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HoldingCost

Property holding cost calculator

Model the true cost of holding an investment property over time.

Calculator property

Logic updated January 2026

This calculator estimates the full annual cost of holding an investment property — interest, maintenance, management fees, rates, insurance, and any land-based tax — and subtracts the rental income to show whether the property is positively or negatively geared on a cash-flow basis. It's the running cost figure that determines whether you're funding the property out of pocket each year or it pays for itself.

How this is calculated

Formula 

annualInterest = loanAmount × rate / 100 ; netHoldingCost = totalAnnualCosts − annualRentalIncome ; weeklyNetCost = netHoldingCost / 52

Step-by-step

  1. Calculate annual interest cost on the loan amount at the stated rate (interest-only basis — principal repayments are excluded because they build equity, not cost)
  2. Sum all annual outgoings: interest, maintenance, property management fees, local property rates, insurance, and any land-based tax
  3. Subtract the annual rental income to determine the net holding cost
  4. If positive, the property is negatively geared and costs you each year. If negative, it generates surplus cash flow
  5. Divide by 52 to express the net position on a weekly basis for easier budgeting
Rounding mode
ROUND_HALF_UP
Precision
20-digit internal precision (Decimal.js), rounded to 2 decimal places for display
Logic last reviewed

Assumptions & limitations

What this calculator assumes

  • Interest is calculated on the loan amount only (interest-only basis)
  • Rental income is assumed constant over the holding period
  • All costs are assumed constant over the holding period
  • No capital growth is modelled
  • No depreciation is modelled
  • No purchase taxes or acquisition costs are included

What this calculator doesn’t account for

  • Does not model rental vacancy or rent growth over time
  • Does not include capital growth or depreciation deductions
  • Does not model changes in interest rates during the holding period
  • Does not include capital improvements or major maintenance projects
  • Does not factor in jurisdiction-specific tax effects (rental income tax, deductible interest)

Worked example

An investor holds a property worth $700,000 with a $560,000 loan at 6.5%, renting for $600 a week, with typical annual outgoings.

Input Value
Loan amount $560,000
Interest rate 6.5%
Weekly rent $600
Annual maintenance $3,500
Property management (8%) $2,496
Local property rates $2,800
Insurance $1,500
Land tax $1,200

Net holding cost: ~$13,096/year ($252/week negative)

Annual interest is $36,400 ($560,000 × 6.5%). Total outgoings sum to $47,896. Annual rental income is $31,200 ($600 × 52). The shortfall of $16,696 is the cash you'd need to add each year — but this calculator is on a cash-flow basis only, so capital growth, depreciation deductions, and tax savings on negatively-geared interest aren't reflected here.

Frequently asked questions

What are property holding costs?

All the recurring costs of owning a property over time, distinct from the upfront purchase costs. Typically: mortgage interest, local property rates or municipal taxes, insurance, property management, maintenance, and any land-based tax. For investors, the rental income offsets these — the net figure (after rent) is the actual cash drain or surplus.

How do holding costs affect investment returns?

Holding costs eat into yield year after year, while capital growth happens silently in the background. A property with a 4% gross yield and 3.5% in holding costs delivers only 0.5% in cash terms — meaning the entire investment case rests on capital growth. Higher holding costs raise the bar for capital growth to make the investment worthwhile.

What is a holding cost ratio?

The total annual holding cost divided by the property's value, expressed as a percentage. A typical ratio is 1.5–3% of property value per year for established properties, higher for older or high-maintenance properties. This calculator gives you the components — divide the total cost by the purchase price to derive the ratio.

Which holding costs are tax deductible?

In many jurisdictions, holding costs incurred to produce rental income are deductible against that income — typically including interest on the loan, maintenance, property management fees, rates, insurance, and depreciation. Specific deductibility rules vary by jurisdiction. This calculator doesn't model tax effects; consult a qualified tax adviser for your local treatment.

How can I reduce holding costs?

Refinance to a lower rate, manage the property yourself instead of using a manager (saves 7–10% of rent), bundle insurances, dispute property tax assessments if comparable properties have lower valuations, and stay on top of maintenance to avoid expensive emergency repairs. The biggest lever is usually the interest rate — even 0.25% off a $500,000 loan saves $1,250 a year.

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