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  Summary of Inputs  
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  Income Statement  
  Cash Flow Statement  
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       Income Statement  
 
          ( See Report Below )  
 
  The income statement summarizes future projections for rental income, other income, operating expenses, mortgage interest, depreciation, taxable income, etc., associated with an income property.  The gross rents possible and other income are projected forward at the income growth rates entered by the investor.  Operating expenses are projected forward at the expense growth rates entered.  If a vacancy factor is entered, it is applied to the gross income from the property and the effective gross income is calculated.  In the income statement below, operating expenses are subtracted from the effective gross income to arrive at the net operating income or NOI for the property.  Loan interest, depreciation, unamortized points, etc. are subtracted from the net operating income to establish the taxable income. 

The most important line item on the income statement is taxable income. The taxable income from the income statement is multiplied times the investor's state and federal tax rates and the investor's tax liability is displayed on the Cash flow statement.  The state and federal tax liability is then subtracted from before-tax cash flows to determine the investor's after tax cash flow.  If you would like to learn more about investor tax rates, click on    Federal Marginal Tax Rate.

The operating expense ratio and the net income ratio at the bottom of the income statement can be helpful in identifying potential operational problems.  To learn more about the operating expense ratio and how to identify problems via expense item ratios, click on Operating Expense Ratio.   If you are unfamiliar with operating expenses and would like to learn more, click on Operating Expenses.  

Commercial income properties are depreciated over 39 years and residential income properties are depreciated over 27 1/2 years on the income statement below.  The On Target software calculates 11 1/2 months of depreciation for the building in the first year and a full year of depreciation for each successive year.  To learn more about depreciation, click on Depreciation.

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