Rental Property Tax Deduction Calculator
Itemize Schedule E deductions for a rental property: mortgage interest, property tax, insurance, repairs, management, utilities, depreciation, and other. See after-tax cash income.
Income
Deductions
After-tax cash income
$11,480
rent − cash expenses − tax
Total deductions
$37,020
cash + depreciation
Taxable rental income
-$1,020
paper loss (passive)
Tax owed
$0
How rental income is taxed
Schedule E reports rental income, deductions, and the resulting net taxable income or loss. Depreciation is a non-cash deduction that often produces a paper loss even when the property cash flows positively.
Passive activity rules: rental losses are usually limited to passive income. Real estate professionals (over 750 hours/year and majority of work in real estate) can deduct losses against ordinary income. Active participation taxpayers ($25k allowance) phase out by $150k MAGI.
How to Use
- Enter annual gross rent and your marginal tax rate.
- Enter mortgage interest, property tax, insurance, and other operating expenses.
- Enter depreciation — the non-cash deduction that often produces a paper loss.
- Read after-tax cash income — what actually hits your bank account after Uncle Sam.
Frequently Asked Questions
Why does depreciation produce a paper loss?
Depreciation is a deduction without cash outflow. A property generating $5,000/yr cash flow plus $12,000 depreciation produces -$7,000 taxable income, even though you actually got $5,000.
Can I deduct rental losses against W-2 income?
Generally no — passive losses can only offset passive income. Two exceptions: (1) Real estate professionals (qualifying full-time real estate work), (2) the $25,000 active participation allowance for AGI under $100k (phases out by $150k).
What's a 'real estate professional'?
Tax status requiring more than 750 hours/year and over half your work hours in real property trades or businesses. Allows full deduction of rental losses against any income. Strict documentation required.
What about the 20% QBI deduction?
Qualified Business Income deduction may apply to rental income that rises to a 'trade or business' level (safe harbor: 250+ hours of rental activity per year). Reduces effective marginal rate by ~20% on qualifying income.
Related Calculators
Depreciation Schedule Calculator
Build the depreciation deduction.
Mortgage Interest Deduction Calculator
Detail mortgage interest deductibility.
Property Tax Deduction Calculator
Property tax detail with SALT cap.
Cost Segregation Calculator
Increase first-year deductions via cost seg.
Bonus Depreciation Calculator
Bonus depreciation on qualifying property.
Rental Cash Flow Calculator
Standard cash-flow analysis without tax detail.