Annual Deductions
Net Rental Income
-$7,609
Total Tax on Rental
$0
After-Tax Cash Flow
$3,300
Deduction Breakdown
Tax Breakdown
What is depreciation recapture?
When you sell a rental property, the IRS taxes you on the depreciation deductions you claimed during ownership. This is called depreciation recapture, and it is taxed at a flat 25% rate. For example, if you claimed $50,000 in depreciation over the years, you would owe up to $12,500 in recapture tax when you sell. This is separate from capital gains tax on the profit from the sale.
What deductions can landlords claim?
Landlords can deduct many expenses from their rental income. Common deductions include mortgage interest, property taxes, insurance, repairs and maintenance, property management fees, depreciation (spreading the building cost over 27.5 years), travel to the property, advertising for tenants, and professional services like accounting. These deductions reduce your taxable rental income.
What is NIIT?
NIIT stands for Net Investment Income Tax. It is an extra 3.8% tax on net investment income, including rental income, that applies if your modified adjusted gross income is above a certain threshold. For single filers, the threshold is $200,000. For married filing jointly, it is $250,000. The tax applies to the lesser of your net investment income or the amount your income exceeds the threshold.
Note: This calculator provides estimates only. Rental property taxation can be complex, especially with passive activity loss rules and material participation requirements. Consult a tax professional for personalised advice.
Disclaimer: This calculator provides estimates based on current IRS rates and thresholds for the 2025 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your filing status, state of residence, deductions, and individual circumstances. Always consult a qualified tax professional or CPA before making financial decisions. Read our terms
This calculator uses official rates and thresholds from:
- IRS Publication 527 — Residential Rental Property
- IRS Publication 946 — How to Depreciate Property (MACRS)
- IRS Topic 409 — Capital Gains and Losses
Last verified: March 2026 · Tax year 2025. Results are indicative — consult a qualified accountant for personalised advice.