Logic behind add back principal payments

[Walt Waters]

Hello everyone, 

Can someone please help me answer this...

This question pertains to line 56, "Add Back: Principle Payments" in the REIpropertyanalyzer.xls. I downloaded the REIpropertyanalyzer.xls from BP and it's been a tremendous help to figuring out which properties are a good deal, or to determine what I need to make as an offer to make the better. This particular part of the calculation is really confusing and I actually found an older attempting an explanation, but it doesn't make any sense either. (https://www.biggerpockets.com/renewsblog/2011/07/2...). 

What the formula does is subtract the total interest you owe from the annual payments and then add that to your taxable net income. The difference between including this calculation or not will mean that I'm either loosing money or making money each year! 

For example, let's say I take out a 30-yr mortgage for $170,000 with a 5% interest. My monthly payment would be $913 and my annual payment would be $10,951. 

Now, let's say that I determined that my net operating income is $15,369, depreciation at -$5,636. My taxable income would be a loss of -$1218 ($15,369-$10,951-$5,636). 

The "Add Back: Principal Payments" in this scenario is $2,451 ($10,951-(0.05*$170,000)). This would "add back" to the net income loss of -$1,218 to make a net income gain of $1,233. 

Without "add back"                               With "add back"

+$15,369: NOI +$15,369: NOI

-$10,951: Annual debt                           -$10,951: Annual debt

-$5,636: Depreciation                            -$5,636: Depreciation

-$1,218: Net income loss                        +$2,451: "Add back: Principal payments"

                                                               +$1,233: Net income gain

As you see, I'm either loosing money or making money by a large difference and I don't really understand why. Why am I including my debt as part of my income gain?? 

Confused and sorry for the long post.