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.
Associate Broker / Manager
Home Buyers Marketing II, Inc.
Wayne, PA 19087
Nov 12, 2009