Landlord Tax Calculator
Calculate your rental property's tax impact, deductions, and after-tax cash flow.
Rental Income
Annual Expenses & Property Info
Typically 15–30% of property value; only building depreciates
Rental Cash Flow & Tax
| Item | Monthly | Annual |
|---|---|---|
| Gross rent | $2,000 | $24,000 |
| Vacancy loss | -$100 | -$1,200 |
| Operating expenses | -$1,800 | -$21,600 |
| Pre-tax cash flow | $100 | $1,200 |
| Income tax | $-0 | $-0 |
| After-tax cash flow | $100 | $1,200 |
Tax Deduction Breakdown
| Deduction | Annual | % of Total |
|---|---|---|
| Mortgage interest | $12,000 | 38% |
| Property tax | $4,800 | 15% |
| Insurance | $1,800 | 6% |
| Repairs & maintenance | $2,400 | 8% |
| Other expenses | $600 | 2% |
| Depreciation | $10,182 | 32% |
| Total deductions | $31,782 | 100% |
Landlord Tax Tips
- 1.Depreciation of $10,182/year is a non-cash deduction — it reduces taxes without costing you money
- 2.You can deduct up to $8,982 of rental losses against your ordinary income (active participant with MAGI under $150K)
- 3.Keep detailed records of all expenses — mileage to the property, supplies, and even a portion of your phone/internet if used for management
- 4.Consider a cost segregation study to accelerate depreciation on components (appliances, carpet, fixtures) from 27.5 years to 5–15 years
- 5.Self-managing? Your time isn't deductible, but mileage, phone, and supplies used for management are
This is a simplified estimate. Rental tax situations can be complex — consult a CPA or tax professional familiar with rental property taxation.
How Rental Income Is Taxed
Rental income is taxed as ordinary income at your marginal tax rate. However, landlords can deduct virtually all expenses related to the property — mortgage interest, property taxes, insurance, repairs, management fees, and depreciation. Depreciation alone can shelter thousands of dollars of rental income from tax. Many rental properties show a tax loss on paper while generating positive cash flow, because depreciation is a non-cash deduction.
Common Landlord Tax Deductions
| Deduction | What It Covers | How to Claim |
|---|---|---|
| Mortgage interest | Interest on the rental property loan | Schedule E, Line 12 |
| Depreciation | Building value / 27.5 years (residential) | Form 4562, then Schedule E |
| Property tax | Annual property taxes | Schedule E, Line 16 |
| Insurance | Landlord policy, liability, flood | Schedule E, Line 9 |
| Repairs & maintenance | Plumbing, HVAC, painting, landscaping | Schedule E, Line 14 |
| Management fees | Property manager (typically 8–12% of rent) | Schedule E, Line 17 |
| Travel | Mileage to property, supplies runs | Schedule E, Line 19 |
Passive Loss Rules for Landlords
| MAGI | Active Participant? | Loss Deductible Against Ordinary Income |
|---|---|---|
| Under $100,000 | Yes | Up to $25,000 |
| $100,000–$150,000 | Yes | $25,000 minus $1 per $2 over $100K |
| Over $150,000 | Yes | $0 (losses carry forward) |
| Any income | No | $0 (losses carry forward) |
| Any income | Real estate professional | Unlimited (non-passive) |
Frequently Asked Questions
What is depreciation recapture?
When you sell a rental property, you must "recapture" all depreciation you claimed (or could have claimed). This recaptured amount is taxed at a flat 25% rate, separate from capital gains. For example, if you claimed $50,000 in total depreciation over the years, you'll owe $12,500 in depreciation recapture tax at sale — even if you sell at a loss relative to your original purchase price.
Can I deduct improvements?
Improvements (new roof, HVAC, appliances) must be capitalized and depreciated — they can't be deducted immediately like repairs. Residential improvements are depreciated over 27.5 years. However, appliances and fixtures may qualify for a 5–7 year MACRS depreciation schedule, and Section 179 may apply. The distinction between "repair" (deductible immediately) and "improvement" (capitalized) is a common audit trigger — keep clear records.
See also: Airbnb Rental Calculator and Depreciation Calculator.