What is a good cap rate?

It depends entirely on market and asset class, so there is no universal number. A cap rate is a price-to-income ratio, not a quality score: a low cap rate means you paid more per dollar of income, which is normal in low-risk, high-demand markets. Compare a property only against recent sales of similar assets in the same submarket.

Does the cap rate include my mortgage?

No. Cap rate is deliberately unlevered — it measures the property, not your financing. Debt service never belongs in NOI. That is what makes cap rates comparable between a cash buyer and a leveraged one.

What counts as an operating expense?

Property taxes, insurance, management, repairs and maintenance, utilities you pay, HOA or admin, and turnover costs. Excluded: mortgage principal and interest, capital improvements, depreciation, and income taxes. Putting any of those four in opex understates NOI and makes the cap rate look worse than it is.

Cap rate or cash-on-cash return — which should I use?

Both, for different questions. Cap rate compares properties to each other independent of how you pay for them. Cash-on-cash measures what your specific deal returns on the cash you actually put in, after debt service.

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Excess Business Loss Calculator

Section 461(l) caps how much business loss can offset wages, interest and other non-business income. It is the fourth and last limit a loss has to clear, and it is the one almost nobody plans for. Enter your numbers to see what lands this year and what carries forward. Nothing you type leaves your browser.

This limit applies after the other three. Basis, then at-risk, then passive activity, then this. Real estate professional status and the seven-day short-term rental rule win the third gate and do nothing at the fourth. Solar and oil and gas deductions reach it the same way.

Filing statusSets the annual threshold

Tax yearThe threshold fell for 2026 when OBBBA reset the inflation base

Business deductionsAll trades and businesses combined, both spouses on a joint return. Depreciation, cost segregation, section 179, solar, oil and gas.

Business income and gainsFrom those same trades or businesses. Not wages, not portfolio income.

Wages and other non-business incomeW-2, interest, dividends, retirement distributions. This is what the loss is trying to reach.

Your marginal tax rate %Federal and state combined

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Loss usable against non-business income this year

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Estimated tax saved this year

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Deferred as an NOL carryforward

What this assumes. Thresholds are the official amounts in Rev. Proc. 2025-32 for 2026 and Rev. Proc. 2024-40 for 2025. The calculation treats the loss as having already cleared basis, at-risk and the passive activity rules — if it has not, none of it is usable yet regardless of this limit. Capital gains and losses have their own treatment in the computation and are not modelled here. Parikh Financial does not provide attest services and is not a registered investment adviser.

Why the number is smaller than people expect

Three things surprise owner-operators about section 461(l), and all three are visible in the result above.

Wages do not raise the ceilingBusiness losses can offset wages up to the threshold, but wages are not business income and do not enlarge the room. The IRS instructions for Form 461 exclude any deductions, income or gains attributable to the trade or business of performing services as an employee. Pay from a corporation you own is still wages.

Everything is aggregatedEvery trade or business on the return is combined into one figure, not tested property by property. On a joint return that means both spouses together, and for partnerships and S corporations the test is applied to you as the owner rather than at the entity.

The cap fell for 2026A joint filer went from $626,000 to $512,000, about 18% less headroom, because OBBBA reset the inflation base year rather than indexing forward. A plan modelled on 2025 figures is too generous.

The deferred amount is not lostIt becomes a net operating loss carryforward. Use of a post-2017 NOL is generally limited to 80% of taxable income, so a deduction underwritten as a single-year event can arrive over several years. Timing is the cost, not the deduction.

The full explanation, with the four-limit stack →

Disclosure

This calculator is provided for informational purposes only. Using it does not create a client relationship, and its output is not tax advice for your situation — it is a general model that cannot see your facts. Parikh Financial does provide tax services, under a written engagement, and nothing on this page is a substitute for that. We do not provide legal or investment advice, we are not a registered investment adviser, and we do not perform attest services. Use of this calculator is entirely at your own risk, and Parikh Financial assumes no liability for its use or for any reliance on its output. Parikh Financial does not guarantee the calculator’s accuracy or its applicability to your particular circumstances. It is provided “as is”, without warranty of any kind, whether express, implied, or statutory, including without limitation any warranty of merchantability, fitness for a particular purpose, title, or non-infringement. Some jurisdictions do not allow the exclusion of implied warranties, so these exclusions may not apply to you. Tax law changes frequently and any figures shown reflect published federal amounts as of the date of this page.

Excess Business Loss Calculator

Why the number is smaller than people expect

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