There are several strategies that people who own commercial real estate can use to reduce their tax burden. Some of these strategies include:
Depreciation: Commercial real estate can be depreciated over a period of time, which can help to reduce the amount of taxable income you have.
Cost segregation: By performing a cost segregation study, you may be able to reclassify some of the components of your property as personal property, which can be depreciated more quickly than real property.
1031 exchanges: If you sell a commercial property that you have held for investment, you may be able to defer paying capital gains taxes by using the proceeds from the sale to purchase another investment property through a 1031 exchange.
Passive activity loss rules: If you own a commercial property that generates a loss, you may be able to use that loss to offset income from other sources, such as a salary or wages.
Interest deductions: You may be able to deduct the interest paid on a loan used to acquire or improve a commercial property.
It's important to note that the specific tax strategies that are best for you will depend on your individual circumstances and the specifics of your commercial real estate holdings. It may be helpful to consult with a tax professional or financial advisor to determine which strategies will be most effective for you.
