Depreciation as Percent of Income

Annual depreciation as a percentage of effective gross income.

Example Result

Sample Data

34.47%

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

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Depreciation as Percent of Income Formula

Annual Depreciation / Effective Gross Income x 100

$11,200 / $32,490 x 100

34.47%

What This Means

A sample property priced at $385,000 with $2,850/month rent has a depreciation as percent of income of 34.47% at Purchase (Month 0). If depreciation exceeds 30% of income, a significant portion of your rental income is tax-free. Combined with interest deductions, many investors pay little or no tax on rental income.

Where This Value Comes From

Depreciation as Percent of Income is not entered directly — it is calculated from Depreciation and Effective Gross Income. See the formula breakdown above and the detailed inputs below.

Inputs That Determine Depreciation as Percent of Income

Depreciation

Annual straight-line depreciation deduction for the building.

$11,200

Purchase

Effective Gross Income

Actual expected income after vacancy and other income.

$32,490

Purchase

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Why It Matters

If depreciation exceeds 30% of income, a significant portion of your rental income is tax-free. Combined with interest deductions, many investors pay little or no tax on rental income.