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taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 493
Experience:  Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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Hi --Im looking at purchasing some investment units

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Hi -- I'm looking at purchasing some investment units and I'm building a model to calculate returns. Wanted to be sure I'm not missing anything.


 


Start with Net Rents


Less:


Property Taxes


Utilities


Maintenance


Interest


 


You get to EBTD


 


Less:


Depreciation


Taxes


Net Income


 


Am I missing anything? Is the interest deductible?

Welcome to Just Answers! Thank you for the opportunity to answer your questions! I will do my best to help!

You seem to have the formula down. The net income calculation is correct. The deductions you listed are only a partial list - you are allowed to deduct any expenses incurred in the production of income. So yes, interest is deductible. The taxes that you are listing after the EBDT are normally are income taxes. Real estate taxes are usually listed in the upper portion, where you have them. The depreciation allowed for tax purposes is straight line, usually over 27.5 years for residential property, or 39 years for commercial property.

I hope this answers your question! If you have any more questions, please let me know. If you have found this answer helpful, please rate me highly. I would appreciate it!

Again, thanks! Have a great weekend!
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