Write Off Commercial Property: What You Can Deduct and How It Works

When you own a commercial property, a building or land used for business purposes like offices, retail spaces, or warehouses. Also known as income property, it’s not just an asset—it’s a tax tool. The IRS lets you write off commercial property through deductions that reduce your taxable income. This isn’t about hiding income. It’s about recognizing that buildings wear out, systems break, and maintenance costs money. If you’re renting out space or using it for your business, you’re entitled to claim these losses over time.

One of the biggest write-offs is depreciation, the gradual loss of value of a property over its useful life. For commercial buildings, the IRS allows you to spread this deduction over 39 years. That means if you bought a warehouse for $1.2 million, you can deduct about $30,700 each year—no receipts needed, just the purchase price and date. You can also write off repairs, property taxes, insurance, utilities, and even cleaning services. But here’s the catch: you can’t write off the land. Only the structure. And if you make improvements—like adding a new roof or HVAC system—you have to depreciate those separately over their own timelines.

Many owners miss out because they treat commercial property like a personal home. You can’t deduct mortgage interest the same way. You can’t claim the home office deduction unless you’re using part of the building exclusively for business. And if you sell the property later, you’ll owe depreciation recapture tax—basically, the IRS gets back what you saved over the years. That’s why tracking every expense matters. Keep records of every repair, every bill, every meter reading. Even small things like replacing a broken door handle can add up over time.

What about expenses you pay upfront? Things like legal fees to buy the property, broker commissions, or title insurance? Those get added to your property’s cost basis, which lowers your capital gains tax when you sell. It’s not a deduction in year one, but it’s still money in your pocket later. And if you’re using the property for both business and personal use—like a mixed-use building—you have to split costs based on square footage. No guessing. No estimates. The IRS wants numbers.

There’s also a shortcut: the Section 179 deduction. If you’re buying equipment for your commercial space—furniture, computers, security systems—you can write off the full cost in the year you buy it, up to $1.22 million in 2025. But this only applies to personal property, not the building itself. So a new elevator? No. A new cash register? Yes. This is where people get confused. Knowing the difference between building and equipment is the difference between saving $50,000 and missing out entirely.

And if you’re not sure what qualifies? Look at your property’s use. Is it generating income? Are you actively managing it? Then you’re likely eligible. The IRS doesn’t care if you’re a big corporation or a single landlord with one office building. The rules are the same. What changes is how much you can save—and how carefully you document it.

Below, you’ll find real examples of how people actually claim these deductions. Some saved thousands by catching overlooked expenses. Others lost money by mixing personal and business use. You’ll see what works, what doesn’t, and what the IRS actually looks for when they audit.