Investing in commercial real estate in the United States brings more than just rental income and property appreciation—it also unlocks a range of tax benefits that can be a game-changer for investors. If you’re thinking about diving into this market or expanding your portfolio, understanding these incentives can help boost your returns and build your long-term wealth.
Contact Agora Real Estate Group and let’s create your perfect investment strategy.
Depreciation: A real estate investor’s best friend
Depreciation lets you deduct the cost of your commercial building from your taxable income over several years—usually 39 for commercial properties. While your property might actually be gaining value, the IRS lets you treat it as if it’s losing value, at least for tax purposes. This “paper loss” can help offset your rental income, reducing how much you owe come tax season.
But that’s not all. Investors often combine depreciation with other allowances, like bonus depreciation or Section 179 deductions. These let you write off certain improvements—think HVAC systems or fire alarms—much faster, further slashing your taxable profits.
You might be interested in: Red flags to watch out for in a commercial property purchase
1031 exchange: Deferring tax, building wealth
Another big break is the 1031 exchange, one of the investor favorites. With a 1031 exchange, you can sell one commercial property and reinvest the proceeds into another “like-kind” property without paying capital gains taxes right away. Instead, those taxes are deferred until you eventually cash out. This lets you roll over your profits from deal to deal, supercharging your portfolio growth while your tax bill waits patiently on the sidelines.
Of course, there are some rules and deadlines—like identifying a new property within 45 days and closing the deal in 180. But for investors looking to scale, the 1031 exchange can turn tax deferral into extra buying power.
Energy tax incentives and local credits
If you’re upgrading your building’s energy efficiency, there are even more perks. Programs like Section 179D provide deductions for installing energy-saving systems. Plus, many states and local governments offer property tax breaks or credits for green building certifications, so check your city’s latest offerings.
You can also see our available properties.
Bottom line: Commercial real estate isn’t just about location—it’s about leveraging every advantage. With the right tax strategies, you can turn a good deal into a great investment.
If you found our article useful, please share it with others and don’t forget to follow us on Facebook, Instagram and LinkedIn as well as check out our services at agorare.com