Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 16%
$32.50 /mo
$390 billed annualy
MONTHLY
$39 /mo
billed monthly
7 day free trial. Cancel anytime

Let's keep in touch

Subscribe to our newsletter for timely insights and actionable tips on your real estate journey.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions
Followed Discussions Followed Categories Followed People Followed Locations
Goals, Business Plans & Entities
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated almost 6 years ago on . Most recent reply

User Stats

12
Posts
4
Votes
Cory Brown
4
Votes |
12
Posts

Do you include or exclude taxes?

Cory Brown
Posted

Hey there,

When forecasting a return for a corporate investment structure, do you subtract state and federal taxes from your ROI calculations?
*** I ask as it doesn't seem that the BP deal calculators factor in state and federal taxes. It only seems to account for municipal which reduces net income before the feds come for their share. ***

For example, if my R/E investments generate $100,000 in net income (held in a corporation) and these profits will be distributed to investors, do you subtract state and federal taxes to find the ROI and IRR?

Corporation net income:$100,000

State/Federal taxes (20%): $20,000

True Net Income: $80,000

What calculations do you use?

Most Popular Reply

User Stats

2,272
Posts
885
Votes
Hai Loc
  • Specialist
  • Toronto, Ontario
885
Votes |
2,272
Posts
Hai Loc
  • Specialist
  • Toronto, Ontario
Replied
Originally posted by @Cory Brown:

Hey there,

When forecasting a return for a corporate investment structure, do you subtract state and federal taxes from your ROI calculations?
*** I ask as it doesn't seem that the BP deal calculators factor in state and federal taxes. It only seems to account for municipal which reduces net income before the feds come for their share. ***

For example, if my R/E investments generate $100,000 in net income (held in a corporation) and these profits will be distributed to investors, do you subtract state and federal taxes to find the ROI and IRR?

Corporation net income:$100,000

State/Federal taxes (20%): $20,000

True Net Income: $80,000

What calculations do you use?

Pretax  After tax are both used   depends on preference..  normally it pre taxed you used especially to determine value

You will not use an after-tax NOI with a market cap rate to determine value of a property

I would think an after tax number would be used internally to see how much cash will actually be in the bank that can be utilized 

Loading replies...