Rental Income Tax Calculator

Common deductions include mortgage interest, property taxes, landlord insurance, repairs and maintenance, property management fees, and depreciation. Depreciation is typically calculated over 27.5 years for residential rental property under MACRS. These deductions reduce net rental income before calculating the tax owed. Consult a tax professional to ensure you claim all allowable deductions correctly.

Rental income is generally classified as passive income. If your rental expenses exceed income, the resulting passive loss can usually only offset other passive income. However, if your adjusted gross income is below $100,000 and you actively participate in managing the property, you may deduct up to $25,000 of passive losses against ordinary income. Consult a tax advisor for your specific situation.

Rental income is taxed as ordinary income at your marginal federal rate, not at the lower capital gains rate. Unlike wages, rental income is generally not subject to Social Security or Medicare (FICA) taxes. However, if the IRS determines you are a real estate professional, different rules may apply. Always verify your classification with a qualified tax professional.

Yes. If you expect to owe more than $1,000 in federal tax from rental income after withholding, the IRS requires quarterly estimated tax payments due in April, June, September, and January. Underpayment penalties apply if you miss these. Use IRS Form 1040-ES to calculate and submit estimated payments. A tax advisor can help you plan accurately throughout the year.