Annual Rental Income Calculator Formula

Understand the math behind the annual rental income calculator. Each variable explained with a worked example.

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Formulas Used

Annual Rental Income

annual_income = monthly_rent * months_occupied

Annual Vacancy Loss

vacancy_loss = monthly_rent * (12 - months_occupied)

Effective Monthly Average

effective_monthly = (monthly_rent * months_occupied) / 12

Variables

VariableDescriptionDefault
monthly_rentMonthly Rent Collected(USD)2800
months_occupiedMonths Occupied Per Year(months)11

How It Works

Annual Rental Income

Annual rental income is the total rent collected over a year, accounting for any months the unit was vacant.

Formula

Annual Income = Monthly Rent x Months Occupied

Tax Reporting

  • All rental income must be reported on Schedule E
  • Include rent received, not rent billed
  • Short-term vacancies reduce your taxable rental income

    • Worked Example

    A property rents for $2,800/month and was occupied for 11 out of 12 months.

    monthly_rent = 2800months_occupied = 11
    1. 01Annual income: $2,800 x 11 = $30,800
    2. 02Vacancy loss: $2,800 x 1 = $2,800
    3. 03Effective monthly average: $30,800 / 12 = $2,566.67

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