Cash Flow from Depreciation™
Depreciation Remaining
Advanced Tax Benefits Tax & Depreciation

Effective Tax Rate

Estimated income tax as a percentage of NOI.

Example Result

Sample Data
0.00%

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

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Effective Tax Rate Formula

Estimated Income Tax / NOI x 100
$0 / $20,344 x 100
0.00%

What This Means

A sample property priced at $385,000 with $2,850/month rent has a effective tax rate of 0.00%. Comparing your effective tax rate to your marginal tax rate shows how much real estate tax benefits are saving you. Many investors achieve effective rates of 0-10% on rental income despite being in the 24%+ marginal bracket.

Where This Value Comes From

Effective Tax Rate is not entered directly — it is calculated from Net Operating Income, Annual Depreciation, Income Tax Rate, and Mortgage Interest (Year 1). See the formula breakdown above and the detailed inputs below.

Calculated From

Effective Tax Rate is calculated using these inputs:

Net Operating Income
Income remaining after all operating expenses but before debt service.
$20,344
Annual Depreciation
Annual straight-line depreciation deduction for the building.
$11,200
Income Tax Rate
Your marginal income tax rate applied to rental income.
Found on your tax return
24.00%
Mortgage Interest (Year 1)
Total interest paid on the mortgage in year 1

Platform Distribution

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Why It Matters

Comparing your effective tax rate to your marginal tax rate shows how much real estate tax benefits are saving you. Many investors achieve effective rates of 0-10% on rental income despite being in the 24%+ marginal bracket.

Detailed Explanation

The effective tax rate on your property's NOI after accounting for all deductions (interest, depreciation). This is typically much lower than your marginal rate due to real estate tax benefits.

Example

Sample Result
1.28%

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

Related Calculations

Annual Depreciation

2

Annual straight-line depreciation deduction for the building.

$11,200 Example

Monthly Depreciation

2

Monthly depreciation deduction.

$933.33 Example

Depreciation as Percent of Income

2

Annual depreciation as a percentage of effective gross income.

34.47% Example

Tax Savings From Depreciation

U

Dollar amount saved in taxes due to depreciation deduction.

$2,688 Example

Cash Flow from Depreciation™

U

Additional effective cash flow generated by depreciation tax savings.

$2,688 Example

Depreciation Remaining

2

Years of depreciation benefit remaining.

27.5 years Example

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