Real Estate Tax Calc
Portland’s investment property tax landscape
Portland has long attracted real estate investors drawn by a combination of strong rental demand, a growing tech and creative economy, limited new housing supply relative to demand, and Oregon’s lack of a sales tax. However, the city and region have added multiple new income tax layers in recent years that have materially increased the cost of ownership for high-income investors. Understanding all of these layers — Oregon state income tax, the Metro tax, the Multnomah County tax, and property taxes — is essential for accurate after-tax return modeling.
Oregon does not have a state sales tax, which affects how operating expenses are structured for rental properties (no sales tax on materials and supplies). Oregon also has no value-added tax. The primary tax burden for Portland investors is through the income tax system, which is multi-layered, and through property taxes, which are assessed under a system that includes both real market value constraints and constitutional limits on rate growth.
Oregon state income tax on rental income
Oregon imposes a progressive income tax on all taxable income, including net rental income from Oregon investment properties. The rate schedule begins at 4.75% at the lowest bracket and rises through 6.75% and 8.75% to the top rate of 9.9%. The 9.9% rate applies to taxable income above approximately $125,000 for single filers and $250,000 for joint filers (thresholds are adjusted periodically and should be verified).
Oregon taxes all capital gains as ordinary income. There is no Oregon equivalent of the federal preferential long-term capital gains rate. A Portland investor selling a rental property at a $200,000 gain after a ten-year hold pays federal capital gains tax at the 15% or 20% preferential rate, but owes Oregon income tax on the same gain at ordinary income rates — potentially 9.9% if the investor’s total taxable income reaches the top bracket in the year of sale.
Oregon generally conforms to the federal passive activity loss rules. Net rental losses are passive losses that can only offset other passive income or are suspended until the property is sold. Oregon allows the same passive activity loss calculation as the federal return for most purposes. Oregon also conforms to the federal 27.5-year depreciation schedule for residential rental property and the 39-year schedule for commercial property.
Oregon nonresidents who earn rental income from Oregon properties must file an Oregon nonresident return and pay Oregon tax on the Oregon-source income. An investor residing in Washington (which has no income tax) and owning a Portland rental property will owe Oregon income tax on the net rental income, with no Washington credit available because Washington has no income tax to credit against.
Metro Supportive Housing Services Tax
The Metro Supportive Housing Services Tax is a 1% income tax on Oregon taxable income above $125,000 for individuals and above $200,000 for joint filers earned within the Portland Metro district. “Metro” is the regional government covering the Portland metropolitan area, including all of Multnomah County (where Portland is located) and parts of Washington and Clackamas counties.
This tax applies to both residents and nonresidents who earn income sourced to the Metro district. Rental income from a Portland investment property is sourced to the Metro district — a nonresident investor who earns $150,000 of Oregon taxable income from Portland rental properties would owe the Metro tax on $25,000 of income ($150,000 minus the $125,000 threshold), producing a Metro tax of $250.
The Metro tax is filed and paid separately from the Oregon state income tax return. Metro publishes its own return forms, and penalties apply for failure to file or pay. Investors with Portland rental income above the Metro threshold should ensure they are aware of this separate filing obligation, as it is separate from the state return and is sometimes overlooked by investors and even some tax preparers who are unfamiliar with it.
Multnomah County Preschool for All Tax
The Multnomah County Preschool for All Tax (PAT) is a county-level income tax on Oregon taxable income above certain thresholds for individuals with income sourced to Multnomah County. The rate structure applies 1.5% to income above $125,000 for single filers (and above $200,000 for joint filers) up to certain thresholds, with a higher 3% rate applying to income above $250,000 for single filers and above $400,000 for joint filers (thresholds are as enacted and may adjust; verify current thresholds when filing).
Like the Metro tax, the Preschool for All Tax applies to both residents and nonresidents with income sourced to Multnomah County. Rental income from Portland properties within Multnomah County is Multnomah County source income. The Preschool for All Tax is administered by the Revenue Division of the City of Portland (not the county directly), alongside the Metro tax.
Combining the Oregon state income tax (up to 9.9%), the Metro tax (1%), and the Multnomah County Preschool tax (1.5% to 3%) creates a potential combined Oregon-and-local income tax rate of up to approximately 13.9% for the highest-income investors on income above $250,000. This total is close to California’s 13.3% top rate and among the highest combined state-and-local income tax rates in the country for investment property income.
Multnomah County property taxes
Property taxes in Multnomah County (where Portland is located) are governed by Oregon’s property tax system, which has several distinctive features compared to other states. Oregon uses real market value as the basis for assessment but also applies a separate maximum assessed value concept (the lower of real market value or 103% of the prior year’s maximum assessed value). Additionally, Measure 5 (1990) placed constitutional limits on the property tax rate that can be applied to real market value.
In practice, effective property tax rates for investment properties in Portland within Multnomah County typically fall in the range of 1.0% to 1.3% of real market value. This range reflects the combined county, city of Portland, school district, and Metro levies that apply to most Portland parcels. Investment properties do not receive the owner-occupant’s senior deferral or poverty exemption; non-homestead properties are assessed at the full applicable rate.
Because of Oregon’s maximum assessed value cap, investors who purchase a property that has been assessed below its real market value for many years may find that the maximum assessed value — not the market value — is the actual tax base. This can produce tax bills that are lower than the real market value would imply, but it also means reassessment does not reset to full market value at sale the way it does in California under Proposition 13. Oregon property taxes are more stable across ownership changes than California’s, but the protective cap does not fully reset on purchase.
Property taxes on Portland rental properties are deductible as a business expense on Schedule E. As with all Schedule E property, the deduction is not subject to the $10,000 SALT limitation, which applies only to itemized personal deductions on Schedule A.
Worked example: $450,000 Portland rental property
An investor purchases a Portland duplex for $450,000. Both units together rent for $3,000 per month, producing $36,000 in annual gross rent.
Building depreciable basis: $450,000 × 80% = $360,000. Annual depreciation: $360,000 ÷ 27.5 = $13,091 per year.
Annual operating expenses before depreciation: Property taxes (1.15% effective): $5,175. Insurance: $1,800. Maintenance: $2,500. Management (10%): $3,600. Total: approximately $13,075.
Net income before depreciation: $36,000 − $13,075 = $22,925.
Net income after depreciation: $22,925 − $13,091 = $9,834.
Oregon income tax (at 9.9% top bracket for a high-income investor): $9,834 × 9.9% = approximately $974.
Metro tax: If total Oregon income is $130,000 (above the $125,000 threshold for single filers), Metro tax is 1% × $5,000 = $50. If Oregon income is $200,000, Metro tax is 1% × $75,000 = $750.
Multnomah County Preschool tax: For a single filer at $130,000, the Preschool tax is 1.5% × $5,000 = $75. At $200,000 income: 1.5% × $75,000 = $1,125.
Federal income tax (22% bracket): $9,834 × 22% = approximately $2,163.
This example shows that for moderate-income Portland investors, the Metro and Preschool taxes are relatively small amounts on their own. Their impact grows substantially for investors with total Oregon income well above $125,000, particularly those selling a property in a high-gain year.
Portland’s rental market and rent stabilization considerations
Oregon enacted statewide rent stabilization legislation that limits annual rent increases to no more than 7% plus the Consumer Price Index (CPI), subject to a statutory cap and with various exceptions. For Portland investment property owners, this creates an annual constraint on rent growth for existing tenancies that must be factored into long-term income projections. Newly constructed buildings (less than 15 years old at the time of the tenancy) are exempt from rent stabilization under state law.
Investors targeting newly constructed or recently built Portland properties therefore avoid the rent stabilization constraint during the 15-year exemption period, which is a meaningful difference in the flexibility to adjust rents to market levels. After the 15-year window, the property becomes subject to the rent stabilization limits for existing tenants while new tenancies can be started at market rate.
Portland also has its own relocation assistance ordinances and just-cause eviction requirements that exceed state law in some respects. Investors should review current city ordinances and consult with a Portland landlord-tenant attorney before acquiring residential investment property to understand the full regulatory framework.
Oregon’s absence of a sales tax
Oregon has no state sales tax, which provides a modest benefit to rental property owners who purchase supplies, materials, appliances, and maintenance items for their properties. In California, Texas, or New York, sales tax on materials and supplies adds to operating costs. In Oregon, these purchases are made without sales tax. For a landlord spending $10,000 per year on maintenance and supplies, the absence of sales tax saves $700 to $1,000 compared to a state with a 7%–10% sales tax rate — a small but real cost advantage.
Oregon also has no real estate transfer tax at the state level. There is no Oregon REET or documentary transfer tax on property sales comparable to Washington’s REET or California’s DTT. This absence reduces transaction costs on both acquisition and disposition of Portland investment properties. County and local recording fees apply but are small in comparison to the transfer taxes in many peer markets.
Frequently asked questions
What is the income tax rate in Oregon for rental income?
Oregon taxes net rental income as ordinary income at progressive rates. The lowest bracket is 4.75% and the top rate is 9.9% for income above approximately $125,000 for single filers and $250,000 for joint filers. There is no preferential Oregon rate for capital gains — all gains are taxed as ordinary income. In addition, the Metro Supportive Housing Services Tax (1%) and Multnomah County Preschool for All Tax (1.5% to 3%) may apply to investors with higher incomes sourced to the Portland area.
What are Multnomah County property tax rates in Portland?
Oregon uses real market value for assessment purposes, subject to Oregon’s maximum assessed value cap. Investment properties in Portland within Multnomah County typically have effective property tax rates of 1.0% to 1.3% of real market value. Oregon’s property tax system does not fully reassess to market value on change of ownership the way California’s Proposition 13 resets to purchase price. Investment properties do not receive owner-occupant exemptions; the full applicable rate applies.
What is the Metro Supportive Housing Services Tax?
The Metro Supportive Housing Services Tax is a 1% income tax on Oregon taxable income above $125,000 for individuals ($200,000 for joint filers) earned within the Portland Metro district, which includes all of Multnomah County. It applies to both residents and nonresidents with income sourced to the Metro district, including rental income from Portland properties. It is filed separately from the Oregon state return. Failure to file or pay is subject to penalties.
Does Oregon tax capital gains on investment property?
Yes. Oregon taxes all capital gains, including long-term gains from the sale of investment real estate, as ordinary income at the same rates that apply to other income — up to 9.9%. There is no preferential Oregon rate for long-term capital gains. Federal long-term capital gains rates still apply on the federal return. The Metro and Multnomah County taxes may also apply to the gain in the year of sale if total income exceeds the applicable thresholds. Oregon has no real estate transfer tax at the state level on sale.
Educational information and estimates only. Not tax advice. Tax rules change and vary by situation; consult a qualified tax professional before acting.