How to Add a Rental Property

If you own a property that you rent out to tenants, you can add it to ProjectionLab as a Real Asset. Once it’s added, your plan can include the rent it brings in, the costs of owning it, and how its value changes over time.

In this article, we’ll walk through adding a rental property step by step. Let’s say you own a condo you bought for $300,000, it’s worth $350,000 today, and you still owe $200,000 on the mortgage.

Add Your Rental Property

1. Click the pie chart icon on the left side of your screen to open Current Finances.
2. Click Real Assets in the middle of the page.
3. Click + Add Asset at the bottom of the Real Assets section. An Add Asset pop-up will appear.
4. Click Rental Property. It’s in the second row, on the left.
5. Enter your Purchase Price, the amount you originally paid. In our example, that’s $300,000.
6. Enter the Current Value, your best estimate of what it’s worth today. In our example, that’s $350,000.
7. Under Owner, choose who owns the property. The dropdown shows your name, and your partner’s name if you’re planning as a couple.

Rename Your Property

Your new asset will be named “Rental Property” by default. If you own more than one, giving each a clear name makes them easier to tell apart. To rename it, click the Pencil icon next to Rental Property and type a new name, such as “Downtown Condo.”

Add Your Mortgage

The Status dropdown tells ProjectionLab whether you still owe money on the property.

• Choose Fully Owned if you paid cash or have already paid off the mortgage.
• Choose Financed if you still have a loan on it.

Choosing Financed will reveal these additional fields:

• Current Loan Balance: the amount you still owe. In our example, that’s $200,000.
• Annual Percentage Rate: your mortgage interest rate.
• Interest: choose Simple or Compounded. Simple means interest is charged only on the loan balance. Compounded means unpaid interest is added to the balance, so you’re charged interest on it too. It’s set to Simple by default.
• Monthly Payment: your total monthly mortgage payment.

Once you fill these in, you’ll see Years to pay off calculated for you. The number is underlined, and you can click it to change it, and your monthly payment will adjust to match. This is a helpful way to see how paying the mortgage off faster could change your plan.

Add Rental Income and Costs to Your Plan

Current Finances holds what your property is worth today. The rent it brings in and the costs of owning it are set inside each plan.

1. Click Dashboard on the left side of your screen.
2. Under Plans for the Future, click the card for the plan you want to update.
3. On the Plan tab, scroll down below the chart to Real Assets.
4. Click your rental property, for example, “Downtown Condo.”

Usage

Click Usage. Rental properties are set to Other Property under Property Type, which unlocks the rental options. Primary Residence is for the home you live in, so it doesn’t include these options.

Toggle on Generate rental income to include rent in your plan. You can toggle it off at any time, such as when the property will sit empty for a while. Click Save when you’re done.

Rental Income

Click Rental Income. Under Yearly Income, your rental income starts at 8% of the property’s value. To change how it’s calculated, hover over % of Value at the right side of the field. This opens More Options, with three icons across the top. Click an icon to see its name and description, and to choose it:

• % of Value: your rental income is a percentage of the property’s value at the beginning of each year, so it rises and falls as the property’s value changes. This is the default.
• Today’s Currency: a dollar amount in today’s dollars that grows with inflation.
• Actual Currency: a fixed dollar amount that doesn’t adjust for inflation.

Let’s say your condo rents for $2,200 a month, and you expect the rent to keep pace with inflation. Choose Today’s Currency and enter $26,400, the yearly total.

If you pay a property manager, enter your annual property management costs here too.

Ownership Costs

Click Taxes to add your Yearly Property Tax. It starts as % Assessed. If you’d rather enter a dollar amount, click % Assessed to switch to Actual Currency or Today’s Currency.

You can also add yearly maintenance, improvement, and insurance costs, plus monthly HOA fees. Each yearly cost can be a percent or a dollar amount. Click Save when you’re done.

Taxes on Rental Income

If you’re using US tax estimation, you’ll find tax settings for your rental in Usage, below Generate rental income. These settings only appear when Generate rental income is toggled on. Apply QBI Deduction, Initial Building Value, and Tax Treatment also need Estimate Rental Deductions toggled on to appear.

• Self-Employment Income: toggle this on if your rental income is subject to self-employment taxes. It’s off by default.
• Estimate Rental Deductions: automatically estimates tax deductions for depreciation, mortgage interest, and other rental expenses.
• Apply QBI Deduction: toggle this on if you qualify for the QBI, or Qualified Business Income, deduction. It lets eligible taxpayers deduct up to 20% of their qualified business income. It’s off by default.
• Initial Building Value: the value of the building itself, not counting the land. ProjectionLab needs this to estimate yearly depreciation. It starts at $0, so be sure to fill it in if you want depreciation included.
• Tax Treatment: set to Residential by default, for residential property with a useful life of 27.5 years.

Click Save when you’re done.

To see how your rental income is taxed each year, click the Tax Analytics tab at the top of your plan.

Plan to Sell Your Rental Property

If you expect to sell the property someday, you can add the sale to your plan.

1. On the Plan tab, scroll down to Real Assets.
2. Click your rental property.
3. Click Sale.
4. Choose when to sell: never, at a milestone such as Retirement, or in a specific month, such as January 2035.

If you choose to sell, you’ll be asked to:

• Add a Broker’s Fee.
• Toggle Reduce Capital Gains Tax on or off. If it’s on, choose a percent to reduce capital gains tax by.
• Choose where to Send Proceeds: automatically, which is recommended, or to a specific account.

The sale will appear as an icon above the chart on your Plan tab. Click it to jump back to the sale settings.

Buying a Rental Property in the Future

If you’re planning to buy a rental property later, you can add it to a plan instead of Current Finances and choose when the purchase happens. You can tie the purchase to a milestone or set a specific date.

1. If you’d like to use a milestone, create one for the purchase first. In your plan, click Settings, then Milestones. Scroll down to + Add Milestone and give it a name, such as “Buy a Rental Property.” To learn more about milestones, see Adding, Activating & Deactivating Milestones.
2. On the Plan tab, scroll down below the chart to Real Assets. Click + Add Asset, then choose Rental Property. To learn more, see How do I add Real Assets?.
3. Click your rental property, then click Purchase.
4. Under Purchase Date, choose when you’ll buy the property. Pick your milestone from the dropdown, or choose a specific date, such as June 2030.
5. Enter the Purchase Price, the amount you’ll pay for the property.
6. Enter the Market Value, what the property will be worth when you buy it.
7. Under Payment Method, choose how you’ll pay for it. If you choose Financed, click Financing to add your loan details.

A milestone is a good fit if the timing depends on something else in your plan, since the purchase will move along with that milestone if its timing changes. A specific date stays fixed.

From there, set up Usage, Rental Income, and your ownership costs the same way as described above.