Rental Income Tax Calculator
Estimate tax on rental income after deducting allowable expenses.
Calculate net rental profit, depreciation deduction, and estimated federal tax owed on your rental property.
Rental income is taxable in most countries, but landlords are entitled to deduct a wide range of expenses before calculating their taxable rental profit. Understanding these deductions can significantly reduce your tax liability — often to a fraction of gross rent collected.
Gross Rental Income
All money received from tenants counts as gross rental income:
- Monthly rent payments
- Advance rent (counted in year received)
- Lease cancellation fees
- Tenant-paid expenses (if landlord normally pays)
Security deposits are NOT rental income if held in trust and returned.
Allowable Rental Expense Deductions (US)
The IRS allows landlords to deduct ordinary and necessary expenses:
- Mortgage interest — the largest deduction for most landlords
- Property taxes — state and local real estate taxes
- Insurance premiums — hazard, liability, flood, rental property insurance
- Repairs and maintenance — must be repairs, not improvements
- Property management fees — typically 8–12% of gross rent
- Advertising and vacancy costs — listing fees, photography
- Legal and professional fees — accountant, attorney fees for the rental
- Utilities paid by landlord — water, trash, if included in rent
- Travel to/from rental — at IRS standard mileage rate (current: 67 cents/mile in 2024)
- Home office — if you manage property from a dedicated home office
Depreciation Deduction
One of the most valuable deductions for landlords is depreciation. The IRS allows you to deduct the cost of the building (not land) over 27.5 years:
Annual Depreciation = Purchase Price × (Building Value / Total Value) / 27.5
Example: A $300,000 property where $240,000 is the building: Annual Depreciation = $240,000 / 27.5 = $8,727 per year
This deduction is non-cash — you do not spend $8,727; you simply deduct it.
Net Rental Profit Formula
Net Taxable Rental Income = Gross Rent − All Expenses − Depreciation
Estimated Tax Owed = Net Income × Marginal Tax Rate
Note: Passive activity loss rules apply if net income is negative. This calculator provides estimates only — consult a CPA for your specific situation.