Rental Income Tax Calculator
Estimate the tax impact of your rental property. Factor in depreciation, operating expenses, mortgage interest, vacancy, and passive activity loss rules to see your after-tax cash flow.
| Item | Amount |
|---|---|
| Gross Rental Income | $24,000 |
| Vacancy Loss (5%) | -$1,200 |
| Effective Rental Income | $22,800 |
| Operating Expenses | -$5,000 |
| Mortgage Interest | -$8,000 |
| Depreciation (27.5-yr) | -$8,727 |
| Net Rental Income | $1,073 |
| Estimated Tax | $257 |
| After-Tax Cash Flow | $9,543 |
Net Rental Income
$1,073Annual Depreciation
$8,727Estimated Tax
$257Cash Flow
$9,543This is a simplified estimate. Rental income is generally taxed as passive income. Losses may be limited by passive activity rules. Depreciation recapture applies when you sell. Consult a tax professional for your situation.
Frequently Asked Questions
How is rental income taxed?
Rental income is taxed as ordinary income at your marginal tax rate. You can deduct operating expenses, mortgage interest, property taxes, insurance, repairs, and depreciation. The net rental income (or loss) is reported on Schedule E of your tax return.
What is rental property depreciation?
Residential rental property is depreciated over 27.5 years using the straight-line method. Only the building value is depreciable — land cannot be depreciated. Depreciation reduces your taxable income but is subject to recapture (taxed at 25%) when you sell the property.
What is the $25,000 rental loss allowance?
If you actively participate in managing your rental property, you can deduct up to $25,000 in rental losses against your other income if your AGI is $100,000 or less. This allowance is reduced by $1 for every $2 of AGI above $100,000 and fully phased out at $150,000.
What expenses can I deduct?
Common deductible expenses include mortgage interest, property taxes, insurance, repairs and maintenance, property management fees, utilities (if paid by owner), HOA fees, advertising, travel to the property, and professional services (accounting, legal). Capital improvements must be depreciated rather than deducted immediately.
Sources
Editorial standards
How this page is maintained
USTax Tools updates calculator assumptions and page copy against official source material. We publish for general educational use, not individualized tax advice.
Last reviewed
March 2026
Coverage
2025 rental income tax
Primary sources
IRS Publication 527 and passive activity rules
Your rental income tax also depends on where you live.
State taxes can significantly change your total liability. See how it varies.