Which of the following is NOT considered an expense when determining Net Operating Income (NOI)?

Net Operating Income (NOI) is a key figure used in real estate investment analysis, and it represents the income generated from a property after all operational expenses have been deducted. However, it is important to distinguish between operational expenses and other financial considerations, such as taxes not directly tied to property operations.

Income tax is not considered an expense when determining NOI because NOI focuses solely on the income generated from operating the property. It reflects the performance of the property itself, excluding any financing costs or taxes on the profits derived from that income. This distinction is crucial, as NOI is used by investors to assess the property's value and operating success without the interference of financing arrangements or personal tax liabilities.

On the other hand, expenses like utilities, property taxes, and insurance are directly related to the operation of the property, and they affect the net income generated before financing costs and taxes on earnings are considered. By excluding income tax from NOI calculations, investors can focus on the cash flow generated by the property itself, making it an important measure for evaluating potential investments.