Rental Income Tax Calculator 2025
Calculate federal income tax on rental property income. Includes depreciation (27.5 years), mortgage interest deduction, expense deductions and passive loss rules.
$
Gross rent collected from tenants $
Exclude land value (typically 20% of purchase price) $
$
$
$
$
$
Advertising, legal fees, HOA, utilities paid by you $
$0
Net Rental Income / (Loss)
$0
Annual Depreciation
$0
Tax on Rental Income
$0
Cash Flow After Tax
Schedule E Summary
How to Use This Rental Income Tax Calculator
Enter your gross rental income and all allowable deductions. The calculator automatically computes your annual depreciation at 1/27.5 of the property's building value (land is not depreciable). Net rental income or loss flows through to your personal tax return on Schedule E.
If the result is a loss, the passive loss rules may limit your deduction depending on your AGI.
The Formula
Annual Depreciation = Property Building Value Γ· 27.5
Total Expenses = Mortgage Interest + Property Tax + Insurance + Repairs + Mgmt + Depreciation + Other
Net Rental Income = Gross Rent β Total Expenses
If net income positive: Tax = Net Income Γ Marginal Rate
If net loss and AGI β€ $100K: Deduct up to $25K against ordinary income
Cash Flow = Gross Rent β Cash Expenses β Tax (depreciation is non-cash)
Total Expenses = Mortgage Interest + Property Tax + Insurance + Repairs + Mgmt + Depreciation + Other
Net Rental Income = Gross Rent β Total Expenses
If net income positive: Tax = Net Income Γ Marginal Rate
If net loss and AGI β€ $100K: Deduct up to $25K against ordinary income
Cash Flow = Gross Rent β Cash Expenses β Tax (depreciation is non-cash)
Example
Maria, rental property, $24K rent, $300K building value, 22% bracket:
Depreciation: $300,000 Γ· 27.5 = $10,909/year
Total expenses: $12K interest + $3.6K tax + $1.2K insurance + $2K repairs + $0.5K other + $10.9K depreciation = $30,209
Net rental loss: $24,000 β $30,209 = ($6,209)
AGI: $80,000 β qualifies for $25K loss allowance
Tax saving from loss: $6,209 Γ 22% = $1,366
After-tax cash flow: $24K β $12K β $3.6K β $1.2K β $2K β $0.5K + $1,366 = $6,066
Depreciation: $300,000 Γ· 27.5 = $10,909/year
Total expenses: $12K interest + $3.6K tax + $1.2K insurance + $2K repairs + $0.5K other + $10.9K depreciation = $30,209
Net rental loss: $24,000 β $30,209 = ($6,209)
AGI: $80,000 β qualifies for $25K loss allowance
Tax saving from loss: $6,209 Γ 22% = $1,366
After-tax cash flow: $24K β $12K β $3.6K β $1.2K β $2K β $0.5K + $1,366 = $6,066
Extended
27.5-Year Depreciation Schedule
Full depreciation schedule and year-by-year tax savings from rental property depreciation
27.5-year straight-line depreciation schedule for your rental property.
| Year | Depreciation | Remaining Basis | Tax Saving (22%) | Cumulative Saving |
|---|
Frequently Asked Questions
How is rental income taxed in the United States?
Rental income is generally taxed as ordinary income at your marginal federal tax rate. You report it on Schedule E of Form 1040. You can deduct allowable expenses including mortgage interest, property taxes, insurance, repairs, maintenance, property management fees, and depreciation. The net rental income (after all deductions) is added to your other income and taxed at your applicable rate.
What is rental property depreciation and how does it work?
Residential rental property is depreciated over 27.5 years using the straight-line method. Each year you can deduct 1/27.5 (approximately 3.636%) of the property's cost basis (excluding land) as a non-cash depreciation expense. For example, a property with a $300,000 building value yields a $10,909 annual depreciation deduction, potentially saving thousands in taxes even if the property is cash-flow neutral.
What is the $25,000 rental loss allowance?
If you actively participate in managing your rental property and your Adjusted Gross Income (AGI) is $100,000 or less, you can deduct up to $25,000 of rental losses against your ordinary income. This allowance phases out by 50 cents for every dollar of AGI above $100,000, disappearing completely at $150,000 AGI. Above $150,000, passive rental losses can only offset passive income or are carried forward.
Can I deduct travel to my rental property?
You can deduct ordinary and necessary travel expenses to manage, conserve, or maintain your rental property, including mileage (65.5 cents/mile in 2025) or actual vehicle costs, and travel to inspect the property or meet with tenants. You cannot deduct personal vacation expenses even if you check on the property during a vacation trip.
What happens when I sell a rental property?
When you sell a rental property, you pay capital gains tax on the profit (proceeds minus adjusted cost basis). The adjusted cost basis is the original cost plus improvements minus accumulated depreciation. Any accumulated depreciation is subject to "depreciation recapture" tax at a maximum 25% rate (Section 1250). The remaining gain is taxed at long-term capital gains rates if held more than 1 year.