Calculating rental income tax

[Choi Chingis]

Hello everyone!

I wanted to clarify how rental income taxes are calculated, so that I can see how much I owe to uncle Sam and how much after tax cash flow I make. From what I understood, the rental income tax is calculated by using the following method: Taxable Income = Gross Rental Income - {Operating Expenses + Mortgage Interest + Depreciation}.

I believe that things like utility (unless it is paid by the tenants), repair & maintenance, property taxes, insurances, advertising and leasing fees are included in the Operating Expenses. Is Capex (Capital Expenditures) included in the Operating Expenses or no? Capex is a big expense, so it would alter the tax calculation greatly.

Thank you in advance!