REAL ESTATE CALCULATORS(More Info)
DESCRIPTION OF INPUT VARIABLES © 2005 - 2007

 
DESCRIPTION OF INPUT VARIABLES
Back To HOME Page

Percent Residential Non Rental Property - Percent of the property you occupy as your primary residence. As an example if you own a four family home and occupy one of the units while renting out the other three units, then 1/4 or 25% of the building would be considered residential owner occupied property while the other 3/4 or 75% would be considered rental property. There may be alternative methods for determining this breakdown, such as by square footage rather than by dwelling units. You should determine this with your tax specialist.

Current Value - This is the market value, the appraisal value or the estimated price the property would sell for in the period determined.

Purchase Price - This is the price the property was purchased for and is used to establish a basis for the property.

Out Of Pocket - Your cash investment as a percent of the purchase price or total costs.

Current 30 Year Fixed Mortgage Rate - This is exactly as described. It is the current 30 year fixed mortgage rate based on current market conditions. Since many funding sources offer slightly different rates, it is a good idea to select a number of the most competitive quoted rates and then to either average them or just pick a rate in between. Do not select rates quoted that reflect or include discount points. These rates are adjusted to reflect the discount points paid. It is better to select zero discount point rates.

Closing Costs - As a percentage of financing. Only used in construction and renovation models in order to determine soft costs.

Rehab Costs - If there were any major improvements that could be added to the basis such as rehab costs then you should add this to your rehab costs. It is up to you to determine whether the improvements are allowable additions to your property basis based on IRS code.

Discount Rate - The rate used to discount the cash flows of a commercial project in order to determine the NPV (net present value) of the project.

Mortgage Amount - This is your mortgage amount and is used in determining your mortgage payment. This number is also used in determining the amortization of your loan over our five years forecast analysis. This variable is only used for properties not yet acquired because it assumes that your loan has not begun the amortization process, i.e. you have not yet made the first payment on your anticipated loan.

Original Mortgage Balance (First) - This is the original mortgage balance of your most current first mortgage loan. So if you have refinanced the original loan used to acquirer the property, then you would enter the starting balance of the most current loan. This variable is ONLY used to calculate you current mortgage payment, hence this amount should reflect the original principal amount of your current mortgage loan. This variable is only used for properties already acquired because it assumes that your loan has already begun to amortize, i.e. you have already made numerous payments on your existing loan.

Original Mortgage Balance (Second) - This is the original mortgage balance of your most current second mortgage loan. So if you have refinanced the original loan used to acquirer the property, then you would enter the starting balance of the most current loan. This variable is ONLY used to calculate you current mortgage payment, hence this amount should reflect the original principal amount of your current mortgage loan. This variable is only used for properties already acquired because it assumes that your loan has already begun to amortize, i.e. you have already made numerous payments on your existing loan.

Remaining Mortgage Balance (First) - This is the remaining outstanding balance on your first mortgage. This is used to determine the net equity in the property by subtracting the remaining mortgage balance from the estimated sales price. This number is also used in determining the remaining balance on your loan over your five years forecast analysis as the loan amortizes. This variable is only used for properties already acquired because it assumes that your loan has already begun to amortize, i.e. you have already made numerous payments on your existing loan.

Remaining Mortgage Balance (Second) - This is the remaining outstanding balance on your second mortgage. This is used to determine the net equity in the property by subtracting the remaining mortgage balance from the estimated sales price. This number is also used in determining the remaining balance on your loan over your five years forecast analysis as the loan amortizes. This variable is only used for properties already acquired because it assumes that your loan has already begun to amortize, i.e. you have already made numerous payments on your existing loan.

Mortgage Term - This is the term of the mortgage loan.

Mortgage Rate - This is the rate of the mortgage loan. Only fixed rate amortizing loans can be processed using any of these models. These models will not yet process variable rate loans or interest only loans.

Rent - This is the annual rent the property generates.

Real Estate Taxes - This is the annual real estate taxes.

Maintenance - This should include the annual insurance, water, maintenance and repairs or any other expenses that you want to include in the analysis.

Ordinary Income Tax Rate (A) - This would be an estimate of your ordinary income tax rate and is used in this analysis to determine any benefit from deducting allowable homeowners expenses such as mortgage interest and real estate taxes. It is up to you to determine this tax benefit as a percentage of mortgage interest and real estate taxes. The benefit of deducting mortgage interest and real estate taxes can vary substantially depending on each individuals circumstances and in some cases may present NO benefit at all.

Can You Deduct Mortgage Interest and Real Estate Taxes From Your Personal Income Taxes? - Select YES if you would like to apply ordinary income tax rate (A) to the sum of mortgage interest and real estate taxes in estimating a tax benefit for these personal expenses. Select NO if you would not like to calculate any tax benefit from personal mortgage interest and real estate taxes.

Ordinary Income Tax Rate (B) - This would be an estimate of your ordinary income tax rate and is used in this analysis to determine any taxes on net rental income after deducting operating expenses and depreciation. If you have a net operating loss from rental property operations and you are allowed to deduct operating losses from rental property activities rather than carry them forward, then this number is used to calculate the benefit associated with those losses. It is up to you to determine this tax benefit or tax liability as a percentage of rental property operating gains or losses respectively.

Can You Deduct Operational Losses From Your AGI? - Select YES if you believe that you can deduct operating losses from real estate activities against your personal income taxes. Select NO if you believe that you are not eligible to deduct operating losses from real estate activities against your personal income taxes. If you select NO operating losses from real estate activities will be carried forward until the property is sold. Once the property is sold accumulated loss carry forward will be applied to and gain you have on the sale of business property.

Federal Capital Gains Tax Rate - This figure is used to determine the amount of federal taxes due as a percentage of any gain on the sale of the property after any allowable tax exclusion. It is up to you to determine the tax rate that would apply to you.

State Capital Gains Tax Rate - This figure is used to determine the amount of state and local taxes due as a percentage of any gain on the sale of the property after any allowable tax exclusion. It is also used to determine the amount of state taxes due as a percentage of any depreciation recapture on the sale of the property. It is up to you to determine the tax rate that would apply to you. When people discuss the federal capital gains tax, they often overlook their state may tax the gain on the sale of property as ordinary income as well.

Will you qualify for the $250,000/$500,000 capital gains tax exclusion at the time of sale? - This should indicate whether you qualify for an exclusion on any gain you have on the sale of the property. If you indicate that you qualify for the federal exclusion, this model assumes that 1) your state allows for the exclusion and 2) you would be eligible for the state exclusion as well. You need to check and see if your state has and allows for an exclusion.

In summary the IRS allows an exclusion of up to $250,000 for single individuals and $500,000 for married couples filing jointly on the sale of a principle residence.  The exclusion can usually be claimed only once every two years.  In order to qualify you must have owned and lived in the residence (as your primary residence) for two of the last five years before the sale. The ownership and use periods need not be concurrent and can consist of 24 months or 730 days. For homeowners that are not married the exclusion of up to $250,000 each would apply as long as both individuals meet the qualifying exclusion requirements. The tax law provides for an exemption of the two year rules for use and ownership, when the primary reason for the sale is health, change in place of employment, or “unforeseen circumstance” as defined or determined by IRS regulation. This information comes from the www.irs.gov website and can be found under http://www.irs.gov/newsroom/article/0,,id=105042,00.html titled, “IRS Issues Home Sales Exclusions”.

How much of an exclusion will you get? - In summary the IRS allows an exclusion of up to $250,000 for single individuals and $500,000 for married couples filing jointly on the sale of a principle residence.  The exclusion can usually be claimed only once every two years.  In order to qualify you must have owned and lived in the residence (as your primary residence) for two of the last five years before the sale. The ownership and use periods need not be concurrent and can consist of 24 months or 730 days. For homeowners that are not married the exclusion of up to $250,000 each would apply as long as both individuals meet the qualifying exclusion requirements. The tax law provides for an exemption of the two year rules for use and ownership, when the primary reason for the sale is health, change in place of employment, or “unforeseen circumstance” as defined or determined by IRS regulation. This information comes from the www.irs.gov website and can be found under http://www.irs.gov/newsroom/article/0,,id=105042,00.html titled, “IRS Issues Home Sales Exclusions”.

Depreciation Recapture Federal Tax Rate - This figure is used to determine the amount of federal taxes due as a percentage of any depreciation recaptured on the sale of the property. It is up to you to determine the tax rate that would apply to you.

Any Prior Year Carry Forward Losses - This figure is used to either offset any subsequent years profit or to offset any taxes due from a gain on the sale of the property at a later date.

To Date Accumulated Depreciation - This would be the depreciation that was taken on the property in any of the previous years up to and including through the time of sale. Depreciation must be recaptured and taxed at the federal, state and sometimes the local level. In most instances the federal depreciation recapture tax rate is 25% and the depreciation recapture is taxed at the state and local level using your state and local ordinary income tax rates. This number can NOT be greater than building value.

Building Value - For depreciation purposes you must separate building value from land value. Depreciation is calculated on a straight line basis for 27.5 years unless you are using a commercial model. Enter the structure value and include any rehab costs that are eligible for the 27.5 years straight line method. If you have already partially depreciated the property, do NOT deduct this amount from the building value and any eligible rehab costs. Instead enter the accumulated depreciation in the "To Date Accumulated Depeciation" field. If you are using a multi family real estate investment model, do NOT adjust for the percent which is residential non rental property. This will be automatically calculated using the percent figure you entered for the percent residential non rental property.

Appreciation/Depreciation of Asset - This is your estimate of the projected annual increases or decreases in the value of the property over the next 5 years.

Increase/Decrease Rent - This is your estimate of the projected annual increases or decreases in the rent over the next 5 years.

Increase/Decrease Real Estate Tax - This is your estimate of the projected annual increases or decreases in the real estate taxes over the next 5 years.

Increase/Decrease Maintenance - This is your estimate of the projected annual increases or decreases in the maintenance over the next 5 years.

Any Prior Year Carryforward Losses - If you had losses in prior years and answered "NO" to the previous question then you may have had losses that you carried forward. This number can NOT be greater than "Building Value" multiplied by the percentage of the asset that is rental property. If you had losses in prior years and answered "NO" to the previous question then you may have had losses that you carried forward.

Recovery Period
- This is the period used to determine the annual depreciation expenses for a commercial property. Please note that only the straight line depreciation method is used.

Will out of pocket be a percent of the purchase price or total costs? - Used to determine the dollar amount financed.

Net Operation Income (NOI) - NOI is a company’s operating revenues after deducting operating expenses. Operating expenses consists of real estate taxes, maintenance, repairs, insurance, and general maintenance. However, NOI is before deducting interest expense, depreciation and income taxes. For a futher explaination click here.

By Using This Website You Agree That You Have Read and Understand Our Disclaimer!

Analytical Finances, Inc. Contents © 2005 - 2007

Sedo - Buy and Sell Domain Names and Websites project info: Statistics for project etracker® web controlling instead of log file analysis

Total Real Estate Solutions Top 100 Best