1. What is Net Income for Rental Property?

Net income for rental property represents the actual profit after subtracting all deductible expenses from the gross rental income. It's a key metric for evaluating the financial performance of an investment property.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• Rental Income — Total gross rent collected per month
• Expenses — All deductible expenses including mortgage interest, property taxes, insurance, maintenance, etc.

Explanation: This calculation gives you the actual cash flow from your rental property after accounting for all operating expenses.

3. Importance of Net Income Calculation

Details: Calculating net income helps property owners understand their true cash flow, make informed investment decisions, and properly report income for tax purposes.

4. Using the Calculator

Tips: Enter your total monthly rental income and all deductible monthly expenses. The calculator will show your net monthly income from the property.

5. Frequently Asked Questions (FAQ)

Q1: What expenses can be deducted?
A: Common deductible expenses include mortgage interest, property taxes, insurance, maintenance, repairs, property management fees, utilities, and depreciation.

Q2: Is net income the same as taxable income?
A: Net income is the starting point for taxable income, but tax rules may require additional adjustments for items like depreciation.

Q3: Should I include mortgage principal payments?
A: No, only the interest portion of mortgage payments is deductible. Principal payments are not considered an expense.

Q4: How often should I calculate net income?
A: It's recommended to calculate monthly and annually to track property performance over time.

Q5: What's a good net income for rental property?
A: This varies by market, but generally a net income of 6-10% of property value annually is considered good.