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Introduction to the Rentals Payment Calculator
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Created March 2023
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If you have questions or need help to use this calculator, please send an e-mail to housingsolutions@jcfgives.org
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We recommend you download this calculator and save it before making a copy to use for your calcuations.
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This calculator is intended to provide an interacitve tool for a homeowner to explore the financial feasiblity of an affordable workforce rental unit. You can use the worksheet to estimate the monthly rent you will need to charge to cover your expenses (mortage payments, utilities, maintenace, etc.), pay taxes (property and income), and earn a net monthly income. You can then compare that rent with guidelines for affordable rents for various tenant incomes.
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You may enter data in the green shaded cells to perform "what if" calculations, such as "What if I take out a shorter duration loan?" The tool will then calculate the rent you need to charge. The cells not shaded green have been locked so you don't inadvertantly delete or alter the calculation formulas. If you wish to edit any of the locked cells, go to the Review Tab and select Unprotect Sheet.
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Disclaimer - This tool is intended to be a helpful learning aid for your project finances. You should consult experts to help you plan your project and prepare your taxes. You can learn more about tax on rental income the IRS Tips on Rental Real Estate Income, Deductions and Recordkeeping https://www.irs.gov/businesses/small-businesses-self-employed/tips-on-rental-real-estate-income-deductions-and-recordkeeping. There are many details about deductions allowed on rental income, and the Calcuator should only be used as a staring point to understand this topic.
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Some hypothetical data has been entered in the calculator for illustration purposes
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ItemAmountNotes
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Total cost of project $ 100,000 Site work, construction, permitting, sales tax
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Financing
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Amount to be financed by a loan $ 100,000
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Loan duration (months) 96
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Loan interest (%)7.000%
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Monthly loan payment $ 1,363.37 =
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Property tax
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Estimated increase in property assessed value $ 100,000 Default is total project cost
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Property tax rate ($/$1000 if assessed value) $ 10.00 Available on your property tax bill.
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Estimated increased property tax per month $ 83.33
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Monthly operating expenses
US Income Tax Brackets 2023
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Estimated monthly utilities $ 100.00 Electricity, water/sewer, internet, trash
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Estimated monthly maintenance $ 50.00 Choose an allowance for maintenance & repairsTax rateSingleMarried, filing jointlyMarried, filing separately
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Homeowner's insurance $ 50.00 Any increase in landlords homeowner's insurance10%$0 to $11,000$0 to $22,000$0 to $11,000
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Private mortgage insurance (PMI) $ - For mortgage downpayment less than 20%. Estimated at .75%12%
$11,001 to $44,725
$22,001 to $89,450
$11,001 to $44,725
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OtherProperty management, book keeper, etc.22%
$44,726 to $95,375
$89,451 to $190,750
$44,726 to $95,375
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Homeowner income24%
$98,376 to $182,100
$190,751 to $364,200
$98,376 to $182,100
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Desired net monthly income $ - Amount homeowner wants to net each month. Could be zero.32%
$182,101 to $231,250
$364,201 to $462,500
$182,101 to $231,250
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Total before income tax35%$231,251 to $578,125$462,501 to $693,750$231,251 to $578,125
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Expenses & income before income tax $ 1,646.71 Lines 21+25+(27 to 31)+3337%$578,126 or more$693,751 or more$578,126 or more
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Allowance for income tax expense
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Deduction for monthly expenses $ (200.00)Sum of monthly operating expenses
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Property tax deduction $ - Portion of your property tax allocated to the rental property
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Interest deduction $ (437.50)See Note 1
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Depreciation deduction $ (303.03)Optional. See Note 2
Affordate Rents for 1, 2 & $ Person Families
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Total deductions $ (940.53)Sum of lines 34, 35, 36
MI = 2022 Median Incomes for Jefferson County set by HUD
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Marginal Income tax rate24%Pick from table at right% MI1 person2 persons4 persons
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Allowance for income tax expense $ 223.00 IncomeRentIncomeRentIncomeRent
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Rent including allowance for income tax50% $ 27,875 $ 697 $ 31,875 $ 797 $ 39,813 $ 995
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Rent for 12 month occupancy $ 1,869.71 Rent to charge to cover expenses, income, & income tax80% $ 44,600 $ 1,115 $ 51,000 $ 1,275 $ 63,700 $ 1,593
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Adjustment for vacancy100% $ 55,750 $ 1,394 $ 63,750 $ 1,594 $ 79,625 $ 1,991
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Months rented per year11Estimate for vacancy rate120% $ 66,900 $ 1,673 $ 76,500 $ 1,913 $ 95,550 $ 2,389
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Rent adjusted for vacancy rate $ 2,039.68 Estimated rent to cover all expenses & desired net income150% $ 83,625 $ 2,091 $ 95,625 $ 2,391 $ 119,438 $ 2,986
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Note 1 - Loan interests payments are a deductible expense from rental income for federal tax purposes. Since to interest expenses will vary by month as the loan is paid off, only a guessestimate can be used here. For a start, the calculator uses 3/4 of the first month's interest. You can pick another choice.
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Note 2 - You may deduct the deprecation of the value of your rental property, or you may choose not to. One standard fo rental property is straight line depreciation over 27.5 years. For this worksheet, we use this schedule and the increased Assessed Value of the property. There are other depreciations schedules which allow greater deprecation in earlier years. More information can be found online. Note that when you selll the property, the basis for your property value will be decreased by the total depreciation amount.
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