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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

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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
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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.

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