Investment Property Tax Calculator
Calculate property tax, depreciation, rental income tax, and capital gains for real estate investments.
Property Details
Rental Income
Includes: repairs, insurance, management fees, utilities (if paid by owner)
Improvements add to depreciation basis (not repairs)
Property Tax
Market Value$$500000.00
State Rate (california)1.10%
Annual Property Tax$$5500.00
Depreciation Analysis
Purchase Price + Improvements$$400000.00
Depreciation Period27.5 years
Annual Depreciation$$14545.45
Total Depreciation (5 years)$$72727.27
Depreciation reduces taxable income (paper loss, not cash). But creates depreciation recapture tax when sold.
Rental Income Tax
Gross Rental Income$$36000.00
Operating Expenses-$$12000.00
Property Tax-$$5500.00
Depreciation-$$14545.45
Taxable Income$$3954.55
Federal Tax (24%)$$949.09
State Tax (9.30%)$$367.77
Annual Tax Summary
Property Tax
$$5500.00
Income Tax
$$1316.86
Cash Flow After Tax
$$17183.14
ROI After Tax
4.3%
Sale Tax Analysis (after 5 years)
Estimated Sale Price$$550000.00
Capital Gain$$150000.00
Depreciation Recapture (25%)$$18181.82
Capital Gains Tax (20%)$$15454.55
State Capital Gains$$7186.36
1031 Exchange Savings$$40822.73
Depreciation Recapture Warning
Depreciation ($$72727.27) creates tax benefit now, but taxed at 25% when sold. Capital gains taxed at 20% + state. Consider 1031 exchange to defer all gains tax. Or hold property to pass to heirs (step-up basis eliminates deferred tax).
Tax Deductions Available
Property tax (deductible from rental income), Mortgage interest (deductible), Depreciation (paper loss), Operating expenses (repairs, insurance, management), Travel to property, Home office (if managing), Professional fees (legal, accounting). Document all expenses for audit protection.
1031 Exchange Benefits
Defer all capital gains and depreciation recapture. Must identify replacement within 45 days. Must close within 180 days. Like-kind: Any real estate for any real estate. Value must equal or exceed. Ultimate tax savings: Hold until death - heirs get step-up basis, all deferred gain eliminated.
State Tax Optimization
No state income tax: FL, TX, WA, NV, WY, SD. Low property tax: CO (0.52%), AZ (0.66%). High property tax: NJ (2.49%), IL (2.2%). Balance income tax vs property tax. Consider investing in tax-friendly states. Rental income taxed where property located (not where you live).