Accounting and tax question in Real Estate

· Value determination often based on this

· BTCF = NOI – Interest – Principal – Capital Expenditures

· IRR often calculated on this

· GAAP Net Income = NOI – Interest – Tax Depreciation – Amortization +- Adjustment for Rents* +- Adjustment for Expenses

· FAS141 / SL Rents / Reserves

· Taxable Net Income = NOI – Interest – Tax Depreciation +- Adjustment for Rents* +- Adjustment for Expenses

· Payment of taxes based on this / Accelerated depreciation / Gain deferral (1031, installment sale)

· Tax = Taxable income x Tax Rate

· Rate make a difference

· ATCF = BTCF – Tax

· Real returns are based on this