — sometimes close to zero if interest is high. The exact figure depends entirely on your loan, tax bracket and Annual Value, so it’s worth running your own numbers in the Property Profit calculator’s investment mode rather than trusting a headline rate.
⚖️ Why net yield is the number that counts
A gross yield tells you what the property earns in a vacuum. Net yield tells you what you earn after the taxman, the bank and the management corporation have taken their cut. Two properties with identical gross yields can have very different net yields once you account for different Annual Values, loan sizes and vacancy risk.
It also makes the property comparable to other things you could do with the money. If your net yield is 1.5% but a low-risk investment could return more with far less hassle and no tenant headaches, the rental case weakens. You can stress-test that trade-off with the opportunity cost calculator, which shows what your cash might have grown to if invested elsewhere.
🏠 So what counts as “good”?
There’s no single magic number, because it depends on your financing, your tax rate and the location. A few honest guardrails:
- Always compare net yields, never gross, when sizing up a deal.
- A net yield that comfortably beats a safe alternative investment — after tax and effort — is the real test of “good”.
- Remember rental income is one part of the story; any future price gain is separate, and Singapore charges no capital gains tax on individuals selling their own property.
- Don’t forget your buy-in: a big mortgage at high interest can turn a decent-looking gross yield into a barely-positive net one.
🧮 Run your own numbers
Yield is personal — it hinges on your price, loan, tax bracket and vacancy. Before you commit, check that the monthly numbers even fit your budget with the condo affordability calculator, then model the full picture in the Property Profit calculator to see your net yield and whether it beats simply investing the cash. A clear-eyed net figure beats a flattering gross one every time.