After-Tax Equity Yield
Barron's Business Dictionary:
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After-Tax Equity Yield
The rate of return on an equity interest, taking into account financing costs and income tax implications of the investor.
| After-Tax Cash Flow, After-Tax Basis, After-Acquired Property | |
| After-Tax Proceeds From Resale, After-Tax Real Rate of Return, Against The Box |
Barron's Real Estate Dictionary:
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After-Tax Equity Yield
The rate of return on an equity interest in real estate , taking into account financing costs and income tax implications of the investor.
Example: An investor pays $100,000 for an equity interest in a property that is subject to a $900,000 mortgage loan. The investor receives $8,000 of cash flow each year, then must pay $2,000 for income taxes. The after - tax cash flow is $6,000. Upon resale of the property, the investor receives $120,000 after a 5-year holding period , net of taxes on the sale. The $6,000 annual cash flow is combined with the $20,000 gain on resale to provide a 9.3% after-tax equity yield rate.
See internal rate of return for computations.
Example: An investor pays $100,000 for an equity interest in a property that is subject to a $900,000 mortgage loan. The investor receives $8,000 of cash flow each year, then must pay $2,000 for income taxes. The after - tax cash flow is $6,000. Upon resale of the property, the investor receives $120,000 after a 5-year holding period , net of taxes on the sale. The $6,000 annual cash flow is combined with the $20,000 gain on resale to provide a 9.3% after-tax equity yield rate.
See internal rate of return for computations.
| After-Tax Cash Flow, After Acquired Clause | |
| After-Tax Proceeds From Resale, Age-Life Method of Depreciation |
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Barron's Business Dictionary
Dictionary of Business Terms. Copyright © 2007 by Barron's Educational Series, Inc. All rights reserved.
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