Metrics
Tax Savings
Estimated monthly federal income tax saved by depreciation and (optionally) mortgage interest deduction at your marginal rate.
Why Tax Savings matters
Depreciation is the secret weapon of rental investing. A $400k property with 80% building value depreciates ~$11,600/yr (over 27.5 years), saving a 32% bracket investor ~$3,700/yr in tax — which is real after-tax cash flow you don't see in the basic numbers.
Related terms
After-Tax Cash Flow
Monthly cash flow plus estimated monthly tax savings from depreciation. The real number that hits yo…
Depreciation Period
27.5 years for residential rentals (IRS standard); 39 years for commercial. Determines annual non-ca…
Building Value %
Portion of purchase price allocated to depreciable building (not land). Defaults to 80% for SFR; lan…