Calculator formulas
- Equity = estimated value − loan balance
- Effective gross income = gross scheduled rent − vacancy allowance
- Net operating income = effective gross income − operating expenses (excluding debt service, income tax and depreciation)
- Cap rate = net operating income ÷ value
- Annual cash flow = net operating income − annual debt service
- Operating return on equity = net operating income ÷ equity
- Cash return on equity = annual cash flow ÷ equity
- Debt coverage ratio = net operating income ÷ annual debt service
- Adjusted basis = purchase price + capital improvements − prior deferred gain − depreciation ± other adjustments
- Realized gain = (sale price − selling costs) − adjusted basis
- Exchange deadlines = closing date + 45 calendar days and + 180 calendar days
Tax assumptions
- California does not apply a single flat capital gain rate. California generally taxes capital gain as ordinary income at the taxpayer's marginal rate, so the assumption above should be replaced with a rate your CPA confirms.
- The Net Investment Income Tax applies only above certain income thresholds and may not apply to you.
- Depreciation claimed or allowable may be subject to unrecaptured Section 1250 treatment at a different rate than long-term capital gain.
Market data
Source: August 2026 Exchange Resources, Inc. presentation, citing public county and association data. Last reviewed August 2026.
Authoritative references
Tax content last reviewed August 2026. Market data last reviewed August 2026.
Important: These calculations are for general educational and planning purposes only. They aren't an appraisal, tax calculation, legal opinion, investment recommendation or guarantee of results. Tax basis, depreciation, exchange eligibility and tax consequences can vary substantially based on individual facts. Review your specific situation with your CPA, attorney, qualified intermediary and other appropriate professionals before acting.