Rental Property After-Tax Cash Flow Calculator

Estimate what a rental property puts in your pocket after federal income tax, not just before it. Enter the purchase, financing, rent, and operating costs, then your tax details: marginal rate, building share of value, the month the rental is placed in service, and your modified AGI. The calculator returns NOI, pre-tax cash flow, year-one depreciation, year-one mortgage interest from the amortization schedule, taxable rental income, how much of a loss you can deduct this year, the tax owed or saved, after-tax cash flow, and cash-on-cash return before and after tax.

What the result means

After-tax cash flow = pre-tax cash flow − tax on the rental. When taxable rental income is positive, the tax is that income × your marginal rate. When it is negative, the loss reduces tax on your other income, but only up to the passive loss allowance you qualify for. On the default inputs, a $300,000 rental that loses $3,287 of cash a year shows an $8,529 taxable loss in year one. With $90,000 of modified AGI the whole loss is deductible, saving $2,047 at 24%, so after-tax cash flow is about −$1,240.

These figures are estimates for informational purposes only. Your return will differ in the details listed at the end of this page.

Inputs, grouped by what they drive

Purchase and financing — purchase price, buying closing costs, rehab, down payment %, rate, term. These set the loan, the mortgage payment, and total cash invested (down payment + closing costs + rehab). Enter closing costs that are added to basis, such as title fees, recording fees, and transfer taxes; leave out loan fees and points, which are amortized over the loan instead.

Income — monthly rent and vacancy %. Collected rent (effective gross income) = rent × 12 × (1 − vacancy).

Operating costs — property tax, insurance, HOA, management % (applied to collected rent), repairs, CapEx reserve, and owner-paid utilities. All of them reduce cash flow. All except the CapEx reserve are deductible.

Tax inputs — filing status, modified AGI, whether you actively participate, marginal rate, building value %, month placed in service, and other deductible expenses (travel, legal, accounting, advertising not included above).

How the calculator does the math

1. Mortgage payment from the standard amortization formula. $240,000 at 7% for 30 years is $1,596.73 a month, $19,160.71 a year.
2. NOI = collected rent − operating costs, including the CapEx reserve. Defaults: $25,080 − $9,206.40 = $15,873.60.
3. Pre-tax cash flow = NOI − annual debt service = −$3,287.11.
4. Year-one interest = the interest in the first 12 payments of the amortization schedule: $16,722.77. The other $2,437.94 of payments is principal, which is not deductible.
5. Depreciable basis = (price + closing costs) × building % + rehab = ($300,000 + $6,000) × 80% + $10,000 = $254,800.
6. Year-one depreciation uses 27.5-year straight line with the mid-month convention. Placed in service in January, the rental gets 11.5 months: $254,800 ÷ 27.5 × 11.5 ÷ 12 = $8,879.39. A full year is $9,265.45.
7. Taxable rental income = collected rent − deductible operating costs ($8,006.40, which leaves out the $1,200 CapEx reserve) − interest − depreciation − other deductible expenses = −$8,528.56.
8. Deductible loss = the smaller of the loss and your passive loss allowance. At $90,000 of MAGI the allowance is the full $25,000, so all $8,528.56 is deductible.
9. Tax effect = −$8,528.56 × 24% = −$2,046.85 (a saving).
10. After-tax cash flow = −$3,287.11 − (−$2,046.85) = −$1,240.26.
11. Cash-on-cash = cash flow ÷ $76,000 invested: −4.33% before tax, −1.63% after.

The 27.5-year recovery period and the rule that land cannot be depreciated come from IRS Publication 527. The mid-month percentages are in Table A-6 of IRS Publication 946: 3.485% of basis in year one for a January placement, down to 0.152% for December.

Why the CapEx reserve is not deducted

A reserve is cash you set aside for a future roof, water heater, or HVAC system. Nothing has been paid, so there is nothing to deduct. When you do spend it, most of those replacements are improvements that must be capitalized and depreciated, not expensed. That is why the calculator subtracts the $1,200 reserve from cash flow but not from taxable income. Routine repairs, which you enter separately, are deductible in the year you pay them.

When the month you buy matters

Because of the mid-month convention, a rental placed in service late in the year gets much less depreciation in year one. The same default property placed in service in July gets $4,246.67 of depreciation instead of $8,879.39. Its taxable loss shrinks to $3,895.83, the tax saving falls to $935.00, and after-tax cash flow drops to −$2,352.11. Year two gets a full $9,265.45 either way. Use the month the property was ready and available for rent, not the closing date if you rehabbed it first.

Check the passive loss rules before trusting a negative tax

Rental losses are passive. Under IRS Publication 925, if you actively participate and your modified AGI is $100,000 or less, up to $25,000 of rental loss can offset wages and other nonpassive income. Between $100,000 and $150,000 the allowance is 50% of ($150,000 − MAGI). At $150,000 or more it is zero, unless you qualify as a real estate professional (more than half your working time and more than 750 hours a year in real property businesses in which you materially participate). Married couples filing separately who lived together at any time in the year get no allowance; the calculator treats every separate filer that way.

The calculator applies those rules for you. Here is the default property at different incomes:

A suspended loss is not lost. It carries forward on Form 8582 and offsets future passive income from this or other rentals, and any remaining balance is released when you sell the property in a taxable sale. Active participation is a low bar: approving tenants, setting rents, and approving repairs are enough, even with a property manager. Uncheck the box if you own the rental through a limited partnership interest or otherwise do not participate.

How the inputs move the answer

Building value percentage

The building share applies to the price and closing costs; the $10,000 rehab is depreciated in full either way. Each 5 points of building share moves after-tax cash flow by about $128 a year at 24%. Use a documented ratio; an inflated building share has to be defended if you are examined.

Marginal tax rate

Same property, same $8,528.56 loss, assuming the allowance covers it:

The higher your bracket, the more a deductible loss is worth. But in 2026 a single filer reaches the 32% bracket only above $201,775 of taxable income, and a modified AGI that high has already phased out the $25,000 allowance. Enter a realistic MAGI and the calculator suspends the loss instead, so the 32% and 37% rows only apply to real estate professionals.

Rent

Raise the rent from $2,200 to $2,600 and leave everything else alone. Collected rent becomes $29,640, management rises to $2,371.20, NOI is $20,068.80, and pre-tax cash flow turns positive at $908.09. Taxable income is still a $4,333.36 loss, so after-tax cash flow is $1,948.10 at 24%. That is the pattern investors look for: positive cash flow that is also sheltered from current tax.

Worked example: a self-managed $185,000 rental

Here is a second property entered from scratch, to show which inputs matter when the numbers are smaller.

Inputs: price $185,000; closing costs $4,000; rehab $3,000; 25% down; 7.25% for 30 years; property tax $2,400 and insurance $1,300 a year; no HOA; 0% management (self-managed); repairs $120 and CapEx $120 a month; 6% vacancy; rent $1,650; 22% marginal rate; building 75%.

Two lessons come out of this one. First, self-management is doing the heavy lifting: an 8% management fee would cost $1,489 a year and push pre-tax cash flow to −$815.20. Second, tax adds about two-thirds of a point to the return, but 1.92% on $53,250 is still a thin yield. Unless you expect appreciation or rent growth, a deal like this pays you mostly in principal paydown, which neither cash-on-cash figure counts.

What this calculator leaves out

• State income tax. Add your state rate to the marginal rate if your state taxes rental income.
• Net investment income tax. Net rental income can be subject to the 3.8% NIIT above $200,000 (single) or $250,000 (joint) of modified AGI; see the NIIT calculator.
• Depreciation recapture at sale. Depreciation allowed or allowable reduces basis and is taxed at up to 25% when you sell. Model a sale in the real estate capital gains tax calculator.
• Shorter-lived assets. Appliances, carpet, and land improvements depreciate faster than the building; the MACRS depreciation calculator handles those schedules.
• Later years. Interest falls, depreciation rises to a full year, and rent usually rises, so taxable income climbs over time.
• Other passive income and loan costs. Passive income from other rentals can absorb a loss above the allowance, and points or loan fees are amortized over the loan; neither is modeled.

How to use it well

1. Start with the pre-tax numbers in the US rental property ROI calculator and make sure the deal is not relying on tax savings alone.
2. Enter a building share you can document and a rate that reflects your real bracket.
3. Enter your modified AGI and the month the rental is ready for tenants, so the year-one loss and the allowance match your return.
4. Re-run with 10% vacancy and higher repairs to see how much margin the deal has.