Real Estate NOI calculation

[ar169]

For NOI calculation do we deduct interest, depreciation, amortization or taxes from gross profit?

[pollfre]

Hi mate,

NOI stands for Net Operating Income. Thus, it excludes interest expense (financing) as well as taxes (only income taxes since property taxes are considered operating expenses). Amortization here is N/A since amortization is an accounting concept that only applies to intangibles. Depreciation is not considered in the calculation of NOI.

Simply recall that NOI = income if fully occupied - (vacancy loss and collection losses) - operating expenses (property taxes, insurance, expenses to maintain building in current state).

Hope that helps.

[S2000magician]

@pollfre

Hi mate,

Amortization here is N/A since amortization is an accounting concept that only applies to intangibles.

Bond premia and discounts – which are tangible – are amortized.

[pollfre]

thanks for the correction, you are right

[CMLSML]

@S2000magician

@pollfre

Hi mate,

Amortization here is N/A since amortization is an accounting concept that only applies to intangibles.

Bond premia and discounts – which are tangible – are amortized.

Ummm… how are bond premias/discounts tangible?