Buy-to-Let Yield Ireland 2026 — Gross vs Net After Tax & Is It Worth It?

Buy-to-let investment in Ireland offers rental income but faces rising taxes, mortgage cost, and tenant regulation. Gross yields of 4–6% sound attractive until you subtract tax, maintenance, and non-occupied months. This guide models real net returns across Dublin, Cork, and regional markets.

Yield Definitions

Gross Rental Yield = Annual rent ÷ Property price

• Example: €1,400/month rent = €16,800/year; €300k property = 5.6% gross yield

Net Rental Yield = Annual rent minus expenses ÷ Property price

• Expenses include mortgage interest, tax, insurance, maintenance, vacancy

Cash-on-Cash Return = Annual net cash profit ÷ Your actual cash invested

• Better metric for investors (accounts for leverage)

Real Example: Dublin Buy-to-Let, 2-Bed Apartment

Property Details

• Purchase price: €350,000
• Your deposit: €70,000 (20% down)
• Mortgage: €280,000 @ 3.6% fixed, 25 years
• Monthly mortgage payment: €1,330

Rental Income

• Monthly rent (Dublin city 2-bed): €1,400
• Annual gross rent: €16,800
• Gross yield: €16,800 ÷ €350,000 = 4.8%

Annual Expenses

Mortgage interest (year 1):

• Total payment: €1,330 × 12 = €15,960/year
• Principal repayment: ~€5,400 (loan gets shorter)
• Interest component: ~€10,560 (this is deductible)

Other operating costs:

• Insurance (landlord policy): €400/year
• Management (5% of rent, optional but common): €840/year
• Maintenance/repairs (1% of property value): €3,500/year
• Vacancy allowance (5% of rent): €840/year
• Property tax (none in Ireland for BTL, but LPT applies): €350/year
• Total non-mortgage expenses: €5,930/year

Income tax on rental profits:

• Gross rent: €16,800
• Less: mortgage interest deductible: -€10,560
• Less: non-mortgage expenses: -€5,930
• Taxable income: €310
• Income tax @ 20%: €62
• Income tax @ 40% (higher earner): €124

PRSI on rental income:

• Class S PRSI is charged at 4.2% to 30 September 2026 and 4.35% from 1 October — the flat 4% previously used here was the rate up to 30 September 2024
• It is charged on the net rental profit, not on gross rent. Rental income is assessed after deductible expenses like any other Case V income; the note previously here saying PRSI applies "on full rental, not reduced by expenses" was wrong and inflated the figure by an order of magnitude on this example
• On the €310 of taxable rental profit above, no Class S is due at all. Class S applies once reckonable income exceeds €5,000 a year; €310 is far below it
• Once the profit does exceed €5,000, a minimum annual contribution of €650 applies — so the liability jumps from nothing to €650 and only starts tracking the 4.2% above about €15,500 of profit
• USC also applies to rental profit and is not shown in the figures below. It uses its own bands and its own €13,000 exemption limit, applied to your total income, so a landlord with a salary will pay USC on rental profit at their top USC band

Year 1 Net Cash Flow

• Gross rent collected: €16,800
• Mortgage payment: €15,960 (includes €10,560 interest + €5,400 principal)
• Insurance: €400
• Management: €840
• Maintenance: €3,500
• Vacancy: €840
• Property tax: €350
• Income tax (20% earner): €62
• PRSI: €0 (profit below the €5,000 Class S threshold)
• Total expenses: €21,952
• Net cash loss: −€5,152

Result: NEGATIVE RETURN in year 1 (common for highly leveraged BTL)

After 5 Years (Mortgage Principal Reduced)

Loan balance (after 5 years of payments): ~€260,000 Monthly mortgage payment still: €1,330 (fixed rate) But interest component drops to: ~€9,360/year (less deductible interest)

Year 5 taxable income:

• Gross rent: €16,800 (assume no rent growth)
• Less: mortgage interest: -€9,360
• Less: expenses: -€5,930
• Taxable income: €1,510
• Income tax @ 20%: €302
• PRSI: €0 (€1,510 profit is below the €5,000 Class S threshold)

Year 5 net cash:

• Gross rent: €16,800
• Mortgage: €15,960
• Expenses: €5,930
• Taxes: €302
• Net cash: −€5,392 (still negative, but improving)

After 10 Years (Mortgage Halved)

Loan balance: ~€210,000 Interest component: ~€8,000/year

Net cash (year 10):

• Gross rent: €16,800 (real rents may have grown; assume flat)
• Mortgage: €15,960
• Expenses: €5,930
• Taxes (20% earner): €20 (minimal taxable profit); no Class S, profit below €5,000
• Net cash: −€5,110 (still negative, because the mortgage payment is fixed while the deductible interest inside it keeps shrinking — the taxable profit rises even though the cash does not)

After 25 Years (Mortgage Paid Off)

Loan balance: €0 No mortgage payment

Annual net:

• Gross rent: €16,800
• Insurance: €400
• Management: €840
• Maintenance: €3,500
• Income tax (20% bracket): €3,264 (on €16,320 taxable)
• PRSI Class S: 4.2% × €16,320 = €685.44 (above the €650 minimum, so the percentage applies)
• Net cash: €8,110.56/year

Yield on original €70k investment: €8,110.56 ÷ €70,000 = 11.6% cash-on-cash return

This is before USC, which at this level of total income is likely to take another few hundred euro. A higher-rate taxpayer would pay 40% rather than 20% on the same €16,320 — €6,528 instead of €3,264 — which turns €8,110 of net cash into about €4,846. The landlord's own marginal rate is the largest single variable in this table, and it is not a property characteristic.

Better Scenario: Regional Property (Higher Yield)

Cork 3-Bed Detached

• Purchase price: €250,000
• Your deposit: €50,000 (20%)
• Mortgage: €200,000 @ 3.6%, 25 years = €951/month

Rental income:

• Monthly rent (Cork suburban 3-bed): €1,000
• Annual: €12,000
• Gross yield: €12,000 ÷ €250,000 = 4.8%

Expenses (year 1):

• Mortgage interest: ~€7,150
• Insurance: €350
• Management: €600
• Maintenance: €2,500
• Vacancy: €600
• Property tax: €250
• Total non-mortgage: €4,300

Taxable income: €12,000 − €7,150 − €4,300 = €550 Income tax @ 20%: €110 PRSI: €0 (below the €5,000 Class S threshold)

Net cash year 1:

• Rent: €12,000
• Mortgage: €11,412
• Expenses: €4,300
• Taxes: €110
• Net: −€3,822 (negative, but a smaller loss than Dublin because of the lower price)

After mortgage paid off (year 25):

• Gross rent: €12,000
• Expenses: €4,300
• Taxable profit: €7,700
• Income tax @ 20%: €1,540
• PRSI Class S: 4.2% × €7,700 = €323.40, but the €650 annual minimum applies, so €650
• Net cash: €5,510/year

Yield on original €50k investment: €5,510 ÷ €50,000 = 11.0% cash-on-cash return

Note the minimum contribution biting here: a smaller property produces a higher effective PRSI rate on its profit (8.4% rather than 4.2%) because the €650 floor is fixed.

Comparison Table: Dublin vs. Cork vs. Galway

The Galway row and the "25-Yr Net ROI" column have been removed rather than adjusted: neither was worked anywhere on this page, and the ROI percentages did not follow from the cash-flow figures beside them. The Dublin and Cork rows are the two scenarios actually computed above, at 2026 PRSI rates and with Class S applied to net profit rather than gross rent.

All figures assume a standard-rate taxpayer and exclude USC.

Key Variables Affecting BTL Returns

1. Rent Growth (Critical)

Current model assumes flat rents (conservative). But Irish rents grow 3–4%/year:

Dublin apartment, 3% annual rent growth:

• Year 1 rent: €16,800
• Year 5 rent: €19,450
• Year 10 rent: €22,560
• Year 25 rent: €36,000

Impact: year 25 net cash is far higher than in the flat scenario — but note that the tax on it rises faster than the cash, because the mortgage interest deduction has gone by then and every extra euro of rent is taxable profit at your marginal rate plus USC plus 4.2% PRSI. A specific figure is not given here because it depends on that marginal rate, which is a fact about you rather than about the property.

Realistic 25-year return with rent growth: 15–20% annualized

2. Mortgage Interest Deductibility

Current law (2026): 100% of mortgage interest is deductible against rental income.

Risk: Government has proposed capping deductibility at 75% (standard rate). If implemented, tax on rental income rises significantly.

Example (75% cap):

• Mortgage interest €10,560, only €7,920 deductible
• Taxable income €2,890 (vs. €310 currently)
• Extra tax: €576/year (20% bracket)

3. Rent Regulation & Tenant Rights

Rent pressure zones (Dublin, cork, Galway):

• Rent increases capped at 2%/year (or CPI, whichever is lower)
• Limits upside vs. national inflation (3–4%)
• Outside zones, no cap (but harder to find tenants)

Tenant protections:

• Notice periods: 90 days to evict
• "No-fault" evictions phased out (2024+); only grounds-based possible
• Deposit protected in government scheme (no leverage there)

Impact: Rental growth slower in cities, better in regions.

4. Capital Appreciation

Model above assumes flat property values. But:

• Dublin property appreciation: 2–3%/year typical
• Regional property appreciation: 1–2%/year
• Long-term (25 years): €350k property → €700k–€900k (at 3% CAGR)

Total return (rental income + appreciation): Can exceed 15% annualized if rent growth + capital gains align.

Tax Optimization

Strategy 1: Entity vs. Personal

Buy as individual (current model):

• Rental income taxed at marginal rate (20–40%)
• Mortgage interest fully deductible
• No corporation tax

Buy via limited company:

• Rental income taxed at corporation rate (21% for SME)
• No mortgage interest deductibility (financed by equity)
• More complex accounting
• Generally not worth it for 1–2 properties

Verdict: Personal ownership better for small BTL portfolios.

Strategy 2: Timing Purchases

Buyers with high employment income might defer BTL until:

• Early retirement (lower tax bracket)
• Lower income year (e.g., sabbatical, career change)
• Rental income taxed at 20% vs. 40%
• Example: €5,000 tax saving if moving from 40% to 20% bracket

When BTL Makes Sense

1. Long holding period (10+ years): Mortgage payoff and rent growth flip returns positive
2. Regional property (better yields): 5%+ gross vs. Dublin's 4.8%
3. Rent growth strong (3%+ annually): Offsets negative early years
4. Capital appreciation likely (growing city)
5. Low personal income tax rate (20% vs. 40%): Better tax treatment of rental profit

When BTL Is Risky

1. Short holding period (<7 years): Negative cash flow + sale costs = loss
2. High mortgage (>80% LTV): Tight margins, vulnerable to rate shock
3. Rent control zones (Dublin, cork): Growth capped at 2%
4. Mortgage deductibility capped (proposed 75% rule): Tax cost rises
5. Personal income volatile: Can't absorb negative cash flow in down years

Decision Framework

Bottom Line

• Gross yields: 4.8–5.5% typical in Ireland
• Net cash year 1: Negative for most BTL (large mortgage + expenses)
• Break-even point: Year 10–15 (depends on rent growth)
• 25-year payoff: €8k–€10k/year net cash (mortgage paid, rents grown)
• True return (rental + appreciation): 12–18% annualized if held 25 years, rent grows 3%/year, property appreciates 2%/year
• Tax burden: 20–40% of rental profit (higher bracket earners get squeezed)

Next step: Use the Buy-to-Let Yield calculator with your target property price, local rent, mortgage assumptions, and tax bracket. Model scenarios: rent growth 2%/year vs. 4%/year, property appreciation 1.5%–3%/year. Most Irish BTL investors need 10–15 year horizons to break even on negative early years.