Does this rental actually make money?

Every listing looks like a deal until the numbers meet the mortgage. This runs the four numbers investors and lenders actually use — cash flow, cap rate, cash-on-cash, and DSCR — plus the one most calculators skip: what depreciation does to the tax bill.

Residential depreciation over 27.5 years, straight from the code. The tax angle is where a rental quietly earns more than its cash flow shows.

The property

Purchase price

Down payment

Investment loans usually want 20–25% down.

Loan rate

Loan term

Land share of the price

Land doesn’t depreciate. The county’s assessment split is a fair starting point — 20% is common.

The income

Monthly rent

Vacancy allowance

Months empty, turnover gaps. 5–8% is honest for most markets.

The expenses (per year)

Property tax

Insurance

Repairs & maintenance

Honest number: 1% of the price a year is a common floor.

Property management

As % of collected rent. 0 if you self-manage — but your time isn’t free either.

The tax side

Your federal bracket

State tax on the rental income

Indiana county rate

Every Indiana county adds its own income tax on top of the 3.000% — rates differ by county and change year to year, so we ask instead of guessing. It’s on your county’s line of last year’s IT-40, or ask us. Enter 0 to leave it out.

The four numbers show up here.

Price, rent, and honest expenses — and you’ll know whether this property pays you, or you pay it.

Cash flow, year one

After the tax angle

Cap rate

NOI ÷ price — the unlevered read

Cash-on-cash

DSCR

—

Depreciation / yr

Here’s how it lands

The full year-one arithmetic ▶

Your moves

Numbers without a next step are just trivia.

Estimate only — a Delta review is required before acting. Rents, repairs, and rates never behave exactly like a spreadsheet, and whether the paper loss actually helps your return this year depends on the passive-activity rules and your income. We run the real numbers with you before you write an offer.

What this analysis assumes — out in the open

Year one, held long-term rental. Short-term rentals (Airbnb-style) run under different tax rules — often better ones. Ask us.
Depreciation is the building only — price minus your land share, straight-line over 27.5 years. It’s a real deduction against rent, and the reason a cash-flowing rental can show a tax loss.
The paper loss is flagged, not assumed usable. Rental losses are passive: up to $25,000 a year can offset regular income for active landlords, but that allowance phases out at higher incomes, and unused losses carry forward (they’re not gone — they wait). Whether yours is usable this year is exactly what we check.
State tax is whatever you tell it. Indiana is 3.000% plus your county’s own rate — every county sets one and they change, so you enter it rather than trust a stale table. Other states: your combined rate. The math assumes your state follows federal income like Indiana does; a few don’t, and an out-of-state property usually owes that state too — both review items.
Interest is year-one interest from the actual amortization schedule; it falls slowly each year as principal is paid.
Not modeled: appreciation, rent growth, closing costs, capital expenditures (roof, HVAC), the sale (depreciation recapture at exit), and cost segregation — which can pull depreciation forward dramatically on the right property. Review items, all of them.

Like the numbers? The tax side is where they get better.

Depreciation is just the default. Cost segregation, short-term rental treatment, and the right entity setup can turn a decent rental into a great one — and buying wrong can lock the benefits away. Send this over before you offer, and we’ll tell you what this property is really worth to you.

Reach your Delta team at (260) 440-2747 or info@deltacpagroup.com and we’ll walk through it with you.

We are always happy to talk it through.

Thank you,
Amy Grego, CPA Delta CPA Group, LLC · (260) 440-2747