Rental Income Tax Calculator
Calculate taxable net rental income, 27.5-year residential depreciation tax shields, deductible operating expenses, and after-tax cash flows.
Rental Cash Flow & Tax Shield
Rental Property Tax & Depreciation Formula
Deductions = Operating Expenses + Mortgage Interest + Property Taxes + Depreciation | Net Taxable Income = Gross Rent − Deductions | Tax = max(0, Net Taxable × Marginal Rate %)- Operating Expenses: Property management fees, insurance, repairs, advertising, HOA, and landlord-paid utilities.
- Depreciation Deduction: IRS MACRS 27.5-year residential depreciation on building value (excluding land), creating a non-cash paper deduction that shields rental income from taxes.
- Cash Flow After Tax: True net money in pocket after paying debt service, property expenses, and income taxes.
Step-by-Step Worked Example
Calculation Steps:
How to Use This Calculator
Assumptions & Limitations
- Residential real estate depreciates over 27.5 years on building value only.
Frequently Asked Questions
What is depreciation recapture tax when selling a rental property?
When you sell a rental property, the IRS taxes the cumulative depreciation deductions you took (or could have taken) at a special maximum depreciation recapture rate of 25%, unless you execute an IRS Section 1031 like-kind exchange.
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