USA Cost of goods sold for a landlord


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Hello,

I'm wondering how to calculate "cost of goods sold" for a landlord. Is it the cost of operating the property? Does it include mortgage interest and property tax?

I don't understand which items are included. For instance:
- Cleaning
- Advertising
- Legal fees
- Mortgage interest
- Repairs
- Property taxes
- Insurance
- Depreciation

Or is it just "zero" because there is no physical item being sold?

I can't just enter nothing.

Perhaps someone who understands this better than I do can help.
 
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The answer to your question is tough because there is technically no "costs of goods sold".

Through research, I have read people dividing up the floor area from the apartment/house that is rented out and assign cost based on that, assuming the value across all the units are the same, or will be adjusted per size of unit/# of rooms/ sq foot, etc.

Costs of Goods Sold could also be considered as property cost, therefore things like mortgage interest and property taxes, etc would go under it.
 

Fidget

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It's basically all associated costs. It's not a true "COGS" because, as the post above says, there technically is no COGS.

So for a Landlord's accounts, you've basically just got total income - total expenses = profit/loss.
 
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Werner Reisacher

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The general term Cost of Sales refers to all costs that are directly related to the purchases, procurement or creation of a tangible product or marketable services that generate income. We mostly use the term COGS, since it precisely defines the Cost of Sales that, under the matching accounting principle, is related to the sales we reported during the same reporting period.
This method allows us to identify the amount of money that our products or services generate. All expenses that we list below the Gross Profit line reflect the costs we incur in running our business. This includes the distribution cost, money spent on management, administration, advertising, accounting - all the costs related to the work we need to perform to run the operation and fulfill our legal and fiscal obligations.
If you are the owner of a shopping mall, you will allocate all the cost you spend for the maintenance of the building including utility, maintenance, and repair of the building, equipment, parking lot and security services under the category Cost of Sales. Depending on the contractual agreements you signed with your tenants, you will pass part of these costs on to the tenants. These allocations are based on the number of square feet that the tenant is occupying. The calculation is always on the bases of the square feet. What type of costs are distributed to the tenants depends entirely on the type of lease the tenants entered.
The gross profit generated by the Investment in the building identifies the profit he has generated by the way he markets his product. Any expenses spent on running this business are reported as expenses below the Gross Profit level.
 

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