Modeling Rental properties
How are folks modeling rental properties? Are you using the rental property link under EXPENSES and entering gross rents and itemized expenses or using the INCOME tab and entering the NOI before depreciation?
I use the rental property link under EXPENSES. Using the INCOME tab rather than the EXPENSES tab could cause some problems with determination of tax items, such as passive loss limitation/carryover for tax calculations.
This is indicated in the manual:
Please note that you should generally avoid entering any income related to rental property on PRC’s
Income page; the Rental Expense page accounts for all expenses and income associated with rental
property, including tax-related items, and produces a net expense value (which will be negative if you have net income) which is incorporated into PRC’s overall cash flow calculations.
I have only modeled rental properties one time and I followed the instructions in the manual, so I used the the rental property tab under expenses. I found it to be straight forward without any issues.
After fiddling around with it for a few hours I came to the conclusion that you're both right! 😀
The upcoming 2023 version of PRC will do a better job of showing the income from rental properties, yay!