How to Calculate ROI for Property Investments
First, we need to understand “Deductions”
What is a ‘Deduction’
A deduction is any item or expenditure subtracted from “Gross Income” to reduce the amount of income subject to Income tax. It is also referred to as an “allowable deduction.” For example, if you earn $50,000 and claim a deduction for $2,000, then your taxable Income is reduced to $48,000.
BREAKING DOWN ‘Deduction’
The Internal revenue system offers a host of deductions. In the United States, tax payers have the choice of claiming the standard deduction or itemizing their deductions.
Return on Investment (ROI) is an accounting term that indicates the percentage of invested Money that’s recouped after the deduction of associated costs. For the non-accountant, this may sound confusing, but the formula may be simply stated as follows:
But while the above equation seems easy enough to calculate, with property [...]