Ordinary rental deductions
Track legitimate, documented rental expenses and depreciation. Personal expenses are not business deductions, and land itself is not depreciated.
These are planning estimates, not a tax-return calculation. Enter figures from your records or a tax professional. The example values are editable illustrations.
Rental depreciation scenario
Compare a first-year real-property baseline with a cost-segregation estimate you provide.
Purchase price plus eligible capitalized costs, before allocating land. Do not include financing costs or personal-use portions without professional guidance.
Land is not depreciable. Use a defensible allocation.
General MACRS recovery period; special cases can differ.
Used only for the real-property first-year mid-month baseline; enter the month the property was ready and available for rent or business use.
Use a qualified cost-segregation study estimate; this is not predicted by the calculator.
Enter the study’s estimate for eligible reclassified components in the tax year. The tool does not determine eligibility or prepare an asset schedule. Federal 100% bonus depreciation generally applies to certain qualified property acquired and placed in service after January 19, 2025; California generally does not conform. Check current IRS and FTB rules.
Passive-loss, basis, at-risk, and other limits may defer deductions. Enter your own estimate.
Illustrative federal rate
Use your applicable marginal rate. This flat-rate illustration does not calculate your full return or surtaxes.
Depreciable building basis—Total basis less land allocation.
First-year real-property baseline deduction—Straight-line illustration using the entered recovery period and mid-month convention.
Illustrative incremental first-year deduction—Entered study estimate less the first-year real-property baseline on the reclassified share. Not a depreciation schedule.
Assumed usable incremental deduction—Applies your entered usability percentage.
Estimated federal current-year tax effect—Usable incremental deduction × entered federal rate. A timing estimate, not permanent savings.
State depreciation tax effectNot calculatedState depreciation rules may differ from federal. California generally does not conform to federal bonus depreciation; see the linked FTB guidance.
Read this as a timing comparison. The federal result applies your entered flat marginal rate to an assumed usable incremental deduction. It does not calculate bonus eligibility, component conventions, elections, passive-loss limits, or a full tax return. Accelerating deductions can reduce basis and affect later deductions or gain/recapture. Rental losses are often limited; see the IRS passive-activity rules.
1031 exchange deferral scenario
Estimate the portion of a gain you expect to defer in a qualifying exchange. Get the gain and recognized amount from your tax professional or qualified intermediary.
Enter an estimate that accounts for adjusted basis and depreciation; the calculator does not determine gain or recapture.
Enter an estimate of currently recognized gain, including any taxable non-like-kind value. Rules can be complex.
User-entered illustration only; the tool does not classify gain, calculate recapture, NIIT, or apply tax brackets.
Potential gain deferred—Estimated gain less the amount you entered as recognized now.
Flat-rate illustration on entered gain (no exchange)—Entered gain × entered federal and state rates; not an estimate of actual tax liability.
Flat-rate illustration on entered recognized gain—Entered recognized gain × the same rates; actual gain character and tax can differ.
Illustrative amount postponed at entered rates—A simplified rate-based illustration, not actual tax savings or a tax liability. A qualifying exchange generally defers gain; it does not erase it.
Section 1031 is not a general-purpose sale strategy. This scenario uses gain and recognized-gain figures you enter; it does not determine either amount or compute depreciation recapture, gain character, deadlines, or actual tax liability. A qualifying exchange generally applies to real property held for business or investment, has strict process rules, and carries deferred gain into replacement-property basis. California can require continuing reporting for certain out-of-state exchanges.
MAP THE SYSTEM
Wealth architecture & cash-flow design
Sketch who owns each layer, then decide how available cash might be assigned across reserves, taxes, debt, reinvestment, and family goals.
The starting selections are examples. This planner organizes questions and dollars; it does not recommend an entity, create legal ownership, characterize a payment, or calculate tax savings.
Trust terms, tax classification, state law, and beneficiaries matter.
An entity name does not tell you its federal tax classification.
Legal form and tax election are separate questions.
Review title, loan, insurance, transfer, and property-tax effects before retitling.
State rules and recurring entity costs vary.
YOUR EDITABLE OWNERSHIP SKETCH
ACTIVE BUSINESS
INVESTMENT PROPERTY
DESIGN CASH FLOW
Assign the available monthly cash
Start with cash left after normal operating costs and scheduled debt payments. Set your own target percentages.
$
DestinationTargetMonthly illustrationAnnualized
%
%
%
%
%
%
Assigned target100%
Assigned cash per month$10,000
Unassigned cash per month$0
Your targets total 100%.
A cash allocation is not a tax deduction or permission to transfer funds. Entity agreements, lender terms, payroll and distribution rules, fiduciary duties, and actual tax obligations still control. A “tax reserve” is only a planning target, not a tax estimate.
What the scenarios include
Cost segregation
A qualified study may identify components with different recovery periods. The calculator uses the study's estimate; it does not decide what qualifies or prepare depreciation schedules.
Like-kind exchange
A qualifying exchange can defer eligible gain. The exchange has detailed requirements and may create current recognition when money or other non-like-kind value is received.
Primary references
- IRS Publication 527: Residential Rental Property — depreciation, rental expenses, and loss limitations.
- IRS Publication 946: How To Depreciate Property — recovery periods and special depreciation rules.
- IRS: Like-kind exchanges — real estate tax tips — qualification and recognized gain.
- IRS Publication 925: Passive Activity and At-Risk Rules — limits that may delay rental losses.
- California FTB Publication 1100 — California tax treatment and reporting for like-kind exchanges.
- California FTB: Summary of Federal Income Tax Changes — California’s treatment of federal bonus depreciation changes.
Ownership and entity references
- IRS: Federal tax treatment of LLCs — legal LLC form and federal tax classification are separate.
- IRS: S corporation eligibility — permitted shareholders and election requirements.
- IRS: Trust taxation and abusive-trust warnings — grantor taxation and limits on assigning income.
- California FTB: LLC tax booklet — filing, annual tax, and income-based fee rules.
- California FTB: Corporation rules — C corporation and S corporation taxation and franchise tax requirements.
- California BOE: Change-in-ownership FAQs — property transfers, reassessment, and exclusions.