I just finished taxes and want to boast to my wife how much we made on our rental properties.

Is it fair to tell her how much we made, not including depreciation (a bigger number) or do I tell her how much we made including deprecation? (a lower number)

Seriously, I'm wondering when assessing how well your properties are doing, do you include depreciation, like you do on your tax return?

For me, I tell DH, "This is how much the rents grossed, and this is how much we spent on the biz." Those are the two numbers that interest him the most.

Depreciation is just a paper expense.

I go by net income, which is total rent minus total expenses, w/o depreciation.

If she wants a new Lexus, wait till December for their famous "December to remember" sale.

Technically since this is bragging, I'd give her the real number of profits minus expenses, then I'd also inform her of the tax savings. I'd then add the tax savings to the profits and list it as money brought into the household.

You’ve really got 3 or 4 numbers you could use depending upon how financially savvy your wife is.

One is cash flow and is not related to your taxes. This would be the simplest but she might ask why this isn’t what shows up on the return.

Another is taxable income straight off of the return.

Another is EBIDTA - take your income off of your return and add depreciation and interest expense back in.

Landlord ofthe Flies, it took a bit to understand what you wrote, but when I did I laughed. Thanks for that.

Deanna, that was the part hard on my wife, when I'd spend $$$k "worth of love" on the properties, and It looked like we were throwing money away. It's nice now to see some substantial profits after the improvements were done.

Yes, Fred I'm going to start shopping now. That RC 350 F Sport looks like a nice choice now the kids are grown.

you don't think she knows? You didn't mention the expense of principal buy down. An expense but a big asset.

If you made that much-- buy her a new car- pay off a car-- a vacation for 2.

Bill my older brother is proof you can't take it with you. He had a gorgeous Rolex watch. When we were standing next to the pine my second brother said see that his watch is gone-- I said yea did you see his older son is wearing it.

Point being he proved you can't take it with you so spend now while you can enjoy it.

Razorback, I did basically your last option, I took income off the return, and added depreciation back in.

How can you justify putting interest expense back in? Isn't it like property taxes, as far as an expense?

myob, since I started tracking our net worth every month, one thing that gets me happy is to see how are principal paydown increases our net worth. Yes, it's a decrease in cashflow, but we're gaining equity.

Pmh, if nothing else, I find my monthly net worth report more engaging than today's news.

We are living without a "real" job, either of us.

We both do pretty much what we want to every single day.

How can you measure that in dollars?

Our rentals pay all our bills, with plenty left over. that's enough, without putting a $$ amount on paper.

When I let things slip out of the bag, it never helps me it always hurts in the long run. When I told my wife that during the first year together I was able to buy a 5 unit, two homes and made "X" number of dollars, she told her parents. So in turn the parents decided we didn't need help and gave us nothing while giving the rest of their children tons of stuff.

Gevans, you make a good point that the freedom we get can't be measured in dollars.

Before I bought my first house I prayed, and the message I received is, if you honor the lord, you will be blessed. I've done my best to be fair in my dealings with people and be honest and treat people with respect (and fallen short many times). I feel very much I have been blessed.