Purchasing commercial real estate can be a costly venture, but, a variety of tax breaks and deductions are in place to get instant relief.
Since 1986, the tax law has provided long-term tax write-off opportunities for investment in commercial real estate. Although the price given to the land cannot be written off against your taxes via depreciation, building improvements are another story. Structural improvements to commercial buildings can be deducted based on a 39 ½ years depreciation schedule. On the other hand, improvements not permanently affixed, such as partition walls, air conditioning units and carpeting can be written off as quickly as 7 years. Sidewalks, fences, stone, signs and benches are all included under the land improvement umbrella and are eligible for 15-year write-offs.
There are also tax advantages for improving the energy efficiency at a property. Qualified projects can receive various deductions at the state and federal level that may include HVAC, water systems and interior lighting.
There are also additional incentives available to developers interested in revitalizing parts of the country. Detroit, for example, offers businesses planning expansion and relocation kickbacks for moving operations to the financially challenged city. Buffalo, NY has rebuilt its economy into a bustling metropolis based on New York state tax breaks drawing investors in every industry to solar energy to the medical field.
Whether you own shopping centers, office parks or industrial properties, you can take advantage of commercial real estate tax breaks. You can often times offset the income you earn from investment properties with the right tax deductions. With some research into the specifics of tax deductions, you can get the most out of your commercial real estate property.
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