# Rental property returns and income tax calculator

## Price, rent & expenses

Purchase price
Monthly rent
Taxes
%
Annual insurance
Vacancy
days
Leasing fee
months
Property Mgmt fee
%
Maintenance cost
%

## Financing details & taxes

Financing
%
Interest Rate
%
Amortization
years
Effective Tax Rate
%
Land Value
%

## Annual Profit & Loss \$411

 Annual Rent \$1,200 Vacancy \$99 Net Rent \$1,101 Taxes \$375 Annual Insurance \$100 Repairs & Maintenance \$88 Property Management \$77 Leasing Fees \$50 Total Expenses \$690 Net Operating Income (NOI) \$411 Cap Rate 1.64%

## How is rental income taxed?

Rental income is taxed as ordinary income. This means that if an investor is in a 22% marginal tax bracket and their rental income is \$5,000, the investor would end up paying \$1,100.

Here's the math we used to calculate that tax payment: \$5,000 x .22 = \$1,100.

Uncover the hidden tax benefits related to rental property ownership.

• How is a rental property defined?

"Any payment you receive for the use or occupation of property" is how the IRS defines rental income.

Here are additional types of rental income:

• Advanced rent payments: If your tenant pays both the first and last month's rent before moving in, then you would count both payments as income for the year in which they're received.

• Portions of the security deposit that you keep: The security deposit isn't counted as rental income if it's returned in full to the tenant. If, however, you keep a portion of the deposit for any reason, like to repaint the room, then that amount counts as rental income.

• Expenses your tenants pay for if they're not required to do so: If your tenant pays their electricity bill and subtracts it from their monthly rent, then the sum used to cover the bill counts as rental income.

• Services rendered in place of rent payments: If your tenant provides you with services in place of rental payment, like charging you \$50 for piano lessons, then that \$50 counts as rental income.