Commercial real estate investing is a business. This means investors receive the same tax deductions and advantages other businesses and corporations are allowed. Many new investors overlook two of these benefits, travel and depreciation. These alone are enticing reasons to join this prestigious group of forward thinking go-getters.
Travel
Businesses deduct travel expense for necessary travel. For investors, this means travel to and from properties. These can be real estate already owned or real estate under consideration. This expense can be actual cost or a mileage allowance. If investors take public transportation or a taxi from their house or office to the investment property, they deduct the cash paid out. If they use their automobiles, this expense is computed on actual operating cost or a per mile fee. When property is located a certain distance from the owner?s home, that person can claim lodging and meals. Many people buy property in other states or countries so they can write off travel, lodging and meals costs on these trips.
Depreciation
Because buildings and their components wear out, investors get credit for a certain percent of their investment every year. Either the building and everything in it is depreciated over a set number of years or the individual components are calculated separately. According to the IRS schedule, property is separated into different categories with depreciation periods of 3, 5, 7, 10, 15, 20, 25, 27.5 and 50 years. Anyway this lucrative tax deduction is calculated, property owners benefit. Not only do these lucky people collect rental income, they get a valuable depreciation deduction which reduces income and income taxes.
Businesses are given many beneficial tax breaks. These include the cost of going from one place to another and depreciating expensive real estate. People who take advantage of commercial real estate investing get these benefits.
Source: http://robertstewart.com/the-hidden-advantages-of-commercial-real-estate-investing/
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