Commercial real estate depreciation is a significant tax advantage available to qualified commercial real estate owners. The Internal Revenue Service (IRS) permits eligible owners of commercial real estate investments to decrease their tax bill by depreciating the value of their property over a predetermined period of time, similar to how ordinary business tax deductions work. Depreciation is just as significant to many real estate investors as the cash flow and potential increase in market value that a property generates. Read the complete blog to know what is commercial real estate depreciation and its benefits.
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Despite the fact that the name "depreciation" implies a loss, it is actually a significant gain for commercial real estate investors and a major reason why individuals invest in real estate. Here's an illustration of how the straight-line depreciation method for commercial property works:
Not only has the investor's taxable income been decreased, but the tax rate has also changed from 32 % to 24% percent as a result of commercial real estate depreciation.
The term "commercial real estate" refers to physical structures that represent a variety of industries. Given below are a few examples of commercial real estate properties:
Given below are the properties that can be depreciated:
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