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Rental Income Tax Calculator

Estimate taxable rental income after operating expenses and depreciation to preview landlord tax liability—not file your return.

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Income & Property Details

Total rent collected for the year
Current market value or purchase price
%
Land cannot be depreciated (typically 15-25%)

Annual Expenses

$
$
$
$
$
$
$
$
$
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$

Enter your rental details

Fill in your income and expenses to calculate your rental income tax liability

How this calculator works

Building value = property value × (1 − land value %). Annual depreciation = building value ÷ 27.5 years. Taxable income = gross rent − operating expenses − depreciation. Tax liability = taxable income × tax bracket (if positive).

Inputs

  • Gross rental income — all rent collected before expenses.
  • Property value and land percentage — split land (non-depreciable) from building.
  • Operating expenses — mortgage interest, taxes, insurance, repairs, management, HOA.
  • Tax bracket — federal marginal rate for estimation; state taxes not included.

Assumptions

  • Residential rental depreciated over 27.5 years straight-line.
  • Property is held for investment, not primary residence flip.
  • Passive activity loss limits may restrict deductibility of losses.

Limitations

  • Does not compute state/local taxes, NIIT, or self-employment tax.
  • Cost segregation, bonus depreciation, and QBI deduction are not modeled.
  • 1031 exchanges and capital gains on sale are excluded.

Example calculation

  1. Gross rent $36,000; property value $400,000; land 20%.
  2. Building value $320,000; depreciation ≈ $11,636/year.
  3. Operating expenses total $14,000.
  4. Taxable income ≈ $10,364 before passive loss rules.
  5. At 22% bracket, estimated tax ≈ $2,280.
Result: ~$10,364 taxable income; ~$2,280 estimated federal tax at 22%

Depreciation often shelters cash flow from immediate tax. When you sell, recapture may apply to prior depreciation deductions.

Common mistakes

Deducting principal mortgage payments

Only mortgage interest is deductible, not principal. Misclassifying payments overstates deductions.

Ignoring passive loss limits

Many landlords cannot deduct rental losses against W-2 income unless they qualify for an exception.

Skipping expense documentation

IRS requires receipts for repairs, travel, and professional fees. Estimates here do not replace records.

Frequently asked questions

Yes—rent is generally taxable income. Allowable expenses and depreciation reduce net taxable income.

The building (not land) is written off over 27.5 years for residential property, creating a non-cash deduction.

Passive activity rules often limit losses to $25,000 for active participants phasing out at higher incomes.

Repairs are typically expensed; improvements must be capitalized and depreciated over time.

Most landlords report rental income and expenses on IRS Schedule E. Consult a CPA for your situation.

STRs may trigger different depreciation, self-employment, and local occupancy tax rules not covered here.

Disclaimer

LeaseCraft provides document automation and general information — not legal, tax, or financial advice. Calculator results are estimates for planning only. Consult a licensed attorney, accountant, or housing counselor for advice about your situation.

This calculator provides a simplified tax estimate for planning purposes only. It is not tax advice and does not replace a CPA or enrolled agent. Tax law, passive loss limits, and state obligations vary—consult a qualified tax professional before filing.

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