Rental Property ROI Calculator

Full-cycle analysis for Massachusetts rental property investments — mortgage amortization, depreciation tax shield, passive-loss limits, and after-tax return at sale.

1. Property & Purchase

Land isn't depreciable — only the building portion is. Eastern MA typically runs 30–40%; can be lower elsewhere in the state.
If set, tables/charts show calendar years instead of "Year 1, 2...".

2. Financing

Typically drops off once you reach ~20-22% equity.

3. Rental Income

4. Operating Expenses (year 1)

Prop 2½ caps the town's total levy at 2.5%/yr, not your individual bill — your own reassessment can rise faster if your property appreciates faster than the town average. Consider setting this close to your appreciation rate.
Applied to insurance, maintenance, filing, other opex.

5. Appreciation & Sale

Leave blank to project with the appreciation rate below instead.
Standard MA rate is $4.56/$1,000; Barnstable County uses $5.70/$1,000.

6. Taxes

Used to value the depreciation/loss tax shield each year. Federal §1250 recapture rate is derived from this minus the MA rate below.
MA taxes capital gains as ordinary income — no preferential rate.
Used consistently for: passive-loss allowance phase-out, NIIT threshold, MA surtax stacking, and federal bracket stacking at sale.
Shields the bottom of the income stack before recapture/LTCG are taxed. Verify the exact figure for filing status and tax year.
Income (other income + recapture + LTCG, after deduction) below this is taxed 0% on the LTCG portion. Verify for filing status/year.
Between the 0% top and this, LTCG is taxed at 15%; above this, 20%. Verify for filing status/year.
$250,000 MFJ / $200,000 single (2026). Applies to rental income and sale gain above this MAGI level.

Results update automatically as you change any value below. Your inputs are saved in this browser, so a page refresh won't lose them.

Summary

Cap rate (year 1)
NOI ÷ purchase price
Cash-on-cash (year 1)
Pre-tax year-1 cash flow ÷ cash invested
Simple ROI (total)
Can overstate return if cash was added over time — see IRR
IRR (annualized)
Time-weighted — the number to trust

Step 1 — Cash Invested

Step 2 — Year 1 Operating Cash Flow

Step 3 — Cash Flow Over the Holding Period

Step 4 — Depreciation & Passive-Loss Tax Benefit

Step 5 — Sale

Step 6 — Overall Return

Property Value vs. Loan Balance

Year-by-Year Detail

Methodology & assumptions
  • Mortgage is a standard fixed-rate, fully amortizing loan; the P&I payment is constant for the full term. An all-cash purchase (100% down) is supported and correctly produces $0 debt service.
  • Property tax is modeled as a % of the original purchase price, growing at the entered rate each year. Prop 2½ caps the town's total levy, not your individual bill — if your property appreciates faster than the town average, your own reassessment can rise faster than 2.5%/yr. Set the growth rate closer to your appreciation rate for a more conservative estimate.
  • Depreciation is straight-line over the entered period (default 27.5 years, IRS residential rental standard). The depreciable building basis is (purchase price + closing costs) × (1 − land %) — closing costs are capitalized into the basis and allocated between land and building in the same ratio as the purchase price, consistent with how they're treated at sale. Depreciation stops once fully depreciated.
  • Passive activity loss rules: if you actively participate, up to $25,000 of rental loss per year is deductible against ordinary income, phased out 50¢ per dollar of MAGI between $100,000 and $150,000 (fully phased out at/above $150,000). Any loss above the allowance is suspended and carried forward, and fully released in the sale year per IRC §469(g).
  • Net Investment Income Tax (NIIT): 3.8% applies both to rental income each year and to the sale gain, whenever MAGI (your entered "other household income" plus that year's property income/gain) crosses your entered threshold ($250,000 MFJ / $200,000 single by default).
  • Federal tax at sale uses real bracket stacking, not a flat rate: your entered standard/itemized deduction shields income from the bottom up (other income first, then §1250 recapture, then regular LTCG); §1250 recapture is taxed at the lesser of 25% or your implied federal ordinary rate (derived from your combined rate minus the MA rate) — never a flat 25%; remaining LTCG is then taxed at 0/15/20% based on where it lands in the stack after other income and recapture. This means selling in a low-income year can genuinely realize $0 federal tax on a meaningful gain — enter your real numbers to see if that applies to you. Bracket thresholds are editable; verify the current-year figures for your filing status.
  • Massachusetts taxes the full gain as ordinary income at your entered MA rate (no preferential capital-gains rate) and deed excise tax is estimated at $4.56 per $1,000 of sale price by default (editable — Barnstable County uses $5.70/$1,000).
  • The optional MA 4% surtax and the NIIT MAGI check both stack the sale gain on top of the single "other household income / MAGI" figure you enter — a simplification of a real household return, but consistent across every threshold check in this tool (unlike having separate, disconnected income inputs for each).
  • IRR is solved numerically over the full cash-flow timeline: initial cash outlay at year 0, after-tax operating cash flow each year, plus net sale proceeds in the final year.