If you are operating property . What will be income and expense will have ?

EXPENSES :-
 Property taxes: Break them out and deduct them in the year they're paid even if they're
included in your mortgage payment.
 Insurance: Your annual insurance premium  is deductible as an operating expense even though
it might also be escrowed and included in your mortgage payments.
 Utilities: You can deduct as an operating expense any utilities that you pay, including water
and sewer.
 Trash collection: This is usually a monthly municipal charge, and it's a valid operating
expense.
 Management: You can deduct the cost in the year paid if you hire professional management.
 Maintenance and repairs: You can't deduct major items like renovation, although they're
often depreciable for tax purposes. You can deduct normal maintenance and repairs to the
dwelling, however.
 Landscaping and pool care: These are operating expenses and they're deductible as well. 
 Accounting and legal: Fees you pay to an accountant or attorney related to work performed
for your rental property are deductible as operating expenses.
 Snow removal and pest control: These are valid operating expense deductions as well.
 Payroll for salaried personal – compensation that has to pay in form of salary or wages
 License fees – Fees which has to be pay are form of operating expense
 Rent – For living at one house , one has to pay rent is the form of expense
 Marketing – Doing marketing & Advertisement of our property
 Sales commissions
 Vehicle expenses
 Travel expenses
 Interest expense
 Derivatives expense
 Restructuring expense
 Damages Caused to Fire
 Expropriation of property
 Altered accounting principles
 Amortisation of preliminary expenses.
 Depreciation
 Tenant improvements,

INCOME FROM OPERATING PROPERTY :-

USE AS AN INVESTMENT TO SUPPORT RETIREMENT

Business owners often have their eventual exit plan and retirement in mind when they decide to buy a
building.
The idea of being able to sell the company but keep the real estate appeals to many business owners,
noted Craig Caliger, manager of commercial banking at City National Bank. For many, he said, "that
seems to be the big driver."
This strategy may not work well for those planning to sell their companies in a few years, but
entrepreneurs with longer time frames are more likely to be able to pay off their commercial
mortgages, keep the property and collect substantial income from future tenants in retirement.
Meanwhile, long-term real estate trends should work in their favor.
GENERATE RENTAL INCOME NOW
Owners, who often form LLCs to buy their property, may not need to wait decades to derive some
income from the building.
Depending on the type of business, the building and their real estate loan restrictions, entrepreneurs
may be able to rent out parts of their industrial facilities or office buildings to tenants, thereby
subsidizing their monthly mortgage expenses or perhaps breaking even on the property.
LOWER COSTS WITH FIXED MORTGAGE PAYMENTS
By fixing your monthly mortgage payments for a decade or longer, you can hold down costs by
protecting your business against rising lease rates, which a landlord could increase annually. While
you'll have to make a down payment up front, you may well enjoy lower monthly mortgage payments
as a building owner than you would with lease payments as a tenant.
LEVERAGE TAX ADVANTAGES SUCH AS DEPRECIATION AND INTEREST
DEDUCTIONS
While businesses leasing their space can deduct rent payments from their income taxes, ownership
also brings significant tax advantages, including potential depreciation on the property, which lowers
taxable income, and a mortgage interest deduction. Consult a tax expert to help you analyze the
numbers to see if they work in your favor compared with renting.
 SOLE MANAGEMENT
You can do whatever you want with the property. Designs, plants, styles, colours – all these can be
configured according to your preference. You also choose who to rent or sell your property to.
     REDUCED VOLATILITY
This is one reason why people
People see stocks as high-risk investments and it can bankrupt you if you’re not careful.
invest instead on properties as they’re less volatile compared to shares and similar options.
      ADDED INCOME
Renting your property is one of the best ways to earn from your investment. Subtracting the tax and
maintenance costs, you’ll still get a decent amount of income without doing anything much.
Even if your mortgage costs $500 and maintenance will cost you another $200, you still have money
to pocket if you rent your property for a thousand dollars.
     CAPITAL GROWTH
Purchasing property in a developing location is a decision that can make you rich. Areas with high
business traffic will surely generate more profit than a property in a rural area.
APPRECIATION AND VALUE ADD
The second opportunity for returns and profitability of a commercial real estate investment comes
from any increase in the property’s equity value – or appreciation – over the period of ownership.
Properties can also lose value, and even the most disciplined, proven investment strategies can’t
guarantee gains, due to the fact that outside economic forces can impact a real estate investment’s
value. All types of property have the potential for appreciation in asset value and profitability, from
raw land to a site home to an extensive apartment housing already developed.
In general, real estate is a unique and scarce asset class. More raw land can’t simply be “created.”
This scarcity is increased by demand as many renters experience in major cities. If demand increases
for your property, or in the area near your property, there’s a good chance that tenants will be willing
to pay higher rents, and prospective buyers will be willing to pay a higher price than you paid
originally to buy it from you.