Internal Rate of Return (IRR) Tables
See the IRR for your deal if you sold at the end of each year — both before and after taxes. Know exactly when your return peaks and when it makes sense to sell.
What Is Internal Rate of Return?
IRR is considered the gold standard of investment metrics because it accounts for the timing of every cash flow — not just the total.
IRR in Plain English
IRR is the annual rate of return that makes your total investment "break even" in present-value terms. It's the discount rate at which the net present value (NPV) of all cash flows equals zero.
Think of it this way: If you could earn the IRR percentage in a savings account, you'd end up with the same result as the real estate deal. It's the single number that captures the total investment performance including when money went in and when it came out.
Unlike simple ROI, IRR accounts for when cash flows occur. Getting $10,000 in Year 1 is worth more than $10,000 in Year 10.
IRR considers your initial investment, every year of cash flow, and the net proceeds from selling — the complete picture.
IRR lets you compare real estate to stocks, bonds, or any other investment on equal footing. A 12% IRR on a rental beats an 8% stock market return.
How TWGREDAS™ Calculates IRR
Cash flows used:
-
-
Year 0: Total cash invested
- Down payment + closing costs − seller concessions + rent-ready costs
- + Years 1–N: Annual cash flow before tax
-
+
Year N: Net sale proceeds
- Sale price
- − Real estate commissions
- − Closing costs at sale
- − Remaining loan balance
- − Depreciation recapture taxes
- − Capital gains taxes
TWGREDAS™ computes IRR for every year from 1 to 40, so you can see what your return would be if you sold at the end of any given year.
Before vs. After Tax: The "after tax" IRR subtracts depreciation recapture tax and capital gains tax from your sale proceeds. This can significantly reduce your return — it's important to see both numbers.
IRR by Year of Sale
$500,000 property — 25% down, 6.5% rate, $3,900/mo rent. Showing Years 1-20 of 40.
IRR by Year of Sale
| Year | Before Tax | After Tax |
|---|---|---|
| 1 | -24.88% | -28.94% |
| 2 | -3.78% | -8.22% |
| 3 | 3.85% | -0.28% |
| 4 | 7.51% | 3.78% |
| 5 | 9.53% | 6.19% |
| 6 | 10.73% | 7.75% |
| 7 | 11.48% | 8.81% |
| 8 | 11.97% | 9.57% |
| 9 | 12.28% | 10.13% |
| 10 | 12.49% | 10.55% |
| 11 | 12.62% | 10.87% |
| 12 | 12.70% | 11.11% |
| 13 | 12.75% | 11.31% |
| 14 | 12.77% | 11.46% |
| 15 | PEAK 12.77% | 11.58% |
| 16 | 12.76% | 11.67% |
| 17 | 12.74% | 11.75% |
| 18 | 12.72% | 11.81% |
| 19 | 12.69% | 11.86% |
| 20 | 12.65% | 11.89% |
IRR Over Time
Visualize how your return changes depending on when you sell. The peak year is marked with a diamond.
Why Both Tables Matter
Before-tax and after-tax IRR can tell very different stories about when to sell.
Before-Tax IRR
Shows the raw investment performance before any tax impact from selling. Use this to evaluate the deal's fundamental return characteristics.
- Compare against other investment returns
- Evaluate the deal's pure performance
- Relevant for 1031 exchanges — capital gains and depreciation recapture taxes are deferred, but you still pay real estate commissions, your share of closing costs, and the 1031 exchange fee
After-Tax IRR
The real-world return after capital gains tax and depreciation recapture. This is what you actually keep when you sell.
- Accounts for depreciation recapture (25% rate)
- Includes capital gains tax on appreciation
- Shows your true net return if you sell outright
Finding the Optimal Hold Period
Look for the year where IRR peaks and then begins to plateau or decline — we highlight it with a PEAK badge in the tables and a marker on the chart. That's often the optimal time to sell (or refinance and redeploy equity). TWGREDAS™ computes this for all 40 years automatically.
Explore More Features
Dive deeper into what makes TWGREDAS™ the most complete deal analysis tool.
Included with All Apps
Property Database
30+ financial fields organized into 9 categories with auto-save and full change history.
Property Classification
Tag properties by investment strategy and property type. Filter and sort your entire portfolio.
Real-Time Calculations
27 key metrics across 5 categories computed instantly as you type, with clickable walkthroughs.
Portfolio Dashboard
Portfolio highlights, property cards, strategy and type breakdowns, overview charts, and cross-app features.
Included with Purchase of Deal Analyzer
Four-Stream Breakdown
See appreciation, cash flow, debt paydown, and tax benefits as both dollars (RIDQ™) and percentages (ROIQ™).
Analysis Dashboard
The TWGREDAS™ card, 6 input sections, and 9 interactive charts that update as you type.
Multi-Year Projections
Project all 80+ metrics across 40 years. See how returns compound and accelerate over time.
Override System
Click any cell to override its value. Changes cascade forward and recalculate all downstream metrics.
Scenario Modeling
Model rent bumps, tax increases, renovations, or any scenario with month-level granularity.
Amortization Schedule
480-month schedule with PMI tracking, extra principal modeling, and interactive balance charts.
Return Quadrants™
RIDQ™, ROIQ™, ROEQ™, and ROTNEQ™ with year navigation and reserve adjustments.
Yearly Summaries
All 40 years in one table: value, rent, cash flow, equity, RIDQ™, ROIQ™, cap rate, and IRR.
Know Your True Rate of Return
IRR before and after taxes for every year from 1 to 40. The most sophisticated return metric, computed automatically for your deal.