Thinking of selling your office building, store, or warehouse? Did you make interior improvements? This newsletter explains how those improvements might impact your future taxes.
Key points:
- Today’s deduction can become tomorrow’s higher tax bill: Certain improvements trigger “ordinary income recapture” when you sell, meaning it’s taxed at higher rates than regular capital gains.
Three ways to depreciate improvements (QIP):
- Straight-line: Slower deduction, lower future tax hit.
- Section 179: Big deduction upfront, high future tax.
- Bonus depreciation: Same as Section 179, but may be temporarily increased to 100%.
- Plan! Understand the trade-offs and choose the right method based on your plans.
Let’s make your property work harder for you!
Want to discuss your specific situation?