![]() This also makes understanding each individual property’s profitability (or ability to generate cash flow) difficult to understand. Total Rental Income – Total Expenses = NIBTīecause passive income tax rates tend to be high in many jurisdictions, it’s a common strategy for real estate investors to try and actively inflate expenses in order to drive down their income tax bills.įurther, where an investor owns multiple properties, net income (or NIBT) may be calculated or presented at the portfolio level. For real estate, revenue is (largely) rental income: It’s the total revenue minus the total expenses. NIBT is an accounting figure, whether we’re talking about an operating business or an investment property. It’s critical to understand just how different these two figures can be, even for the exact same property.
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