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:

• Self-employed PRSI @ 4%: €672 (on full rental, not reduced by expenses)
• Note: This is on gross rent, not net profit

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: €672
• Total expenses: €22,624
• Net cash loss: -€5,824

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: €672

Year 5 net cash:

• Gross rent: €16,800
• Mortgage: €15,960
• Expenses: €5,930
• Taxes: €974
• Net cash: -€6,064 (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)
• Net cash: -€6,110 (still breakeven due to fixed mortgage amortization)

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: €672
• Net cash: €8,124/year

Yield on original €70k investment: €8,124 ÷ €70,000 = 11.6% cash-on-cash return

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: €480

Net cash year 1:

• Rent: €12,000
• Mortgage: €11,412
• Expenses: €4,300
• Taxes: €590
• Net: -€4,302 (negative, but smaller loss due to lower price)

After mortgage paid off (year 25):

• Gross rent: €12,000
• Expenses: €4,300
• Income tax @ 20%: €1,540
• PRSI: €480
• Net cash: €5,680/year

Yield on original €50k investment: €5,680 ÷ €50,000 = 11.4% cash-on-cash return

Comparison Table: Dublin vs. Cork vs. Galway

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 becomes €24,000/year (vs. €8,124 in flat scenario)

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.