Loading page
Compare total ROI and annual IRR from your prepared rental-property cash flows, with property growth and separate loan, tax and sale-cost assumptions.
Return on investment
70.00%Total return over the entered holding periodAnnual IRR
12.66%Timing-adjusted rate for annual cash flowsROI compares net cash profit with total cash invested; IRR reflects when the annual cash flows occur.
Example: starting property value of $300,000, $170,000 of loan repaid at sale and no tax on sale.
Rates as of
This calculator uses a year 0 investment followed by one net cash flow at the end of each holding year. From that timeline it calculates a total return and an annual internal rate of return. The inputs are your cash-flow assumptions, not a prediction of rents, property prices or the amount a buyer will pay.
Enter the initial cash investment as a negative year 0 amount. For later years, enter a positive amount when money comes back to you and a negative amount when you contribute more. Keep the same ownership share and currency throughout. Each year’s figure should already include operating costs, regular borrowing payments and applicable rental-income tax.
Keep the final year’s operating cash flow separate from the sale. The calculator projects the sale value from growth, then deducts your loan repayment at sale, disposal tax and selling costs once. Do not also include these amounts in an annual cash flow.
Sale proceeds, less the sale adjustments, are added to the final year’s cash flow. Net profit is the sum of all signed cash flows. ROI is net profit divided by the cash invested, multiplied by one hundred. Cash invested is the total of all negative cash flows, so later contributions count as well as the initial investment.
IRR is the annual rate at which the discounted cash-flow total equals zero. Year 0 is not discounted; each later flow is divided by one plus the rate raised to its year number.
Year 0 is -$100,000. Years 1 to 4 each return $8,000. The final year has the same $8,000 operating cash flow. A starting property value of $300,000 and zero growth give sale proceeds of $130,000 after the $170,000 loan repayment. Sale tax and selling costs are zero, so the final combined cash flow is $138,000.
Total cash received is $170,000 against $100,000 invested, leaving $70,000 of net cash profit. ROI is 70.00% over five years. Discounting the annual flows gives an IRR of approximately 12.66% a year.
Growth compounds annually on the whole entered property value. It does not compound your deposit, increase the annual rental cash flows or change the loan balance automatically. Zero growth keeps the starting property value unchanged; minus one hundred percent means no sale proceeds.
The loan repayment and tax at sale are your own figures for that sale scenario; no mortgage schedule or tax liability is calculated. Check them again after changing growth or hold years.
The calculation assumes equally spaced annual flows and one net figure per year, so it is not an irregular-date return calculation. Netting several transactions into a single year-end amount can hide the timing of money invested and withdrawn during that year. Cash flows with more than one sign change leave IRR unresolved because multiple rates can exist; ROI is still shown.
IRS Publication 527 describes rental income and deductions; sale proceeds are separate from annual taxable rental profit. Enter applicable disposal taxes only in the tax-on-sale field, including any recapture and state or local tax you have calculated. These liabilities are not inferred from a property growth rate.
The sources below explain why a cash receipt, deductible expense and taxable gain need different treatment. No country tax rate is applied inside the ROI or IRR formula. Zero disposal tax gives a before-tax comparison and does not establish a legal exemption; an after-tax comparison needs after-tax annual flows and a separately entered disposal-tax amount.
Ask an accountant or tax advisor to check the cash-flow series before a purchase or sale decision, especially where ownership is shared, losses are restricted, a company holds the property or depreciation affects a sale. Ask the lender for a reliable settlement balance when estimating the final proceeds.
Enter your initial cash investment as a negative number. Include your actual cash contribution and acquisition costs in that figure, rather than treating a borrowed purchase price as cash invested.
Enter only the final year’s operating cash flow after regular loan payments and applicable income tax. The calculator adds projected property-sale proceeds separately and deducts the entered loan balance, disposal tax and sale costs once. Do not include those sale amounts in the annual cash flow.
The starting property value grows by the entered percentage each year over the holding period. This projects the sale price, not your rent or cash investment. Recalculate the separate loan and tax assumptions when changing the holding period or sale scenario.
ROI compares total net cash profit with total cash outflows. IRR accounts for the timing of annual flows by finding the annual rate that makes their discounted sum zero. The two percentages describe different aspects of the same investment.
A series without a sign change has no IRR under this calculation. Multiple sign changes may produce multiple rates, so those cases remain unresolved. The calculator also explains if a rate cannot be represented reliably, rather than selecting an arbitrary percentage.
See what remains after running costs, mortgage payments and income tax.
See the weekly and annual effect of rent, costs, borrowing and income tax.
Compare rent, operating costs and Canadian mortgage payments in one estimate.
