Rental Property Income Statement: Template & Example

A rental property income statement shows the income and expenses generated by a property over a set period.

In everyday accounting, income statement and profit and loss statement (P&L) are often used interchangeably. For real estate analysis, however, it helps to separate the property's net operating income (NOI) from financing costs, cash flow, accounting profit and taxable rental income.

That distinction matters because the same property can have a healthy NOI while producing much less cash after mortgage payments - and its taxable rental income can be different again.

This guide gives you a practical rental property income statement template, a worked example, and the formulas needed to read the numbers correctly.

Quick distinction summary:

• NOI measures property operating performance.‍
• Cash flow shows cash left after financing and other cash outflows.‍
• P&L/net income can include non-operating expenses such as mortgage interest and depreciation.‍
• Taxable rental income is calculated under IRS rules and does not automatically equal any of the above.‍
  

If you are looking specifically for how to generate and use a profit and loss report, see our rental property P&L guide.

What Is a Rental Property Income Statement?

A rental property income statement organizes the income earned and expenses incurred by a rental over a specific period, such as a month, year to date, calendar year or trailing 12 months.

A useful property-level statement normally starts with:

Property income − operating expenses = net operating income (NOI)

You can then add financing, depreciation and other below-NOI items depending on whether you are reviewing property performance, accounting profit or owner cash flow.

Rental Property Income Statement Template

Here is a simple structure you can use for a single rental property.

*Mortgage principal and capital expenditures are shown separately because they are important cash outflows but are not ordinary operating expenses used to calculate NOI. Mortgage principal is also not a P&L expense because it reduces the loan balance.

What Counts as Rental Property Income?

Include all income generated by the property when calculating operating income, not just base rent. This can include rent collected, late fees, pet rent, parking, storage, laundry income and other recurring property income.

If a property earns $24,000 of rent and $150 of late fees, total property income is $24,150 - not $24,000.

What Counts as an Operating Expense?

Operating expenses are the recurring costs required to own and operate the property, such as property taxes, insurance, property management, repairs and maintenance, owner-paid utilities, landscaping and HOA dues.

Does Mortgage Interest Count as an Operating Expense?

No. Mortgage interest and other debt-service costs are financing expenses, so they are excluded from NOI. Mortgage principal is also excluded.

Does Depreciation Count as an Operating Expense?

No. Depreciation is a non-cash accounting and tax expense and is not deducted when calculating NOI.

Do Capital Expenditures Count as Operating Expenses?

Normally, no. Major capital expenditures are treated separately from ordinary operating expenses. See Capital Expenses vs Operating Expenses.

Worked Example: Rental Property Income Statement

Assume an investor owns a single-family rental property valued at $200,000. The property collects $2,000 per month in rent, or $24,000 per year, plus $150 in late fees.

Income

Operating Expenses

Net Operating Income

$24,150 total property income − $7,300 operating expenses = $16,850 NOI

Mortgage payments are not included in the operating-expense total. If the property has $12,000 of annual debt service, that financing cost is considered separately.

Cash Flow

$16,850 NOI − $12,000 debt service = $4,850 pre-tax cash flow

NOI vs Cash Flow vs P&L Net Income vs Taxable Rental Income

The distinction is especially important for mortgaged properties. Mortgage interest can be an accounting and tax expense, while mortgage principal is not an expense; it reduces the loan balance. Depreciation can reduce accounting or taxable income even though no cash leaves the bank account in that period.

How to Calculate Net Operating Income

The basic formula is NOI = total property income − operating expenses.

Using the worked example: $24,150 − $7,300 = $16,850 NOI.

NOI excludes mortgage principal, mortgage interest and other financing costs, depreciation, income taxes and capital expenditures. For more, see our Net Operating Income guide.

How NOI Is Used to Calculate Cap Rate

Cap rate = NOI ÷ property value

Using the example: $16,850 ÷ $200,000 = 8.425%, or approximately 8.4%.

How NOI Is Used to Calculate DSCR

The standard formula is DSCR = NOI ÷ total debt service.

Using the worked example: $16,850 ÷ $12,000 = 1.40x DSCR.

A 1.40x DSCR means the property's NOI is 1.4 times its annual debt service in this simplified example. Lenders may make their own underwriting adjustments, so use the lender's methodology when applying for financing.

What Belongs Below NOI on a Rental Property P&L?

Mortgage Interest

Mortgage interest is a financing expense rather than an NOI operating expense. It can appear below NOI when calculating accounting profit.

Mortgage Principal

Mortgage principal is not a P&L expense. Paying principal reduces the mortgage liability, although it still affects owner cash flow.

Depreciation

Depreciation is excluded from NOI but can reduce accounting and taxable income. See our rental property depreciation guide.

Why Taxable Rental Income Is Not Simply NOI Minus Depreciation

Taxable rental income should not be calculated by simply taking NOI and subtracting depreciation.

For a typical individual landlord reporting on Schedule E, the tax calculation can include rental income and deductible expenses such as qualifying mortgage interest, repairs, insurance, taxes, management fees and depreciation. Some costs must instead be capitalized, mortgage principal is not deductible, and passive activity or at-risk rules can limit rental losses.

As a result, taxable rental income can differ from NOI, cash flow and accounting net income. See the IRS guidance on residential rental property and Schedule E.

Monthly, YTD, Year-End and T12 Income Statements

A monthly statement helps spot short-term changes in rent collections or expenses. A year-to-date statement shows cumulative performance from the start of the year. A year-end statement summarizes the full year's activity. A trailing 12-month statement (T12) covers the most recent 12 months regardless of the calendar year.

For more on T12 reporting, see What Is a T12 in Real Estate?.

Creating Rental Property Income Statements With Landlord Studio

Landlord Studio lets landlords track income and expenses by property, connect bank accounts for transaction reconciliation, and generate rental-property financial reports.

Available reports include the Income Expense Statement, Profit/Loss Summary, Breakdown Report and Schedule E report, with filters for properties, categories and date ranges.

That means the same underlying records can be used to review property performance, prepare an income and expense statement, or organize information for your accountant without maintaining separate spreadsheets.

Learn more about rental accounting with Landlord Studio.

Rental Property Income Statement FAQs

Is a rental property income statement the same as a profit and loss statement?

The terms are often used interchangeably. For real estate analysis, showing NOI as a subtotal before financing expenses and depreciation keeps operating performance clear.

Does mortgage interest go on a rental property income statement?

Mortgage interest can appear on a full P&L, but it should not be included in operating expenses when calculating NOI. Mortgage principal is not a P&L expense, although it affects cash flow.

Does NOI include mortgage payments?

No. NOI is calculated before debt service. Both mortgage principal and mortgage interest are excluded from the NOI calculation.

Does NOI include depreciation?

No. Depreciation is excluded from NOI because it is a non-cash accounting and tax expense rather than a property operating expense.

What is the DSCR formula for a rental property?

A common formula is NOI ÷ total debt service. Lenders may make underwriting adjustments, so check the methodology required for the particular loan.

Is taxable rental income the same as NOI?

No. Taxable rental income is calculated under IRS rules and can include deductions excluded from NOI, such as qualifying mortgage interest and depreciation.

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