Many investors get into commercial real estate for its significant benefits including potentially high capital appreciation, a relatively consistent cash flow stream, funding leverage, property security, and portfolio diversity. And there are important tax benefits to consider.

There are indeed many tax benefits for owners and investors in commercial real estate that should be factored into investment decisions:

Commercial real estate mortgage interest is tax-deductible. In some cases, this deduction can offset some or all the taxes that may be owed due to profits generated by a property.
As with any structure, commercial properties experience wear and tear, and this natural factor qualifies owners to claim depreciation as a tax deduction. The deduction can span 39 years. The deduction can be leveraged by an engineering study that shows accelerated cost deprecation.
Many commercial real estate property on-going expenses are tax-deductible including repairs, maintenance, management expenses, renovations, property upgrades, and condo fees (in some cases.)
If an individual investor is planning for retirement, the capital gains tax rate on real estate is a lower rate than the tax rate on funds withdrawn from an IRA.
If an investor’s plan is to pass on a commercial real estate investment to beneficiaries, the investor’s beneficiaries only pay taxes on the increased property value after the time of inheritance. That can provide some comfort and relief to the investor and beneficiaries.
Section 1031 of the tax code allows investors to swap properties without realizing a capital gain.
There are also Opportunity Tax Zones, specific areas that offer special tax incentives.
The Federal Government provides other specialized programs that offer tax credits including the Low-Income Housing Tax Credit, Historic Tax Credit, and New Market Tax Credit.
And many losses experienced through commercial real estate investing can be claimed as deductions.

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