How to Account for Rental Property Income Throughout the Wealth Planner

There are a few places where it works better to use your net rental income, and other places where entering your nominal numbers is better (e.g., actual rents received, actual mortgage expenses, etc.), depending on what the feature is intended to do.

Dashboard Tab

1. “Add Names of Your Sources of Income” table. Give your rental property income(s) a name so you can select them later in your monthly tabs and account for the nominal rental income.

2. Estimated US Income Tax Liability table. If you want to include your rental income in your tax calculation, use your net rental income (that is, your income minus your qualifying expenses and deductions). This will allow you to see how your remaining profit will be taxed. Note: Some real estate investors prefer to ignore their rental property investing activity in the tax estimate table, because it’s used to fuel the “Example Monthly Goal Breakdown” feature that helps use your income to build a budget. Some investors prefer that their rental property income be excluded from those calculations.

3. “Housing” section of the Plan Your Monthly Spending table. It’s best to input your actual mortgage payments (or other expenses) associated with your rental property in this table.

4. “Real Estate” section of the Load Your Accounts, Assets, Liabilities, and Goals table. Input your actual property value, balance owed, and monthly payment—the resultant payoff timeline will be factored into your Financial Independence calculation.

Financial Independence Tab

1. “Real Estate Investors” table. If your net rental income is already accounted for in your “Current Income” figure (as it will be, if you included your net rental income in the “Estimated US Income Tax Liability” table back in the Dashboard tab), you can ignore this table! Your rental income is already being included in your timeline. If you ignored your rental property income in the tax table, you can factor it in here: Input your net monthly income (gross rents minus expenses) and choose an estimated annual increase for this figure (e.g., 2%). As long as the box is checked for “Include in Financial Independence Calculation?”, the net income and its increases will be factored into your FI timeline.

2. Changes in net income after a certain year. If you for some reason anticipate a major change in the future (e.g., you plan to sell a property and therefore lower a chunk of net income), you can select a year to manually adjust the net income amount it’s factoring in. Note: Once your property is paid off (per the amortization calculation that’s being run with the data you input in the Dashboard tab), the associated mortgage expense should “fall off” your annual expenses in the correct year, so that particular “known” future event is already accounted for.

Monthly Tabs

1. “Income” table. Select your relevant rental property from the dropdown options and input your actual rental income received.

2. “Housing” section of the Regular Spending This Month table. Input your actual mortgage payments (or other expenses) associated with your rental property in this table.

“I don’t want to include my rental property income and expenses in this Planner that I’m using for personal purposes. Can I just ignore them?”

Yes. While the Planner is intended to accommodate the existence of rental property assets, liabilities, and rental incomes, if you’d prefer to keep your rental property investing separate from your personal budgeting, you can absolutely ignore it. Some people prefer to make a copy of the Wealth Planner and use one for personal and adapt the other for business income and expenses, to keep things separated.

Other Useful Reminders

1. Be careful not to cut & pasting cells. This can create #REF errors. (Copy & paste is fine.)

2. Only change data in the white cells. Colored cells have formulas in them to make the Planner work!

3. Avoid adding or deleting rows & columns. (Hiding rows and columns is fine.)