NRI Property Rental Yield: The Number You Probably Don't Know
If you own a flat in Bangalore and rent it for ₹38,000 a month, what is your NRI property rental yield? Most owners say something like "around 5%." The actual calculation — the real number, after costs — usually lands somewhere between 3.2% and 4.5%. It is not dramatically worse. But it is a different number. And it tells a different story about the asset.
The Back-of-Envelope Number (and Where It Falls Short)
The quick calculation goes like this: ₹38,000/month equals ₹4,56,000 annually. If the flat is worth ₹90 lakhs, that is roughly 5.1% gross yield.
That is not wrong. But it is not the number that governs decisions. Gross yield answers "how much does the tenant pay?" Net yield answers "how much do I actually keep?" The two are rarely the same.
What Gets Subtracted From Your 5%
Here is a realistic breakdown for a ₹90 lakh Bangalore flat rented at ₹38,000 a month:
- Gross annual rent: ₹4,56,000
- Society maintenance at ₹3,500/month: −₹42,000
- BBMP property tax (annual): −₹12,000
- Painting cycle at ₹18,000 every three years: −₹6,000 amortized
- Plumbing, electrical, and misc repairs: −₹8,000/year average
- CA fees for ITR-2 with rental income schedule: −₹5,000/year
- Vacancy (one month every three years): −₹15,333/year amortized
Effective net cash: approximately ₹3,67,667/year. Net yield on a ₹90 lakh flat: 4.1%.
Not 5.1%. One full percentage point lower — and this is before factoring in TDS obligations under Section 195 of the Income Tax Act, which requires Indian resident tenants to deduct 31.2% at source when paying rent to an NRI landlord. Most tenants don't. Most aren't aware they should.
Why NRI Landlords Rarely Know Their Real Yield
There is no mystery here. The data needed to calculate real yield lives in several different places at once:
- Bank transfer records, often routed through a parent's account
- WhatsApp confirmations that confirm payment but record nothing
- A spreadsheet started with good intentions and not finished
- Receipts held by a local property manager or a parent
- Invoices and payment confirmations scattered across email threads
None of this is organized by property and year. So the yield calculation never quite happens. You know the flat earns ₹38,000 a month. You know it is a good investment. But the number that would let you compare this asset against alternatives — net yield, post-cost, after realistic deductions — does not exist anywhere you can access quickly.
The TDS Variable Nobody Plans For
Section 195 TDS is worth understanding separately because it affects the yield picture in an unusual way. When a tenant correctly deducts 31.2% before transferring rent, your monthly receipt drops from ₹38,000 to ₹26,144. The balance is held as tax credit — meaning it resolves when you file ITR-2 and claim it. For NRIs who file properly and have a CA coordinating the claim, this works cleanly.
The problem is that most of these arrangements are informal. Tenant pays the full rent. NRI landlord receives it, grateful not to have the friction of a TDS conversation. Nobody has told the CA. The tax credit that should have been accumulating doesn't exist because the deduction never happened. At some point — usually when a notice arrives — the math gets reconstructed. It is not a pleasant exercise.
The number that matters here is not the TDS rate. It is whether your rental income picture is legible enough that your CA can see it whole.
What Knowing the Real Number Actually Changes
The case for calculating your NRI property rental yield properly is not about deciding to sell. Most NRI property owners are not going to exit based on a yield recalculation. The case is more practical than that.
When the real number exists, a few things shift:
- Your CA receives a structured summary at tax time, not a reconstruction from memory
- You can evaluate whether a rent negotiation is worth the friction — moving from 4.1% to 4.8% net yield on a ₹90 lakh flat is about ₹63,000 a year; sometimes it is worth asking
- You can spot trends that affect the number: rising society dues, a municipal tax jump, maintenance costs that have been creeping upward
- You have a baseline for comparing rental return against capital appreciation — if the flat has gone from ₹90 lakhs to ₹1.1 crore in three years, the yield story looks different than if values have been flat
None of this requires a financial model. It requires a ledger — rent received, costs paid, dates recorded consistently.
Building the Ledger That Makes the Calculation Possible
PropertyPilot is built for exactly this gap in NRI property ownership. The Premium plan maintains a rent ledger per property — monthly entries with amount due, received, date, TDS deducted, and payment mode — alongside a maintenance log, society dues tracker, and property tax payment history. Everything lives on your device, encrypted, without passing through a server.
The calculation it makes possible is not complicated:
- Total rent received (from the ledger, full-year)
- Minus total costs tracked across the same period
- Divided by a current value estimate you enter
That is your net NRI property rental yield. Not approximate. Not reconstructed at CA-meeting time. Actual — and auditable if you ever need it to be.
The Base plan ($19.99 one-time) covers the document vault and city-specific property tax reminders. The Premium plan ($29.99/year) adds the full landlord stack: rent ledger, tenant records with PAN, TDS tracking per entry, society dues history, and a pre-sale document checklist for when you eventually decide to exit.
The Number That Earns Its Keep
Most NRI property owners, if asked, would say their Indian flat is a solid investment. That is probably true. But "solid" is carrying a lot of weight when the actual yield is approximate. A 4.1% net yield on an appreciating asset in a growing city is genuinely good. A 4.1% yield on a flat that has not appreciated in five years, with climbing maintenance and inconsistent tenants, is a different conversation.
Your real NRI property rental yield — after costs, after realistic deductions, after the easy approximations are stripped away — is the number that lets you have either conversation with clarity. It exists whether you calculate it or not. It is worth knowing what it is.
PropertyPilot is on the waitlist now. If your Indian property's financials currently live in a parent's bank account and a family WhatsApp thread, it is worth changing that. Join the waitlist for PropertyPilot →
PropertyPilot is part of the Make the Money Behave collection — private, no-upsell tools for the financial details most apps overlook.