1. What Are Allowable Expenses Against Rental Property?

Allowable expenses are costs you can deduct from your rental income to calculate your taxable profit. These may include maintenance, repairs, insurance, property management fees, and other costs directly related to renting out your property.

2. How Does the Calculator Work?

The calculator uses a simple formula:

Where:

• \( Rental\ Income \) — Total income received from tenants
• \( Allowable\ Expenses \) — Qualified expenses that can be deducted

Explanation: The calculation shows your net profit from rental property after accounting for legitimate business expenses.

3. Importance of Calculating Rental Profit

Details: Accurate profit calculation is essential for tax reporting, financial planning, and assessing the viability of your rental property investment.

4. Using the Calculator

Tips: Enter your total rental income and all allowable expenses in . Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What counts as an allowable expense?
A: Generally, expenses wholly and exclusively for rental purposes, like repairs, insurance, agent fees, and utility bills you pay.

Q2: Can I deduct mortgage payments?
A: Typically only the interest portion of mortgage payments is deductible, not the principal repayment.

Q3: Are capital improvements deductible?
A: No, capital improvements must be depreciated over time rather than deducted as immediate expenses.

Q4: What if my expenses exceed income?
A: You may have a rental loss which could potentially offset other income (subject to tax rules).

Q5: Should I keep receipts?
A: Yes, maintain detailed records of all income and expenses for at least the required tax retention period.