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Commercial Real Estate Depreciation

Basics Things You Should Know about Commercial Real Estate Depreciation


Although the word depreciation may sound like a loss to you, it is actually a great gain for commercial real estate investors as well as a main reason why people invest in real estate. In this post you can get a quick look at how commercial real estate depreciation acts and also about commercial property tax depreciation and more.

Commercial real estate depreciation in simple words

The ATO or (Australian Taxation Office) enables commercial real estate investors to simply diminish or reduce the value of their investment property in identical instalments over a period of thirty-nine years. Such a useful life of the property does not really encompass the land value, just the building and even overall improvements. It might interest you that many real estate investors are there who consider depreciation to be just as critical as the cash income and possible increase in market value that a property produces.

Quick perks of commercial real estate depreciation

Well, commercial real estate depreciation works as a tax shelter by simply diminishing or reducing the taxable income of investors. Have a look at a swift example of how real estate depreciation for commercial property operates using the overall straight-line depreciation method:

  • The building value only equals $1 million
  • Annual depreciation deduction equals $1 million or 39 years equals $25,641
  • The taxable income of the investor equals $225,000-$25,641 depreciation expenditure equals $199,359

All the gratitude to the commercial real estate depreciation, not just has the investor’s taxable income been diminished, but the overall tax bracket has also altered from thirty two percent to twenty four percent. The point is the income tax liability of the investor has gone from $72,000 down to simply $47,846.

However, you must always remember that the depreciation expense deduction is going to be per property, and it is not per investor. So, there is always the possibility that active commercial real estate investors might simply have a complete depreciation expense deduction that lessens their taxable income to even $0.

You know commercial real estate depreciation allows investors to expense the cost of overall income producing property over time, lessens the sum of personal income tax paid, and even roll over and even defer the payment of capital gains tax once property gets sold.

  • Depreciation deduction for commercial property might create tens of even thousands of dollars in tax savings every single year
  • Commercial depreciation enables investors to diminish or even fully eliminate their taxable income every single year
  • Commercial real estate depreciation is a kind of legal tax shelter used by even the smart and savvy investors

Indeed, if you are already thinking about investing in commercial real estate or property after going through this post, you should. After all, once you are informed and make the smart moves, you can actually experience gains!


So, you should right away consult the experts like JC Tax Depreciation and make the most of their knowledge and experience. Their mission is to offer you reliable as well as accurate depreciation reports with just the best customer service.

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