How are depreciation lessening taxes factored into a Real Estate deal when its not on the income statement...

RE income

Depreciation is obviously a big deal in any business, esp. real estate, and on real estate income statements I don't see depreciation, so where is it accounted for and how does it flow through to the equity?

I.e. how to calculate the true yearly cash flow of a property after factoring in depreciation?

 

Ok so how do I actually adjust something like that to include depreciation and post-tax cash flow. I don't really give a crap about anything except what the equity distributable to investors is, right?

So let's say we get an LP llc with 5 guys putting money in, and a GP managing the 5 residential short-term rental properties. How are those generally going to be taxed? Standard corporate rate, or some type of pass through to the individuals?

Why would depreciation not be factored into a property income statement like a normal company 10-k?

Ultimately I'm just trying to figure out what the real cash flows are at the end of the day.

THanks for the help

 

Because depreciation only affects the after tax cash flow, and your picture seems to be before tax cash flow. Your property level cash flow should include a line item below it, subtracting the tax liability (or adding tax savings), then you achieve your after tax cash flow. A lot of different shops will do it differently, this is just the way I was taught. That line about your tax will include depreciation to lessen your tax burden.

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