Law Office of Kimberly A. Abrams & Associates, P.A.

Impact of capital gains on the sale of commercial property

If you are a business owner who is thinking of cashing in on your commercial property investment, now could be a great time. With real estate markets in a state of ascension in many areas, now could be the time to capitalize on your investment. Maybe the reason behind the sale of a commercial property is to meet a need, like to find a larger space or to relocate to a different area. Either way, a commercial property could reap capital gains and some strings that are attached to them.

Depending on when and how much you paid for a commercial property, its value could increase any time after your initial purchase. Whether a change in supply and demand, a revitalization of a certain area or just simple appreciation, there could be lots of reasons that a commercial property may be worth more than what a person initially paid for it. If a person is attempting to sell a property for more than the initial investment, capital gains are a factor to consider. Capital gains are profits that an individual receives from an appreciation in the value of an investment.

Capital gains do not apply specifically to commercial property, but, really, to all investments that appreciate and turn a profit. The profited amount is the capital gain. The capital gain is taxed once the capital asset has been sold. So, while a commercial property may be worth more than it once was, the capital gains tax will be assessed only upon the sale of that asset.

No one likes to pay more taxes, but this is something that will happen with capital gains. The good news is the maximum percentage that will be paid on capital gains is 15% of the profits. This is something a person should be prepared for if they stand to make a profit on an investment. This includes the sale of and any profits made in commercial real estate.

Source: FindLaw, "What Are Capital Gains?," Accessed January 1, 2017

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