Depreciation Deductions for Income Taxes

Depreciation deductions are just like your house or vehicle.  While the cost of commercial real estate properties were  going down over time, it reduced their value. Due to this depreciation, did you know that investors can include the amount of depreciation as a deduction?  Yes, depreciation is one way to deduct cost for your income tax return.  However, you will have to pay back the IRS, if you sell the property in the form of depreciation recapture.

Interest Expense Tax Deductions

With commercial real estate, you can also deduct any interest you pay on a commercial mortgage.  The IRS allows a deduction of interest to come off when you file your income taxes. This can be a powerful tool for investors, especially in the situation of higher interest financing loans, like a construction loan.

Non-Mortgage Tax Deductions

In addition, commercial real estate investors can deduct property repairs.  When filing your taxes you can deduct:

• maintenance costs,
• certain property management expenses
• and many other operating expenses from their income taxes.

Utilizing Real Estate Tax Losses to Your Advantage

While as an investor, you want to have a successful investment.  However, if you do incur losses on a piece of commercial property, you may be able to use that loss to your advantage. It is always best to talk to your accountant and tax professional to see which bracket of commercial taxpayer classification you fall in.  They can help you decide what deductions you can take on your commercial investment.