Question regarding what part of rental income is taxable

[Ed Park]

Hello all, was wondering if someone could help me understand what part of the rental income is taxable. So I understand that once I receive rent, a certain percentage should be saved for vacancy, capex, repairs & maintenance, etc.

Then after deducting all the other expenses, I'll get the NOI. From the NOI i'll deduct the mortgage payment and will arrive at the cashflow before income tax. Hopefully I got that correctly.

If that's the case then my question is:

1) Is setting aside for example 5% vacancy 8% capex each month in it of itself a deductible expense? or are those reserves not considered an expense unless they are actually incurred and at that point tax deductible? (e.g. lose a tenant or water heater breaks down and needs replacement)

2) If the variable expenses in it of themselves are tax deductible regardless if I have a vacancy or capex that year, I would obviously hold on to them for when those expenses are incurred. However, am I free to make money off of it in the meantime(high yield savings)? or are they're any rules around that. Same with security deposits. (This question would be moot if the variable expenses are tax deductible only when actually incurred)

I feel like the answer is obvious but I wasn't quite sure and was hoping to get guidance from the knowledgeable members here.