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.
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)

MA Prop 2½ caps most annual levy growth at 2.5%.
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.
MA taxes capital gains as ordinary income — no preferential rate.

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.
  • 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.