Can anybody explain me why tax (income tax) is not included in NOI?
My logic is that Tax is Cash outflow for investors and difference in tax % has significant influence on return of RE . Theoretically if two RE investments have same NOI –w/o tax , equal required rate, equal growth rate but only different tax rate (due to different location or…) – logically RE with lower tax% to have higher value but according dir. capitalization method the result is same for both investments (NOI will be same and cap. rate also).
I do not know why the tax is not taken in consideration or where is taken?
The idea here is to get a before-tax unlevered measurement of income. The tax rate is certainly relevant ultimately, but just not what we want to look at here. It’s (pretty much) the same as using EBIT or EBITDA measurements of cash flow in company valuation.
In your example, these sorts of differences would be taken into account when calculating Investment Value (which takes into account a specific individual’s circumstances).
I think the tax mentioned by Sharko is property taxes (which are property dependent) and not income taxes (which don’t vary by the property the investor purchases). Property taxes are indeed deducted before arriving at NOI. Income taxes are not because they depend on the investor and not on the property.