Advertiser Disclosure

advertising disclaimer
Skip to main content
houses for rent sign

Real Estate 101: How Rental Properties Are Taxed

Before you buy your first rental property, it’s important to understand the tax implications.

[Updated: Mar 03, 2021 ] Aug 22, 2019 by Matt Frankel, CFP

Get our 43-Page Guide to Real Estate Investing Today!

Real estate has long been the go-to investment for those looking to build long-term wealth for generations. Let us help you navigate this asset class by signing up for our comprehensive real estate investing guide.

Item Amount
Rental income $24,000
Mortgage interest ($8,000)
Insurance ($1,500)
Property management ($2,400)
Taxes ($3,000)
Other deductible expenses ($1,000)
Rental income after property expenses $8,100
Item Amount
Rental revenue $31,200
Expenses ($20,620)
Deprecation ($8,182)
Taxable income $2,398
Vacation Home In The Mountains

Click to enlarge

Getty Images
Individual Using Calculator for Personal Taxes

Click to enlarge

Getty Images
Long-Term Capital Gains Tax Rate Single Filers (Taxable Income) Married Filing Jointly Head of Household Married Filing Separately
0% $0–$40,400 $0–$80,800 $0–$54,100 $0–$40,400
15% $40,400-$445,850 $80,800-$501,600 $54,100-$473,750 $40,400-$250,800
20% Over $445,850 Over $501,600 Over $473,750 Over $250,800

Data Source: IRS.

Got $1,000? The 10 Top Investments We’d Make Right Now

Our team of analysts agrees. These 10 real estate plays are the best ways to invest in real estate right now. By signing up to be a member of Real Estate Winners, you’ll get access to our 10 best ideas and new investment ideas every month. Find out how you can get started with Real Estate Winners by clicking here.