Fall has arrived, and with it, the certainty that the end of another year can’t be far away. If you’re like most people, you know you should be doing tax planning to reduce your tax liability if possible, but you’re not sure where to start.
“One of the best deductions available today is for purchases of business real estate,” said Buddy R. Parsons, president of Borelli Investment Company. “And there’s no easier way for companies and professional firms of all sizes to invest in real estate than by buying their own business condominium.”
Borelli Investment Company is a leader in business condominiums, with a wide range of office condos of all sizes at Junction Office Center and AirTech Office Condominiums in San Jose. With a down payment of as little as $36,500, companies can own rather than lease space and gain a number of significant financial benefits, which include:
IRC Section 179 Deduction
This section of the tax code allows business owners to deduct up to $108,000 from company profits for a business asset in the first year it’s placed into service—whether that asset is computer equipment or an office condominium. One way to take advantage of the Section 179 deduction is to use an accounting method called cost segregation. This is the process of identifying and segregating building components by their true useful lives—5, 7, 15, or 39 years—for accelerated depreciation. Under Section 179, you can deduct the cost of certain classes of assets against taxable income in the first year—up to the $108,000 maximum.
And here’s the best part. For a Section 179 deduction (you can also read about Section 179 from the IRS website) all you have to do is place the asset in service before the end of the year, and you qualify for a full-year deduction. That makes closing a transaction on a business condominium in the coming weeks one of the best things you can do to reduce your taxes!
Additional Benefits of Cost segregation
In addition to supporting IRC Section 179 deductions, cost segregation enables you to depreciate the portion of a building’s costs that support personal property or are directly related to your business activities over much shorter lifetimes than the standard 39 years for commercial property.
Accelerating the depreciation of a substantial portion of your office condominium’s value can significantly increase your write-offs in the early years, generating considerable upfront savings. This savings—plus the Section 179 deductions—has reduced the effective out-of-pocket costs for the down payment for many buyers to nearly zero. Imagine purchasing a business condominium with no net out-of-pocket costs!
Businesses also can deduct loan interest and other typical costs of doing business from their taxes.
Long-term appreciation
Owning your business property also lets you enjoy the expected appreciation over time that has long been associated with prime real estate in Silicon Valley. An office condominium gives you a much more affordable way to “get in” and start enjoying the benefits of business property ownership.
For more information about how tax and other financial opportunities apply at Borelli Investment Company’s Junction Office Center and AirTech Office Condominiums, contact Larry Bengiveno at (408) 453-4700 or larry@borelli.com. Be sure to check with your CPA about how specific benefits will impact your personal financial situation before buying.