Rental Yield: How to Calculate Whether Your Flat Really Pays Off

The rent lands in your account, the mortgage goes out, the sinking fund takes its cut – and you still don’t know whether you’re actually making money on the flat or just paying for an expensive hobby. This guide gives you concrete formulas, worked examples with numbers and the tax context for 2026, so you can calculate your rental yield accurately once and for all. We’ll also show you how to track it over the long term so it doesn’t slip away.

Why gross yield alone isn’t enough

Most listings and “investment tips” work with gross yield. It’s a quick back-of-the-napkin number, but it’s a poor basis for decisions. Gross yield ignores tax, the sinking fund, insurance, repairs, vacancy and the mortgage – exactly the items that decide whether anything is left over at the end of the year.

That’s why we’ll go through four levels of calculation, from the crudest to the most precise:

Rental yield: calculating the gross yield

The simplest metric. It’s used for a lightning-fast comparison of multiple flats.

Example: a 2-room flat (2+kk) in Brno for 5,000,000 CZK, rent 18,000 CZK/month. Annual rent = 216,000 CZK. Gross yield = 216,000 ÷ 5,000,000 × 100 = 4.32 %.

For reference on where your number sits: in 2025/2026 the gross yield in Prague hovers around 3.5–4.5 %, in the regions 5–7 %. The Deloitte Property Index puts the band of rental yields for flats in Czechia at roughly 4–6 %, with Ostrava usually at the top. So the most expensive address tends to earn the least – in Prague you pay for certainty and capital appreciation, in the regions for a higher yield but also higher risk of non-paying tenants.

Net rental yield: where the decision is made

This is where reality begins. From the annual rent you subtract all operating costs – the sinking fund and homeowners’ association (SVJ) fees, insurance, property tax, a reserve for repairs, a reserve for vacancy and income tax.

Let’s continue with the Brno flat at 5 million CZK and rent of 18,000 CZK:

Two simple rules of thumb have become established on the Czech market for the two key reserves. For vacancy, one month of rent per year is the common assumption (roughly 8 %); a realistic band is 5–10 % of the annual rent. A practical trick is to divide the annual rent by eleven instead of twelve. For the repair reserve (a kind of sinking fund) it’s recommended to set aside on the order of 10–15 % of the rent for larger renovations, or roughly 1.5 % of the property value per year for overall maintenance.

Now income tax. With flat-rate 30% expenses the tax base is 216,000 − 64,800 = 151,200 CZK, and the tax at 15 % = 22,680 CZK. (Note: the reserves for repairs and vacancy are not a tax-deductible expense – they are your “envelopes”, not a cost recognised by the tax office.)

Net profit after tax = 138,000 − 22,680 = 115,320 CZK. Net yield = 115,320 ÷ 5,000,000 × 100 = 2.31 %.

Rental taxes in 2026: what you need to know

Tax runs through the entire calculation, so let’s get it straight.

Rate. Personal income tax in 2026 has two rates: 15 % and 23 %. The higher rate applies only to the portion of the tax base above 1,762,812 CZK per year, which corresponds to 36 times the average wage; according to EY this is an increase of 86,760 CZK over the 1,676,052 CZK threshold that applied for 2025 (for employees the higher rate kicks in on income above roughly 146,901 CZK per month). Rental income counts towards this base – so it can push someone with a high salary into the 23% band.

Section 9 vs. Section 7. Long-term renting of a flat falls under Section 9 of the Czech Income Tax Act. The key advantage: rental income under Section 9 is not subject to social and health insurance contributions. By contrast, short-term accommodation of the Airbnb or Booking type is an accommodation service, i.e. business activity under Section 7 – which requires a trade licence and social and health insurance contributions.

Flat-rate or actual expenses? You have a choice:

The key trump card is depreciation. Most flats are in depreciation group 5 (30 years): 1.4 % of the entry price in the first year, 3.4 % in subsequent years. For a flat worth 5 million CZK that means depreciation of around 70,000 CZK in the first year and over 150,000 CZK in later years – which often pushes the rental tax base down to zero. That’s why actual expenses pay off for anyone who can depreciate (i.e. who didn’t buy the flat as a cooperative share or receive it as a tax-exempt gift).

Rental cashflow: the mortgage changes everything

Net yield calculates as if you bought the flat in cash. But most landlords have a mortgage – and it turns the calculation on its head. Cashflow is the real flow of money: what actually comes in and goes out of your account.

Current numbers for 2026: according to the ČBA Hypomonitor the average realised interest rate on new loans in April 2026 rose slightly from March’s 4.43 % to 4.52 % (the 2025 average was 4.58 %). The Czech National Bank (ČNB) is holding the base (2-week repo) rate at 3.50 %. On top of that, investment mortgages have been subject to stricter rules since April 2026.

Example with a mortgage: the same Brno flat for 5 million CZK. Own equity of 20 % (1,000,000 CZK), mortgage of 4,000,000 CZK, rate 4.5 %, 30-year term. Monthly annuity payment ≈ 20,267 CZK, i.e. roughly 243,200 CZK per year.

So at today’s rates and prices in Brno you top up roughly 8,800 CZK a month. That’s not automatically bad news: part of the payment amortises the principal (amortization), so you build equity, and the flat (historically) appreciates. But you have to be able to afford it and plan for it. Negative cashflow is only sustainable if you can cover it from other income.

When you compare the yield with the mortgage interest rate, you see the crux of the 2026 problem: the gross yield in Prague and Brno (3.5–4.5 %) is below the mortgage rate (≈ 4.5 %). Leverage is working against you here. In regions with a yield of 5.5–7.5 %, cashflow can come out around zero or in the black – at the cost of higher risk.

Cash-on-cash return and the payback of a property investment

Cashflow is in crowns. To know how hard your invested capital is working, you need percentages.

Invested capital isn’t just the down payment – add the reserve, the renovation and the fees. Let’s say equity of 1,200,000 CZK (1 million down payment + 200 thousand for furnishings and fees).

With positive cashflow this metric shows its full power thanks to leverage. If a 5 million CZK flat appreciates by 5 % a year (250,000 CZK) and you put in 1.2 million, that’s a 20.8 % return on your capital – plus the amortisation of the principal. That’s the power of financial leverage: the return on the whole property is calculated against your fractional stake.

Two further metrics are useful, free of the effect of financing and ideal for comparing flats against each other:

Calculate the yield of your own flat

Enter the parameters of your flat and the calculator will show you all four levels at once – from gross yield to cash-on-cash. We calculate income tax in simplified form using the flat-rate 30%; if you depreciate, the real tax will often be lower.

Is it even worth it? Property vs. ETF

Let’s be honest here – a flat owner wants to hear the truth, not marketing. Over the past decade the global MSCI World equity index delivered on average around 13.65 % per year (gross returns over 10 years as of 29 May 2026 per the MSCI factsheet; net return in EUR roughly 11.3 % p.a.) – and this was an exceptionally strong period. Over the long term the US S&P 500, according to the NYU Stern dataset (Damodaran), has a compound annual return of roughly 10.2 % over 1928–2024, or around 10.4 % over the last hundred years, which after deducting inflation corresponds to a real return of roughly 7.3 % per year.

Czech property, meanwhile, according to the house price index (HPI, ČSÚ data summarised by the ČBA Monitor), rose 140 % over the past decade (and 148 % over the last 15 years). When you add a gross rental yield of 4–5 % per year, the total appreciation came close to global equities. The difference lies in the character:

The conclusion isn’t “flat or ETF”, but “flat and ETF”. Property provides tangible, inflation-resistant income with leverage; equities provide liquidity, diversification and low costs. In a well-built portfolio both have their place – more on that in the article What is an ETF and how does it work.

How to track rental yield over the long term

The calculation at purchase is only the start. Yield changes every year – the rent rises, the rate changes at refixation, repairs come up, the value of the flat fluctuates. Whoever doesn’t track it can easily subsidise a loss-making flat for a year or two without realising it.

What to keep an eye on:

Checklist before buying and at annual review

This is exactly what Assetli makes simple: in one place you see the value of your real estate, your rental income, costs and cashflow – plus stocks and ETFs, crypto, bank accounts and your overall net worth. Instead of five spreadsheets and a rough guess, you get a real, up-to-date picture of whether the flat is actually earning for you. You can also pull the operating data from your rental together when you keep energy meter readings.

Frequently asked questions

Conclusion

You can’t tell whether a flat pays off from the rent in a listing. You tell from four numbers: gross yield (quick comparison), net yield (reality after costs and tax), cashflow (what you have left each month) and cash-on-cash return (how your capital works). In 2026, when yields in Prague and Brno are below mortgage rates, an honest calculation matters more than ever – it decides whether you’re building net worth or subsidising a loss.

Calculate it properly once, then track it. Assetli keeps the value of your real estate and your rental cashflow in one place for you – alongside the rest of your assets.

Related terms in the glossary

Sources and references

1. ČBA Hypomonitor. Average realised rate on new mortgages, April 2026 = 4.52 %. cbamonitor.cz
2. EY / Účetnictví-HK. Personal income tax rates 2026 (15 % and 23 %), threshold 1,762,812 CZK. ucetni-hk.cz
3. Czech Financial Administration. Landlord – flat-rate 30% and the 600,000 CZK cap under Section 9. financnisprava.gov.cz
4. NeoTax. Taxation of rental income – Section 9 vs. Section 7, depreciation, flat-rate vs. actual expenses. neotax.eu
5. InvestičníKalkulačky.cz. Average rental yield in Czechia 2025 – gross and net yield, reserves. investicnikalkulacky.cz
6. Nemovitostnikalkulacka.cz. Flat prices 2026 – gross yield, cap rate, ROI, payback period. nemovitostnikalkulacka.cz
7. Deloitte. Rent Index / Property Index – rental prices and yield band of 4–6 %. deloitte.com
8. Hyponamiru.cz. How much an investment flat really earns – vacancy, reserves, payback. hyponamiru.cz
9. MSCI. MSCI World factsheet – 10-year gross return 13.65 % p.a. (as of 29 May 2026). msci.com
10. NYU Stern (Damodaran) / Kurzy.cz–XTB. Long-term S&P 500 return ≈ 10.2 % p.a. (1928–2024). zpravy.kurzy.cz
11. ČBA Monitor (ČSÚ data, HPI). Property price growth of 140 % over a decade. cbamonitor.cz
12. e15.cz. Yields on investment flats and regional differences. e15.cz

Disclaimer: This article is for educational purposes only and does not constitute investment or tax advice. Before deciding to buy a property or on a method of taxation, consult a licensed professional.