after-tax equity yield Definition | Business Dictionaries from AllBusiness.com
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Business Definition for: after-tax equity yield
Dictionary of Business Terms
after-tax equity yield

the rate of return on an equity interest, taking into account financing costs and income tax implications of the investor.

Dictionary of Real Estate Terms
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 also after-tax cash flow
Related Terms:
after-tax cash flow

in real estate agent, cash flow from incomeproducing property, less income taxes, if any, attributable to the property's income. The tax savings from the possible shelter of income earned outside the property is added to the cash flow that is earned by the property. For example, if a property generates a $1,000 cash flow and $500 tax loss that can be used to offset other income, the after-tax cash flow for a 33% tax bracket investor is $1,167 (0.33 × $500 + $1,000).

Referring Terms:
equity yield rate
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