Taxable Vs. Tax-deferred Calculator

house This calculator will help you to compare the future value and annualized yield differences between a taxable and a tax-deferred investment.

Over extended period of times tax-deferred investments may vastly out-perform taxed investments because the compounded growth happens before taxes are applied.

A 1031 exchange is a popular way for real estate investors to reinvest their increased equity without being taxed on the gains. According to IRS topic 701, homeowners may also qualify to exclude up to $250,000 in capital gains from a home sale ($500,000 if filing jointly) from being treated as ordinary taxable income:

In general, to qualify for the exclusion, you must meet both the ownership test and the use test. You are eligible for the exclusion if you have owned and used your home as your main home for a period aggregating at least two years out of the five years prior to its date of sale. Generally, you are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home. Refer to Publication 523 for the complete eligibility requirements, limitations on the exclusion amount, and exceptions to the two-year rule.
Amount invested ($):
Expected annual rate of return (%):
Number of years invested (#):
Marginal tax rate (%):
Percent of growth that is taxable (%):
Results Taxable Tax-deferred
Future value:
Annualized yield:

 

Tax Documents.

Key Tips & Advice

Things to consider when buying a home:

  • While the 30-year mortgage is the most popular term in the United States, a 15-year term builds equity much quicker;
  • Home buyers in the US move on average of once every 5 to 7 years;
  • Early mortgage payments apply primarily to interest rather than the principal;
  • Using a shorter loan term, paying extra & making bi-weekly payments can better help offset any transaction-based expenses.

Do Home Prices Always Go Up?

In the United States real estate prices have went up about 6-fold since 1970.