Did not realize, at purchase, that as a Physician, I cant depreciate my NNN Walgreens - my options ? JD

own a NNN Walgreens 25 yr self amortizing DSCR 1.01. Cant depreciate it - what are my options
In Selling Property - Asked by JAY D. - Nov 12, 2009
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Holger S.
Wayne, PA

Dear Physician,
It is my understanding that if you own a commercial property you should be able to depreciate it over 39 years. You are probaly not activevely working in the real estate industry and then your income from the property is passive. So with a DSCR of 1.01 there is not much left for you to write off. You could buy another income producing property that is making money after debt service and that is also passive income so you could then use the loss (depreciation) from the Wahlgrens Property to offset the income from the other property.
Do you own the property alone or together with your spouse, if any? If you own it with your spouse she could take her real estate license and then the passive income/loss would be active income/loss for her and she cold offset the operating loss towards her income.
If that does not work you have to prove that you are actively participating in the management of the property and that could possibly change your situation but that is also a thing for a tax lawyer or an accountant to look at.
I am not an accountant or a lawyer so this is not legal or tax advice but I strongly suggest that you bring these option up with your accountant or tax advisor.
If you need more ideas please give me a call.
Holger Stenberg
Associate Broker / Manager
Home Buyers Marketing II, Inc.
Wayne, PA 19087

Nov 12, 2009
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Jim P.
Knoxville, TN

Unless you only bought land, you can depreciate the building over 39 years and the parking lot and sidewalks over 15 years. If you have a loss, it is probably not
deductible but rather carries forward. As you pay down the mortgage, the property will go from generating a loss to generating a profit. At that point in time you can offset the losses against the income.

Nov 12, 2009
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Gregory G.
San Francisco, CA

That doesn't seem right. Why can't you depreciate the Walgreens? You should have plenty of depreciation with a DCR that low. Is this a special ground lease?
Gregory Garver - Commercial Real Estate Broker
Broker License# 01716531
Web Reference: http://www.gregorygarver.com

Dec 3, 2009
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Chris S.
Coeur D'alene, ID

I think you need a better CPA?

Jan 22, 2010
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