Tax Benefits for CRE Investors

If you’re among the thousands of CRE investors just beginning to make a career in the commercial real estate industry, you probably already know a great deal about the huge profits you can turn when you land that perfect purchase. However, did you know that there are also several tax benefits you can expect while you’re working in this industry? If you directly own a property you’re investing in, you may be able to take advantage of a huge number of tax benefits that are designed to make your job easier and save you a pretty penny. Some of these include:

Depreciation Value

While your goal is probably to make your property appreciate in value, depreciation can be written off as an expense when tax time rolls around. This applies to damages and any wear and tear your property sees over the years that directly impact its overall value and make you lose money. This is designed to help you regain some of the money you’ve lost maintaining the property, so you can help it to recover and become a profitable venture once more. This can help you either receive a lower tax bill in many cases, or even defer tax payments until after the property in question is sold to a new buyer.

Loan Interest Deductions

Next, it’s important to remember that you’ll typically be able to deduct the value of loan interest payments from your taxes when you file. The amount of interest you’ve paid on your loan throughout the course of the year is subtracted from the total amount of income you’ve generated from the property in question, and is then used to determine how much of your income is actually taxable. This, of course, increases the overall returns that you and other investors see at the end of the year, and help to keep the property profitable in the long run.

Capital Gains Taxes 

Capital gains refer to any funds you or other CRE investors might gain once you sell a property you’ve been investing in for a number of years. The amount you wind up paying in taxes depends largely on your personal position within the tax bracket itself, but are typically much lower than what you’d be paying on your income taxes if you happen to be a high earner. This helps to ensure you’re still generating a decent profit.

Understanding how CRE investors can benefit from their career and investments during tax time is critical if you really want to make the biggest possible profit while working in this industry.


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