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

Purchase price ($)

Land value (% of purchase price)

Land isn't depreciable — only the building portion is.

Acquisition closing costs (%)

Upfront repairs / renovation ($)

Purchase year (optional)

If set, tables/charts show calendar years instead of "Year 1, 2...".

2. Financing

Down payment (%)

Mortgage interest rate (%/yr)

Loan term (years)

Monthly PMI ($, if down payment < 20%)

PMI cancels after (years, 0 = applies whole term)

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

3. Rental Income

Monthly rent ($)

Annual rent growth (%/yr)

Vacancy rate (%)

4. Operating Expenses (year 1)

Property tax rate (% of purchase price)

Property tax growth (%/yr)

MA Prop 2½ caps most annual levy growth at 2.5%.

Property management fee (% of collected rent)

Insurance ($/yr)

Maintenance ($/yr)

Tax filing / accounting ($/yr)

HOA / other opex ($/yr)

General expense growth (%/yr)

Applied to insurance, maintenance, filing, other opex.

5. Appreciation & Sale

Holding period (years)

Known sale price ($, optional)

Leave blank to project with the appreciation rate below instead.

Appreciation rate (%/yr, used only if sale price is blank)

Selling commission (%)

Legal / other closing costs at sale ($)

MA deed excise tax rate ($ per $1,000 of sale price)

Standard MA rate is $4.56/$1,000; Barnstable County uses $5.70/$1,000.

6. Taxes

Depreciation period (years)

Combined ordinary tax rate (federal + MA, %)

Used to value the depreciation/loss tax shield each year.

Federal long-term capital gains rate (%)

MA state tax rate on sale gain (%)

MA taxes capital gains as ordinary income — no preferential rate.

Modified AGI, for passive-loss allowance ($)

I actively participate in managing this property (enables the $25,000 special loss allowance, phased out $100K–$150K MAGI)

Stack this sale's gain on top of other income when checking the MA 4% surtax

Other taxable income in sale year ($, for surtax stacking)

Summary

Cap rate (year 1)

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NOI ÷ purchase price

Cash-on-cash (year 1)

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Pre-tax year-1 cash flow ÷ cash invested

Simple ROI (total)

–

Can overstate return if cash was added over time — see IRR

IRR (annualized)

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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.
Property tax is modeled as a % of the original purchase price, growing at the entered rate each year (approximating the MA Prop 2½ levy cap), independent of market appreciation.
Depreciation is straight-line over the entered period (default 27.5 years, IRS residential rental standard), on the building value only (purchase price × (1 − land %)), and 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.
Suspended losses are fully released as a deduction in the sale year, per IRC §469(g), valued at your combined ordinary rate.
At sale: accumulated depreciation is recaptured at the fixed federal statutory rate of 25% (unrecaptured §1250 gain); the remaining gain is taxed at your entered federal long-term capital-gains rate; Massachusetts taxes the full gain as ordinary income at your entered MA rate (MA has no preferential capital-gains rate).
Massachusetts deed excise tax is estimated at $4.56 per $1,000 of sale price (the standard statewide rate; some counties differ slightly).
The optional MA 4% surtax is approximated by stacking this sale's gain on top of the "other taxable income" you enter and taxing only the portion above the threshold at an extra 4% — a simplification of the real household tax return.
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.