Rental Income After Vacancy, Maintenance and Tax
How much rental income you really keep after vacancy, maintenance, property tax, brokerage and income tax, with a 2026 worked example and a landlord budget.
In this article
A landlord in an Indian city typically keeps about 60-70% of the headline rent after vacancy, society maintenance, property tax, repairs and brokerage, and less after income tax. In our illustrative example of a ₹30,000-a-month flat, ₹3.6 lakh of annual rent shrank to about ₹2.26 lakh of cash before tax and about ₹1.57 lakh after tax in the 30% slab, as of October 2026. Plan your finances, and any EMI, around that net figure.
The costs that eat into rent
| Cost | Who usually pays | Typical size (indicative) |
|---|---|---|
| Vacancy between tenants | Owner | 1-2 months' rent every 1-3 years |
| Society maintenance | Owner (unless agreed otherwise) | ₹2-₹8 per sq ft a month, more in premium projects |
| Sinking fund and repair levies | Owner | Annual or one-off |
| Municipal property tax | Owner | Varies by city and property |
| Repairs, painting, appliances | Owner | 5-10% of rent a year on average |
| Brokerage for new tenant | Often split, or owner pays | Up to one month's rent |
| Rent agreement stamp duty and registration | Usually shared | A few thousand rupees |
| Home insurance | Owner | Small, but worth having |
| Electricity, water, gas | Tenant | Check meters are in order |
Two of these are easy to underestimate:
- Vacancy. Even good flats sit empty while you paint, list and screen tenants. A month every year is a sensible planning assumption.
- Big-ticket repairs. Waterproofing, plumbing and appliance replacement come in lumps. A tenant leaving after three years often means a ₹40,000-₹1 lakh refresh.
Worked example: a ₹1.2 crore flat let at ₹30,000
Assume the following (illustrative, simplified):
- Rent: ₹30,000 a month = ₹3,60,000 a year
- Vacancy: one month a year
- Society maintenance: ₹4,500 a month
- Property tax: ₹15,000 a year
- Repairs: ₹20,000 a year
- Brokerage: one month's rent every two years = ₹15,000 a year on average
- No home loan; owner in the 30% slab (31.2% with cess)
Step 1: cash in hand before tax
| Item | Amount |
|---|---|
| Headline rent (12 months) | ₹3,60,000 |
| Less: vacancy (1 month) | − ₹30,000 |
| Rent actually received | ₹3,30,000 |
| Less: maintenance | − ₹54,000 |
| Less: property tax | − ₹15,000 |
| Less: repairs | − ₹20,000 |
| Less: brokerage (averaged) | − ₹15,000 |
| Cash before income tax | ₹2,26,000 |
Step 2: income tax on the rent
| Item | Amount |
|---|---|
| Rent received (annual value, simplified) | ₹3,30,000 |
| Less: municipal tax paid | − ₹15,000 |
| Net annual value | ₹3,15,000 |
| Less: 30% standard deduction | − ₹94,500 |
| Taxable house property income | ₹2,20,500 |
| Tax at 31.2% | ₹68,796 |
Step 3: what you keep
₹2,26,000 − ₹68,796 = ₹1,57,204, about 44% of the headline rent. On a ₹1.2 crore flat, that is a post-tax yield of about 1.3%, against a gross yield of 3%. The same maths drives our comparison of rental yield vs total return.
Use the income tax calculator to see the effect at your own slab.
How rental income is taxed (FY 2026-27)
The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026, but the method is unchanged:
- Annual value: broadly the higher of expected rent and actual rent, adjusted for vacancy. Now under Section 21 (earlier Section 23).
- Less municipal taxes actually paid during the year.
- Less a flat 30% standard deduction on the net annual value, under Section 22 (earlier Section 24(a)). This replaces actual spending on maintenance and repairs: you cannot claim those separately.
- Less home loan interest on the let-out property, without the ₹2 lakh cap that applies to self-occupied homes (Section 22, earlier 24(b)).
Points to note:
- Both regimes allow the 30% deduction and interest on a let-out property.
- Loss from house property (when interest exceeds rent) can be set off against salary up to ₹2 lakh a year only in the old regime; in the new regime it cannot be set off or carried forward.
- Rent from a co-owned flat is taxed in each co-owner's hands according to their share.
Our home loan tax benefits guide covers the interest rules in detail.
TDS on rent
If an individual or HUF tenant pays more than ₹50,000 a month, they must deduct TDS on rent (old Section 194-IB, now part of Section 393 of the Income-tax Act, 2025). Businesses paying rent above the annual threshold also deduct TDS. Check the credit in your AIS or Form 26AS before filing, and claim it against your tax.
When there is a home loan on the flat
If the rent is meant to cover an EMI, the gap is usually large. A ₹60 lakh loan at an illustrative 8.5% for 20 years has an EMI of about ₹52,069, while the flat in our example produces about ₹18,800 a month of pre-tax cash. You can check the EMI for your own loan in the EMI calculator.
Interest on the loan reduces taxable rent, often to a loss in the early years. In the new regime that loss is simply wasted, which is one reason some landlords stay in the old regime.
A landlord's annual budget
- Start from 11 months of rent, not 12.
- Subtract fixed costs: maintenance, property tax, insurance.
- Keep a repair reserve of about 5-10% of rent in a separate account or short FD.
- Hold a vacancy buffer of one or two months' rent, more if an EMI depends on it.
- Set aside tax each month at your slab rate on about 70% of net rent, so the March bill does not surprise you. If your total tax due after TDS exceeds ₹10,000, advance tax applies.
- Review rent at renewal, typically every 11 months or annually as per the agreement.
Protecting the income
- Written, registered agreement stating rent, escalation, deposit, notice period and who pays maintenance. States that have adopted laws based on the Model Tenancy Act, 2021 have their own rules on deposits and rent authorities.
- Police verification of tenants, required in many cities.
- Security deposit to cover damage and unpaid bills; agree on deductions in writing.
- Insurance for the building and your own contents in the flat.
- Inspection at handover and exit, with dated photos.
Key takeaways
- Plan on about 60-70% of headline rent reaching you before tax; in our ₹30,000-a-month example, ₹3.6 lakh became ₹2.26 lakh.
- Rent is taxed after deducting municipal tax and a flat 30%; actual maintenance and repairs are not separately deductible.
- In the 30% slab, our example landlord kept about ₹1.57 lakh, a post-tax yield of roughly 1.3% on a ₹1.2 crore flat.
- Tenants paying over ₹50,000 a month must deduct TDS; claim it when filing.
- Budget for 11 months of rent, a repair reserve and a vacancy buffer, especially when an EMI depends on the rent.
Frequently asked questions
How much of my rent do I actually keep?
After a month of vacancy, society maintenance, property tax, repairs and brokerage, landlords often keep around 60-70% of the headline annual rent before income tax. In a 30% tax slab, the post-tax figure can fall to about 45% in some cases.
How is rental income taxed in India?
Rent is taxed under income from house property. You deduct municipal taxes paid, then a flat 30% standard deduction and any home loan interest, and the balance is added to your income and taxed at your slab rate, in both the old and new regimes.
Can I deduct society maintenance and repairs from rental income?
No separate deduction is allowed for maintenance or repairs. The flat 30% standard deduction is meant to cover these costs, whatever you actually spend. Municipal property tax actually paid is deductible.
Does my tenant need to deduct TDS on rent?
An individual tenant paying more than ₹50,000 a month in rent must deduct TDS, and businesses paying rent above the threshold must also deduct it. Check the TDS credit in your Form 26AS or AIS.
How much should a landlord keep aside for repairs?
A common rule of thumb is to set aside 5-10% of annual rent for repairs and replacements, plus one or two months' rent as a vacancy buffer, especially if a home loan EMI depends on the rent.
This article is for general education and is not personalised financial, tax or legal advice. Rates and rules are as of 19 Oct 2026; confirm current terms with your lender, AMC or a qualified adviser.
