291. The Power of Section 179 for Commercial Real Estate and Short-Term Rentals w/ Nathan Sosa, CPA
Tax Smart Real Estate Investors Podcast
Understanding Section 179 Deductions for Real Estate Investors
Real estate investors can utilize Section 179 deductions to deduct up to $1.22 million for qualifying property, with overall capital purchase limits set at $3.05 million. Exceeding the purchase limit results in a reduction of the deduction, which can affect those with significant property investments, especially in equipment-intensive businesses. For commercial investors, additional deductions related to HVAC systems, roofs, and fire protection systems may be available. However, the Section 179 deduction is limited to the business income generated from the specific entity, such as a partnership, meaning any excess deduction can be trapped within the entity and will not transfer to a personal tax return. This makes it crucial for investors to understand these nuances and potentially collaborate with CPAs specializing in real estate to optimize tax strategies.
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