Gross Depreciation Return on Equity

Annual depreciation deduction as a percentage of current equity.

Example Result

Sample Data

12.22%

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

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Gross Depreciation Return on Equity Formula

Annual Depreciation / Current Equity x 100

$11,200 / $91,679 x 100

12.22%

What This Means

A sample property priced at $385,000 with $2,850/month rent has a gross depreciation return on equity of 12.22% at Purchase (Month 0). Depreciation is one of real estate's most powerful tax advantages. By expressing it as a return on equity, you can see how this phantom deduction compares to other returns. A high depreciation ROE means your equity is sheltering significant income from taxes — a key advantage of real estate over stocks or bonds.

Where This Value Comes From

Gross Depreciation Return on Equity is not entered directly — it is calculated from Depreciation and Total Equity Current. See the formula breakdown above and the detailed inputs below.

Inputs That Determine Gross Depreciation Return on Equity

Depreciation

Annual straight-line depreciation deduction for the building.

$11,200

Purchase

Total Equity Current

Current equity position (property value minus loan balance).

$91,679

Purchase

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Why It Matters

Depreciation is one of real estate's most powerful tax advantages. By expressing it as a return on equity, you can see how this phantom deduction compares to other returns. A high depreciation ROE means your equity is sheltering significant income from taxes — a key advantage of real estate over stocks or bonds.

Detailed Explanation

Gross Depreciation Return on Equity measures your annual depreciation tax deduction relative to your current equity. While depreciation is a non-cash paper loss, it represents real economic value by reducing your taxable income. This metric shows the full gross deduction relative to equity, before applying your tax rate.