You pay capital gains at 15% but will have to recapture Depreciation deducted at 25%.

I've owned this house for 6 years, so I'm exempt from capital gains no matter what..

You completely ignored management (whether you do it or not), maintenance, capital expenses, vacancies, utilities during vacancies, advertising, entity maintenance, legal fees, damage done by tenants, evictions, court costs, lawsuits, fuel so that you can drive to your rental 1 1/2 hours away, etc, etc, etc.

The Lloyds TSB Group provides a wide range of domestic and international banking services to personal and commercial customers, including: Retail banking Insurance Wholesale banking Unit trusts and investment management Consumer credit and card services Key Facts and FiguresLloyds TSB Group at a glanceTotal assets £252 billion Total number of customers Over 15 million Number of employees Over 70,000 Total capital ratio 11.3% Lloyds TSB Bank plc deposit credit rating (Moody's) AAA Lloyds TSB Group plc long-term rating (Fitch IBCA) AA+ UK ranking (home insurance) 1st UK ranking (current accounts) 1st UK ranking (mortgage lending) 3rd Lloyds TSB AsiaLloyds TSB has been present in Asia since the 1970s with offices in Hong Kong, Singapore and Malaysia.

So flip another house to raise capital.

With a long term capital gains rate savings, plus some decent deductions, I might still do OK.

Our working capital amounts to another 25k so we have a cash flow deficeit of about 50k on each project.We look for a second mortgage in the amount of 15% of the ARV or, in this case, 45k with 6 months interest deducted.

That 45% to 50% includes paid management, paid maintenance, and capital expenses.

Our working capital amounts to another 25k so we have a cash flow deficeit of about 50k on each project.

To answer your specific question, property taxes and insurance ARE part of the operating expenses.Operating expenses do NOT include Principal and Interest, capital expenses, or depreciation, (although in reality you should consider an allowance for capital expenses in your cash flow analysis).From a practical standpoint, you subtract the mortgage payment (P &I) from the NOI to get your monthly cash flow.