Property - RightCapital Help Center

Properties can be accounted for within a financial plan via the Net Worth section of the Profile, which is where all of a client's assets and liabilities are entered, along with their current balances. By default, the Net Worth is also the 4th step of the initial data entry process for newly created clients:

Primary Home

A property entry for the Primary Home will be prepopulated within every client plan. Click Property on the left side of the page, and then click the Primary Home tile to update the information:

Indicate whether the primary home is rented or owned using the Rent/Own drop-down menu:

Renting Primary Home

For clients who are renting, you will only need to enter the Monthly rent and Annual insurance:

Owning Primary Home

For clients who own their primary home, you will be asked to enter additional information. This also enables the use of the home in Goals, such as a primary home relocation (more on this here). A full list of primary home data entry inputs and descriptions can be found below:

Home Name: Name the home.

Owner: Specify if the home is owned by the client, the co-client, owned jointly, or in trust.

Purchase Year: Defaults to Already Started, which simply assumes the client purchased the home sometime in the past. The other option allows you to enter the specific time of purchase. Select the Calendar year to specify the year the home was purchased.

Purchase price: The amount the client paid for the home at purchase.

Current value: An estimate of the current market value for the home.

Annual appreciation: The rate at which the property's value will be estimated to increase or decrease. This may be taken from industry data, historical data, or some other source. This value will be used in retirement projections and tax projections.

Annual property tax: The amount the client pays in taxes on the property.

Annual Insurance: The amount the client pays in homeowners insurance. Be careful not to double-count insurance, as the property may be covered by other insurance types. Can also include HOA payments.

Annual maintenance: The amount clients spend on annual maintenance or any other housing-related expense they wish to track.

Click Save when all data is complete.

Please note that the entry for the Primary Home cannot be deleted. In select cases where clients neither own a home nor pay any rent, set the primary home to Rent with $0 Monthly rent and $0 Annual insurance to remove the primary home from the retirement projections.

Primary Home Relocation

Life is complex and always changing, and RightCapital allows for excellent financial planning, including all of life's complexities. To accommodate a relocation, add a Goal to reflect this change. RightCapital will adjust the primary home, taxes, sale price, cash flow, and capital gains taxes as needed based on estimated values at the time of sale and the location of the relocated client.

Navigate to Profile > Goals and select Add Goal > Property > Primary Home Relocation.

Completing the Primary Home Relocation card enables RightCapital to estimate changes in taxes, cash flows, and net worth automatically.

Location: This can either be the state they currently live in (if the relocation remains in the same state) or a new state as their new location. If a state is selected other than the state they currently reside in, RightCapital will automatically adjust its tax law according to that new state's law at the date of relocation.

When: Indicates when the client will relocate. Options include Calendar year, Client's age, Co-client's age, Client's retirement, or Co-client's retirement.

When buying a new home, Purchase price, annual appreciation, annual insurance, annual property tax, and annual maintenance operate just as they did in the Primary Home card described above.

Down payment, term, and interest rate provide important details on the nature of the mortgage and the cash flow impact of the new home.

Current home:

You can also specify what happens to the current primary home. The default option is 'Sell immediately', selling the existing property. Any mortgage and home equity associated with the property will be marked as paid, and the net proceeds will be added to the cash flow.

You can also convert the primary home to a vacation home or a rental home. If you convert to a rental home, you will be asked to enter information about new rental income, additional maintenance expenses, and depreciation. Additional annual maintenance expenses will be added to the annual maintenance value entered on the previous primary home.

Add Additional Properties

To manually add additional properties to a client's Net Worth section, click Add Account, hover over Property, and choose from the list of available options:

Options include Investment Property, Vacation Home, and Land. Land is treated similarly to an investment property, with the distinction that it does not allow for depreciation. A full list of data entry inputs and descriptions for Vacation and Investment properties can be found below:

Investment Property

Investment properties added to the Net Worth allow advisors to demonstrate the value of the home as well as monthly maintenance, rental income & vacancy rates. Income flowing from investment properties will populate line 5 of Schedule 1 within Tax > Tax Estimate > Details > Schedule 1-3.

Entry	Description
Home Name	Name the home.
Owner	Specify if the home is owned by the client, the co-client, or owned jointly.
Purchase Year	Defaults to Already Started, which assumes the client purchased the home sometime in the past. The other two options allow you to enter the specific time of purchase. Select Calendar year to specify the year the home was purchased, or select Client's age to select how old the client was when the home was purchased.
Purchase price	The amount the client paid for the home at the time of purchase.
Current value	An estimate of the current market value for the home.
Annual appreciation	The rate at which the property's value will be estimated to increase or decrease moving forward. This may be taken from industry data, historical data, or some other source. This value will be used in retirement projections and tax projections.
Annual property tax	The amount the client pays in taxes on the property.
Annual tax increase	The property tax will increase by this percentage annually.
Annual insurance	The amount the client pays in homeowners insurance. Be careful not to double-count insurance, as the property may be covered by other insurance types.
Annual maintenance	Total deductible maintenance costs for the property.
Location	Determines the state taxes if clients relocate to the investment property.
Rent Approach	Determines how monthly rent income and vacancy rates will be projected out into the future. The 'Simple Growth' option will allow you to enter a single monthly rent amount, annual increase, and vacancy rate to be used throughout the projections. The 'Use Detailed Schedule' option will allow you to manually enter the monthly rent income and vacancy rate for each and every year of the client plan.
Annual Rent Increase	Available when using 'Simple Growth' as your rent approach. Determines the % increase for rent income each year.
Monthly Rent Income	The rental income being generated by the property, as a monthly figure. This amount will feed into the retirement projections as a cash inflow.
Vacancy Rate	The assumed rate of vacancy each year. The percentage entered here will directly reduce the rental income generated by the property.
Total Tax Basis	The total cost basis of the property, excluding any non-depreciable portion (such as land). Typically the purchase price, but can increase based on improvements. This value acts as the total amount we're able to depreciate over the course of the plan, and is referenced when calculating capital gains taxes on the sale of the property.
Accumulated & Annual Depreciation	Depreciation allows the client to spread the tax deduction for the property purchase over time. Residential real estate has a max of 27.5 years of depreciation. RightCapital will calculate the cap up to the 'Total Tax Basis' based on the 'Accumulated Depreciation' and the 'Annual Depreciation'. The annual depreciation will be reflected in line 5 of Schedule 1 to the 1040. (This will adjust the rental income that you see on line 5).
Passive Loss Carryover	This occurs when the client does not have enough passive income by which to offset the losses in a given tax year. The client can carry over these losses until they sell the property or realize enough passive gains. Losses will show on Schedule 1 line 5 of the sample 1040 (This will adjust the rental income that you see on line 5). An individual can deduct up to $25,000 depending on their Modified AGI.
Year of Sale	Select the year of sale for the property.

Selling an investment property

RightCapital allows you to model the financial impact of selling an investment at a future date. Simply use the drop-down menu next to Year of Sale to indicate when the investment may be sold.

The net sale proceeds are calculated as the sale price minus any outstanding loan balance and any expenses. Net proceeds will be included in that year's cash flow. If the client setting uses Traditional Cash Flow, any positive cash flow generated will be invested in the taxable account based on the current or proposed asset allocation.

Taxes -- RightCapital executes very comprehensive tax calculations related to investment properties. This includes schedule E, passive loss limitation, at risk limitation, Sale of Business Property as well as Schedule D 1250 Gain calculations.

Pro Tip

If your client owns property outside of the US, select 'Non-U.S.' for location - this will turn off tax calculations on the rental income and capital gains tax will not be applied upon selling this property.

Vacation Property

Vacation properties entered into the Net Worth allow advisors to demonstrate the value of the home as well as expenses like property tax and insurance. This home can be sold to fund cash flow needs by adjusting the year of sale.

Entry	Description
Home Name	Name the home.
Owner	Specify if the home is owned by the client, the co-client, or owned jointly.
Purchase Year	Purchase Year: Defaults to Already Started, which simply assumes the client purchased the home sometime in the past. The other two options allow you to enter the specific time of purchase. Select Calendar year to specify the year the home was purchased, or select Client's age to select how old the client was when the home was purchased.
Purchase price	The amount the client paid for the home at the time of purchase.
Current value	An estimate of the current market value for the home.
Annual appreciation	The rate at which the property's value will be estimated to increase or decrease moving forward. This may be taken from industry data, historical data, or some other source. This value will be used in retirement projections and tax projections.
Annual maintenance	Annual maintenance costs for the property.
Location	Determines the state taxes if the client relocates to the vacation home.
Annual property tax	The amount the client pays in taxes on the property.
Annual tax increase	The property tax will increase by this percentage annually.
Annual insurance	The amount the client pays in homeowners insurance. Be careful not to double-count insurance, as the property may be covered by other insurance types. Can also include HOA payments.
Year of Sale	Select the year of sale for the property.