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Tax Smart Real Estate Investors Podcast

291. The Power of Section 179 for Commercial Real Estate and Short-Term Rentals w/ Nathan Sosa, CPA

Sep 17, 2024
Nathan Sosa, a CPA specializing in real estate tax implications, joins the discussion to unveil the power of Section 179 deductions. They dive into how these deductions can significantly benefit commercial real estate investors and short-term rental owners. Key topics include strategies to offset W-2 income and the limitations that arise in partnerships. Listeners learn about the importance of consulting tax professionals to avoid pitfalls and maximize their tax savings under evolving depreciation laws.
32:31

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Podcast summary created with Snipd AI

Quick takeaways

  • Section 179 allows commercial real estate investors to immediately expense significant capital expenditures, enhancing tax strategies as bonus depreciation phases out.
  • Short-term rentals can qualify for Section 179 deductions, emphasizing the importance of understanding eligibility to optimize tax benefits effectively.

Deep dives

Understanding Section 179 Deduction

Section 179 is a tax deduction that allows small business owners and commercial real estate investors to immediately expense certain capital expenditures rather than spreading them out over time through depreciation. Unlike bonus depreciation, which has overshadowed Section 179 in recent years, this deduction is becoming more relevant as bonus depreciation begins to phase out. Section 179 allows for a higher immediate deduction, appealing to those looking to reduce their taxable income quickly. This deduction is particularly useful for commercial real estate improvements, such as HVAC systems, roofs, and security systems, which can typically be depreciated over 39 years but can instead be fully expensed in the year incurred.

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