Real Estate NOI calculation

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

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.

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

thanks for the correction, you are right :wink:

Ummm… how are bond premias/discounts tangible?