Tax Savings From Depreciation

Dollar amount saved in taxes due to depreciation deduction.

Example Result

Sample Data

$2,688

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

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Tax Savings From Depreciation Formula

Monthly (Depreciation × Tax Rate) ÷ 12 $224/mo

Annual Depreciation × Tax Rate $2,688/yr

What This Means

A sample property priced at $385,000 with $2,850/month rent has a tax savings from depreciation of $2,688 at Purchase (Month 0). This is real money saved. If depreciation saves you $2,688 in taxes, that is equivalent to earning an additional $2,688 in tax-free income. Add this to your cash flow for the true picture of your return.

Where This Value Comes From

Tax Savings From Depreciation is not entered directly — it is calculated from Depreciation and Income Tax Rate. See the formula breakdown above and the detailed inputs below.

Inputs That Determine Tax Savings From Depreciation

Depreciation

Annual straight-line depreciation deduction for the building.

$11,200

Purchase

Income Tax Rate

Your marginal income tax rate applied to rental income.

Found on your tax return

24.00%

Purchase

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Why It Matters

This is real money saved. If depreciation saves you $2,688 in taxes, that is equivalent to earning an additional $2,688 in tax-free income. Add this to your cash flow for the true picture of your return.