Investment Property Tax Optimizer
Calculate depreciation, rental income tax, and sale tax implications.
Depreciation Benefit
Building Value:$ 400000
Annual Depreciation:$ 14545
Total Depreciation:$ 145455
Residential: 27.5 years. Commercial: 39 years. Land not depreciable.
Rental Income Tax
Net Operating Income:$ 13455
Taxable Income:$ 13455
Annual Tax:$ 3902
Total Rental Tax:$ 39018
Effective Rate:29.0%
Sale Tax Analysis
Sale Gain:$ 250000
Depreciation Recapture:$ 145455
Remaining Gain:$ 104545
Recapture Tax (25%):$ 36364
Capital Gains Tax:$ 15682
State Tax:$ 12500
1031 Exchange Impact
Tax Without 1031:$ 64545
Tax With 1031:$ 64545
Tax Saved:$ 0
1031 exchange defers all capital gains and depreciation recapture tax indefinitely.
Total Tax Summary (10 years)
Rental Tax:$ 39018
Sale Tax:$ 64545
Total Tax:$ 103564
Investment Property Tax Strategies
- Depreciation: reduces taxable rental income, creates future recapture
- 1031 exchange: defer all gains, exchange into better property
- Passive activity: rental losses offset passive income only
- Material participation: can offset active income
- Cost segregation: accelerate depreciation on components
- Hold over 1 year: LTCG rates vs ordinary income