Work Hard Mortgage
Real Estate Investment & Tax Calculator
If you bought this investment property, what might the tax benefit be, how might it build wealth, and how does that compare with investing the same cash somewhere else?
The property
What you would pay, how you would finance it, and what it would rent for.
$125,000 down (25% of the purchase price)
How much you want to assume the property's value increases each year.
At 3%, this assumes about $15,000 of property appreciation in year one.
This is a planning assumption, not a prediction. Property values can rise or fall. Appreciation is a change in what the property is worth, not cash income.
Monthly operating expenses
What the property costs to hold each month.
Fills taxes, insurance, maintenance, management and vacancy with rough planning assumptions — about 0.85% of the price a year for taxes, 0.55% for insurance, and 5%/8%/5% of rent for maintenance, management and vacancy. They are starting points, not this property's real numbers.
Potential tax benefits
Depreciation is a paper deduction — it can reduce taxable income without money leaving your pocket. Whether you can use it depends on your situation.
State tax treatment varies. Utah currently uses a flat individual income-tax rate; choose Other if you want to use a different planning assumption. These are planning choices — the calculator does not determine your actual tax liability.
The default 20% is a common planning estimate, not a rule. A higher land share means less to depreciate.
Depreciation on a rental property is often subject to limits that depend on your income and how you participate. Most people cannot say for certain, and that is a normal answer.
We will show the potential deduction without assuming you can use it this year.
Your Property Estimate
Potential first-year tax savings
$31,424
- Estimated first-year depreciation deduction
- $110,455
- Estimated usable tax savings this year
- Not assumed
Whether you can use this deduction this year depends on your tax situation. The figure above is the potential benefit if the full deduction were usable.
Estimated cash flow
-$454/month
Rent less operating expenses and the mortgage payment. -$5,447 a year.
Estimated first-year equity growth
$18,809
$3,809 of loan principal paid down plus $15,000 of assumed appreciation.
Estimated first-year wealth created
$13,363
Cash flow plus principal reduction plus assumed appreciation. No tax savings included, because none was assumed usable.
Equity growth and appreciation are not cash in your account — they are changes in what you own. Only cash flow is money that could reach your bank account, and it can be negative.
Effective cash invested
What this property ties up once the estimated current-year tax benefit is counted.
Cash needed to purchase
$125,000 down payment. Add estimated closing costs under Adjust assumptions if you want them included.
$125,000
Estimated usable tax benefit
Not assumed, because you told us you are not sure how much you could use.
Not assumed
Effective cash invested after estimated tax savings
$125,000
The tax benefit is an estimate and does not reduce the amount actually required to close on the property. You still bring the full down payment and closing costs to the table, and any benefit arrives later, if at all.
Property economics vs. tax benefit
Two separate questions. A large deduction does not make a property a good investment.
Property cash flow
Negative
-$454/month
Estimated tax benefit
Significant
$31,424 potential, before any limits
This property may provide a significant estimated tax benefit, but the projected monthly cash flow is negative. Tax benefits alone should not determine whether an investment property makes sense.
This is a description of the numbers you entered, not a recommendation or investment advice.
What if you invested the same cash instead?
The same $125,000 of starting cash, put into a broad U.S. stock-market index instead of this property.
An assumption used for comparison only — not an expected return, not a guaranteed return, and not a prediction. Actual market returns vary widely and can be negative.
Long-term property assumptions: 3% annual appreciation, 3% rent growth, 3% operating-expense growth, 6% selling costs.
The property projection includes assumed appreciation, mortgage principal reduction and cumulative cash flow. Tax savings are not included in the cards below.
1 year
Property
$107,463
$143,809 gross equity
− $30,900 estimated selling costs
= $112,909 net equity
− $5,447 cumulative cash flow
Same cash in an index
$135,000
Index ahead by $27,537
5 years
Property
$172,204
$226,644 gross equity
− $34,778 estimated selling costs
= $191,865 net equity
− $19,662 cumulative cash flow
Same cash in an index
$183,666
Index ahead by $11,462
10 years
Property
$291,231
$350,162 gross equity
− $40,317 estimated selling costs
= $309,844 net equity
− $18,613 cumulative cash flow
Same cash in an index
$269,866
Property ahead by $21,365
20 years
Property
$693,334
$688,180 gross equity
− $54,183 estimated selling costs
= $633,997 net equity
+ $59,337 cumulative cash flow
Same cash in an index
$582,620
Property ahead by $110,714
Potential tax impact
You haven't said whether you can use the estimated $31,424 first-year tax benefit, so it is not included in the comparison above.
Hypothetical — not the expected result
If the full estimated first-year benefit were usable, the property result would be $31,424 higher at each horizon shown. This does not mean you qualify for the deduction.
- After 1 year: Property would be ahead by $3,887
- After 10 years: Property would be ahead by $52,789
- After 20 years: Property would be ahead by $142,138
This first-year tax benefit is added once and is not assumed to grow or compound.
How this projection is simplified
- • Rent and fixed costs (taxes, insurance, HOA, other) grow at your selected rates; maintenance, management and vacancy follow that year's rent.
- • The mortgage payment stays fixed for the selected fixed-rate loan. Property value grows at the selected appreciation rate every year, which does not happen in practice.
- • Property results include the selected selling-cost assumption but do not include taxes that may be due on sale, including capital gains or depreciation recapture.
- • Only the first-year tax benefit is modeled. Refinancing and future tax-law changes are not.
- • The index figure is a single lump sum with no contributions, withdrawals, fees or taxes.
Important disclosures
This calculator is for educational purposes only and provides estimates based on the assumptions entered. Actual depreciation, cost segregation classifications, passive-activity limitations, bonus depreciation eligibility, tax rates, property performance, appreciation, financing costs, depreciation recapture, and other tax consequences may differ. Consult a qualified tax professional and financial adviser regarding your individual circumstances.
- • Work Hard Mortgage is not providing tax advice through this calculator.
- • A cost segregation estimate is not a substitute for an actual cost segregation study.
- • Investment returns and property appreciation are not guaranteed.