Ways to save on taxes
Hello, trying to get my feet wet with commercial real estate.

What is a good method to determine how much tax relief I will get based on the pro forms of a property?
[{"id": "egf93v1", "text": "Wouldn't your CPA be able to easily answer that?  I'm trying to figure out what \"tax relief\" you'd get beyond depreciation and deducting interest, if you mortgage the building and expenses of managing and maintaining the building (not capital improvements).  Are you referring to a property operating at a loss - expenses exceeding the income - to produce a write off?  I don't get why anyone would want, say a $100,000 loss to save $40,000 on taxes.  I'd rather have a property earn $100,000 and pay $40,000 in taxes. ", "replies": [{"id": "egf9k36", "text": "Just trying to calculate the potential tax deductions on a property I'm looking at.", "replies": [], "depth": 2}], "depth": 1}, {"id": "egfjaps", "text": "Its pretty easy to figure out.\n\nFirst pro forma the net operating income out. Figure out the debt you will have on the property. Add up one year of interest (not principal).\n\nThen take the value of the building (not land) add in any improvements you have made (you need to research definition of repair vs improvement) divide by 27.5 (irs prescribed life of a bldg).\n\nSubtract the number you get from the second equation from the one from the first equation.  That is your taxable income, if its negative, its a loss. \n\nIf the real estate is owned by an llc or lp you can take a 20% discount off that number before you start calculating taxes.", "replies": [{"id": "egfk3o3", "text": "I thought that 20% discount is still being figured out if it applies to real estate investors?\n\nI read no one knows yet how it's being interpreted.", "replies": [{"id": "egfmhnj", "text": "Not sure", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]