Your Trusted Midwest Property Tax Advocate

Can buying commercial property have tax advantages?

On Behalf of | Apr 29, 2022 | Property taxes |

You’re looking for a new commercial space as your company continues to expand. You’re currently weighing the pros and cons of renting or buying.

One of the biggest considerations you have to factor in is tax expenses. Could buying a commercial property outright, rather than committing to a commercial lease, have tax advantages?

Savings for your beneficiaries

One of the key motivations during your business ventures has been to leave something behind for your family. By owning your commercial property outright, you could save your heirs significant amounts of money in estate taxes. Typically, beneficiaries will only have to pay taxes on the appreciation of the property if you die. For instance, if you buy a property for $1 million, and its value increases to $2 million at the time of your passing, your heirs would only have to pay taxes on the $1million increase rather than the total value of $2 million.

Tax deductions on commercial mortgages

While you are obliged to pay your commercial mortgage amount, the interest on these payments is generally tax-deductible. For instance, if your mortgage payments amount to $6,000 per month, with $1,000 of that being interest, you should be able to claim $12,000 in tax-deductible interest at the end of the financial year.

Protecting your rights

Investing in commercial real estate is a big decision that requires careful consideration. You should only have to pay a fair amount of taxes in accordance with the law. If you feel that you are being overcharged or have any other questions about commercial tax litigation, make sure you seek experienced legal guidance.