Want to diversify your portfolio? Consider the many advantages of investing in commercial properties. CRE investors enjoy other great perks, perhaps most commonly at tax time.
Some tax benefits that Commercial Real Estate offers include:
Depreciation Deductions for Income Taxes
The first advantage for real estate investors is the ability to deduct depreciation at tax time. Any asset will depreciate- including commercial properties and real estate. The benefit is that you can deduct some of that depreciation when you file your taxes.
Interest Expense Tax Deductions
Are you paying a commercial mortgage right now? Deduct the interest that you are paying you’re your federal taxes- talk to your tax preparer to learn more!
Non-Mortgage Tax Deductions
Other items can be deducted from your taxes when you own a commercial property. For example, some non-mortgage tax deductions include repairs, maintenance, management expenses, and other expenses related to the operation.
Utilizing Real Estate Taxes Losses to Your Advantage
Have a loss on your commercial real estate investment? This may be able to be a tax deduction for you at tax time! There are some contingencies and criteria, so talk to a professional tax preparer to find out if you are eligible for this deduction.
Reduced Tax Burdens for Beneficiaries
There are also tax benefits for the heirs of a commercial real estate investment. Typically, the heirs of a commercial property must only pay taxes on the appreciation of their inherited property- not the entire value of the commercial real estate. This can be a huge saving.
Tax Benefits of Commercial Real Estate vs. IRAs for Retirement
Think about commercial real estate investments instead of IRAs for when you retire. While IRAs provide some financial security, they are taxed at the normal tax rate when you take money out. However, when an investor sells their property, they only pay capital gains taxes. This is usually much less than the normal tax rate. The exception to this is Roth IRAs- your tax preparer or financial advisor can provide further information.
Learn more about tax benefits awaiting you when you invest in commercial real estate. Talk to the industry experts at Sterling Capital Consulting today!