Why do you add back principal payments when calculating Taxable Net Income on a property?
http://imgur.com/a/ypzZL

I know this is a noob question, but it doesn't make sense to me since you're already taking away the annual debt service.
[{"id": "dg3bjej", "text": "You're subtracting total mortgage payment to determine cash flow, but add back principal since it isn't tax deductible. Only the interest portion of any debt is deductible, whether corporate debt or a property mortgage. \n\nDepreciation doesn't affect cash flow, but is deductible, which is why that's subtracted out. ", "replies": [{"id": "dg3gp4h", "text": "This is the correct answer. It's because whomever created that spreadsheet was starting from cash flow. It would look different on an income statement.", "replies": [{"id": "dg400b8", "text": "It also negates the payment term, which varies wildly, and has no impact on tax (indirectly the rate though).", "replies": [], "depth": 3}], "depth": 2}, {"id": "dg4ktiw", "text": "Interest is an expense, just like operating expenses.  It's cash out of pocket..  Principal is the curtailment of debt, and that is offset by an increase in equity, aka, Principal curtailment increases your value of your asset", "replies": [], "depth": 2}], "depth": 1}, {"id": "dg99k0b", "text": "Imagine you get $100 every month from a job.  You put $25 of that into a savings account you could not touch for 10 years.  Your taxes would not just be on the $75 you could spend right now, it would include the $25 as well.  Just because you are storing it somewhere else for a period of time does not mean that it is no longer earnings/profit.  This is analogous to a mortgage.  You can think of the principal portion as the $25 taken out of your earnings and stored in a separate account for many years.  It does not earn any interest and can technically lose value if the property loses value but it is still similar. ", "replies": [], "depth": 1}]