Cash Flow from Depreciation™ Return on Equity

Tax savings from depreciation as a percentage of current equity.

Example Result

Sample Data

3.49%

Based on a sample $385,000 property with $2,850/month rent, 20% down, 7% interest rate.

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Cash Flow from Depreciation™ Return on Equity Formula

(Annual Depreciation x Tax Rate) / Current Equity x 100

($11,200 x 24.00%) / $77,000 x 100

3.49%

What This Means

A sample property priced at $385,000 with $2,850/month rent has a cash flow from depreciation™ return on equity of 3.49%. This is the cash-in-hand version of the depreciation benefit. While gross depreciation shows the full deduction, this metric converts it to actual dollars saved at your marginal tax rate. A 25% tax bracket turns a $10,909 depreciation deduction into $2,727 of real cash flow — and this metric shows that as a return on your equity.

Where This Value Comes From

Cash Flow from Depreciation™ Return on Equity is not entered directly — it is calculated from Tax Savings From Depreciation and Total Equity Current. See the formula breakdown above and the detailed inputs below.

Calculated From

Cash Flow from Depreciation™ Return on Equity is calculated using these inputs:

Tax Savings From Depreciation

Dollar amount saved in taxes due to depreciation deduction.

$2,688

Total Equity Current

Current equity position (property value minus loan balance).

$77,000

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Why It Matters

This is the cash-in-hand version of the depreciation benefit. While gross depreciation shows the full deduction, this metric converts it to actual dollars saved at your marginal tax rate. A 25% tax bracket turns a $10,909 depreciation deduction into $2,727 of real cash flow — and this metric shows that as a return on your equity.

Detailed Explanation

Cash Flow from Depreciation Return on Equity measures the actual cash benefit of depreciation — the tax savings (depreciation x your tax rate) — relative to your current equity. Unlike gross depreciation, this reflects the real dollars kept in your pocket through reduced tax liability.