After-Tax Yield Calculator
See what a distribution yield is actually worth after tax once depreciation shelters part of it, and what a fully taxable bond or CD would have to pay to match.
This assumes a new-cash purchase. In a 1031 exchange, depreciation carries over from the property you sold, so your actual first-year shelter is often lower than shown.
A simplified estimate. Actual depreciation also depends on the cost-segregation study and placed-in-service date, can be higher in early years, declines later in the hold, and is recaptured at sale.A bond or CD typically carries lower principal risk and more liquidity than a DST. Equal yields do not mean equal risk.
Because depreciation can shelter a large share of a real estate distribution from current tax, the after-tax yield can be higher than a fully taxable investment paying the same headline rate. Leverage raises the shelter, because depreciation is taken on the whole property while the distribution is paid on your equity. A 1031 exchange can defer capital gains and depreciation recapture tax by reinvesting sale proceeds into a like-kind replacement such as a DST. The sheltered share is not guaranteed and is generally recaptured at sale.
Educational use only. This calculator is a hypothetical illustration based only on the figures you enter. It is not tax, legal, or investment advice, and it is not a promise of any return. Distributions are projected, not guaranteed, and can be reduced, suspended, or eliminated. The depreciation shelter is a simplified estimate that assumes a new-cash purchase and does not reflect 1031 carryover basis, cost segregation, or passive-activity limits. It varies by offering, is reported each year on your Schedule K-1 or grantor-trust letter, and the sheltered amount reduces your basis and is generally recaptured when the property is sold. No offer to sell securities is being made on this page. Confirm every figure with your CPA before acting.
After-tax yield
The headline distribution rate is a pretax number. Only the portion not sheltered by depreciation is taxed at your marginal rate, so the yield you keep is usually higher than a simple rate-times-after-tax calculation suggests.
Depreciation shelter
Real estate depreciation can offset a large share of the cash paid out, so part of the distribution is treated as return of capital. That share varies by offering, is reported on your tax documents, and is generally recaptured at sale.
Tax-equivalent yield
To compare a tax-advantaged real estate distribution against a fully taxable bond or CD, the tax-equivalent yield shows the pretax rate that other investment would need to leave you the same after-tax cash.
Compare your after-tax income options
We can walk through how DST distributions are taxed, how much of a given offering is typically sheltered by depreciation, and how a 1031 exchange defers the tax on the property you sell to get there.