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Compare offers, taxes and sale proceeds.
See how the numbers change for this $150,000 rental.
- Asking price
- $150,000
- Monthly rent
- $2,000
- Cash flow / month
- $263.38 Before income tax
25% down · 7.5% fixed rate · $53,500 upfront
AFTER-TAX RETURNS
Estimate cash flow after tax.
Interest and depreciation deductions reduce the income you pay tax on.
| Deduction | Amount | Tax reduction |
|---|---|---|
| Loan interest | $8,402 | $2,017 |
| Depreciation | $4,530 | $1,087 |
| Combined | $12,933 | $3,104 |
- Annual income tax
- $496
- After-tax cash-on-cash
- 4.98%
Deductions reduce taxable income. Principal payments and unspent reserves are not deducted.
Would bonus depreciation help?
Compare deductions, usable losses and added costs with and without bonus depreciation.
| Year 1 | Regular | Bonus |
|---|---|---|
| Depreciation | $8,811 | $38,311 |
| Federal income tax | $0 | $0 |
| Loss carried forward | $2,213 | $31,713 |
Losses offset future rental income; no current offset against other income is assumed.
| Year 1 | Regular | Bonus |
|---|---|---|
| Depreciation | $8,811 | $38,311 |
| Federal income tax | −$531 | −$7,611 |
| Loss carried forward | $0 | $0 |
Assumes all rental losses can offset other income now. Negative tax represents that offset, not a guaranteed refund.
Bonus eligibility and loss deductions depend on your situation. Set these assumptions with your tax adviser.
OFFERS & FINANCING
Compare your offer and loan options.
Save each offer and loan quote with its date and your notes.
| Assumptions & results | Asking price | Your offer | Lower-rate loan |
|---|---|---|---|
| Purchase price | $150,000 | $140,000 | $150,000 |
| Interest rate | 7.5% | 7.5% | 6.5% |
| Upfront cash | $53,500 | $50,600 | $53,500 |
| Cash flow / month | $263.38 | $315.82 | $338.92 |
| Cash-on-cash return | 5.91% | 7.49% | 7.60% |
Asking price
$150,000 · 7.5% interest
- Cash flow / month
- $263.38
- Upfront cash
- $53,500
- Cash-on-cash
- 5.91%
Your offer
$140,000 · 7.5% interest
- Cash flow / month
- $315.82
- Upfront cash
- $50,600
- Cash-on-cash
- 7.49%
Lower-rate loan
$150,000 · 6.5% interest
- Cash flow / month
- $338.92
- Upfront cash
- $53,500
- Cash-on-cash
- 7.60%
Work backward from $300/month.
Purchase-price targets, before income tax
- Your assumptions
- $143,018
- Downside assumptions
- $89,962
RENT GROWTH & SALE
Estimate returns through the sale.
Compare rent growth, selling costs, loan payoff and taxes on the sale.
| Rent growth | Year 1 | Year 5 | Year 10 |
|---|---|---|---|
| 0% | $263 | $232 | $187 |
| 3% | $263 | $395 | $583 |
| 5% | $263 | $512 | $904 |
- Before sale taxes
- $91,848
- Regular depreciation
- $73,703
- Bonus depreciation
- $72,852
Both cases use the asset allocations above and deduct loan payoff and estimated federal sale taxes. Proceeds are not profit.
View a sample report →Keep a report of your assumptions, comparisons and notes, including after cancellation.
Example assumptions
This example uses these assumptions: $150,000 price; $2,000 monthly rent; 25% down; 7.5% fixed interest over 30 years; 4% closing costs; $10,000 initial work. Vacancy is 5% of scheduled rent. Management, maintenance and capital reserves are each 10% of scheduled rent. Annual insurance is $1,200; property tax is $1,800. Other monthly expenses are $0. Rent and fixed expenses grow 3% annually. Percent-of-rent costs follow rent. Comparison options change only the price or rate shown; lender fees may differ.
The standard tax example uses a January rental start, 27.5-year residential building depreciation with the mid-month convention, 20% land allocation, $10,000 capitalized into basis, all budgeted maintenance spent and losses carried forward. The combined tax reduction compares taxes with and without interest and depreciation deductions, keeping other assumptions fixed. It is not cash added to the rent.
The bonus-depreciation comparison allocates $25,000 to five-year personal property and $10,000 to 15-year land improvements, replacing part of the building basis. Both cases use the same allocation. The bonus case assumes those assets qualify for 100% federal bonus depreciation and incurs $2,500 of additional costs upfront; that cost is not deducted for income tax here. “Use losses now” assumes sufficient eligible other income and full current use of rental losses, not a determination of eligibility. “Carry losses forward” applies losses against future rental income and assumes eligible unused losses are released at sale.
The example assumes a fully taxable sale after 10 years, a 24% ordinary federal rate, 15% capital-gains rate, applicable depreciation recapture and unrecaptured gain treatment. Asset sale values are $5,000 for personal property and $8,000 for land improvements. No additional other income is assumed at sale. State taxes, NIIT, 1031 exchanges and individual tax limitations beyond the selected loss treatment are outside this example. No reserve balance is returned. The two loss treatments produce the same estimated sale tax by Year 10. The discounted benefit compares all cash-flow differences after added cost and sale tax at an 8% annual discount rate.
Tax sources: rental deductions, depreciation and passive activity losses.
The downside offer target combines 10% lower rent, two extra vacant weeks and 10% higher operating costs and reserves. It is a scenario, not a market valuation. Assumptions and limitations.
Save up to 100 analyses, compare four side by side and create a report. $10/month. Cancel anytime.
Saved analyses remain viewable after cancellation.