How to use the rental income tax calculator
In the United States rental income is not taxed under a separate flat rate the way Korean housing rental income can be. It is reported on Schedule E and added to your other income, so this calculator follows the actual U.S. path: rent minus operating expenses minus depreciation, then the Section 199A deduction and the passive activity loss limit. Figures reflect the 2026 tax year.
Depreciation uses the 27.5-year straight-line recovery period for residential rental property under 26 U.S.C. 168(c). Only the building basis is depreciated, so land value is excluded. Section 199A can allow up to a 20% deduction on qualified business income when the rental rises to a trade or business.
If expenses and depreciation exceed rent, the loss is passive under 26 U.S.C. 469. Taxpayers who actively participate may deduct up to a $25,000 special allowance, reduced by 50 cents for every dollar of modified adjusted gross income above $100,000. Anything not allowed is suspended and carried forward.
Rates, thresholds and the Section 199A rules change, so treat this as an estimate rather than a filing figure. Your actual liability depends on other income, state tax, the 3.8% net investment income tax and depreciation recapture at sale. Check current IRS instructions for Schedule E or ask a tax professional before filing.
Frequently Asked Questions
Residential rental buildings are recovered over 27.5 years of straight-line depreciation under 26 U.S.C. 168(c). The deduction lowers taxable rental income now and is recaptured when you sell the property.
Under 26 U.S.C. 469 passive losses beyond the special allowance are suspended and carried forward to offset future passive income or the gain when the property is sold.
No. Section 199A applies only when the rental activity rises to a trade or business, and it phases out at higher taxable income. Set the rate to 0 if you do not qualify and confirm with a tax professional.