CalculateRealEstateROI

Taxes

How is rental income taxed?

Ordinary income rates after depreciation and expenses; often net zero or paper loss.

Reviewed by Keiron Brown, Founder & Editor, CalculateRealEstateROI · Educational estimates only — not investment, financial, tax, or legal advice

Direct answer

Ordinary income rates after depreciation and expenses; often net zero or paper loss.

Expanded explanation

Depreciation typically shelters most rental cash flow. Excess passive losses carry forward until offset by passive gains or property sale (subject to passive activity rules).

Examples

  • $12k cash flow − $9k depreciation − $4k interest deduction = paper loss.

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