The tax effect of interest payments on loans to make real estate investments Eileen invested in residential real estate for $150,000 ($127,500 for the building and $22,500 for the land). She financed her purchase with a 20-year mortgage for $85,000 at an interest rate of 6%. A year has passed since her purchase. Eileen is now curious about how her taxes, cash flow, after-tax return, and after-tax yield would have been different if she had paid cash for the property. Eileens files indicate the following information regarding her investment