Maximizing Profits: Government Programs for US Commercial Real Estate Investors

Government programs play a significant role in shaping the commercial real estate landscape. For savvy investors, understanding and capitalizing on these programs can provide lucrative opportunities. In this article, we will see government programs benefitting commercial real estate investors. 

If you’re looking to invest in commercial real estate, then commercial real estate debt is the best. You can put $12k into a commercial real estate project. This can get done via alternative investment platforms.

Commercial Real Estate Investors’ Government Programs 


Depreciations are well-known tax advantages that commercial real estate investors can enjoy. Commercial properties have a depreciation period of 39 years. Investors can deduct a part of the property's value every year over these respective periods. Let's consider a $2 million commercial office building. With a 39-year depreciation period, investors can get $2 million divided by 39 years. So, they can deduct approximately $51,282. They can deduct this from their taxable income every year for four decades. This presents a significant tax advantage for commercial real estate investors.

Through a study of cost segregation, investors can potentially front-load depreciation deductions.  If the engineer determines that 50% of the value of an office building, let's say $1 million, will mature in ten years, investors can depreciate that portion in increments of $100,000 over ten years. This enables larger depreciation deductions in the earlier years of ownership, boosting cash flow and reducing tax liabilities. Bonus depreciation is a powerful tool introduced by the Tax Cuts and Jobs Act of 2017. It allows some commercial real estate investors to deduct 100 percent of the property's value in the very 1st year of ownership. 

Mortgage Interest

Commercial real estate investors can get a deduction of mortgage interest from taxes. If, for example, you pay $15,000 per month on a commercial real estate mortgage, with $3,000 allocated to interest, you can deduct $36,000 for a year. This deduction is particularly advantageous for commercial real estate investors. This is due to the higher value of commercial real estate investments and the potential for financing with high interest, making it a potent tax benefit.

Loss deduction

Commercial real estate investors have the potential to benefit from deducting losses under conditions. If your income is less than or $100,000, you can get a deduction of losses of $25,000 from the income. If you earn $80,000 but incurred a $20,000 loss on your commercial investments, deducting those losses can reduce your taxable income to $60,000. However, if your income exceeds $100,000 but is under $150,000, there can be a deduction of some losses, albeit at a reduced amount. If your income is more than $150,000, you generally cannot get any deduction for any losses unless you qualify as a commercial real estate expert according to the IRS, which has specific criteria, including being employed in the field of real estate for a minimum of 750 hours per year plus extra than in any other employment.

Tax abatements

These are agreements between commercial real estate developers and local governments that temporarily exempt property or a part of its taxes. These agreements serve as economic incentives, allowing developers to construct or rehabilitate properties without being burdened by substantial tax obligations on the improved property. Typically, tax abatements apply to property or municipal taxes.

Opportunity Zones

Opportunity Zones (OZs) are designated economically distressed areas where commercial real estate investors can receive tax benefits in exchange for long-term investments. Established as part of the Tax Cuts and Jobs Act of 2017, OZs offer significant tax incentives, including deferral of capital gains taxes and potential tax-free gains. By investing in commercial real estate projects within these zones, investors can take advantage of tax savings while revitalizing underserved communities.

Historic Tax Credits

Historic Tax Credits (HTCs) are accessible to developers who undertake the rehabilitation of historically significant buildings. These credits, offered at the federal and sometimes state level, provide a percentage of the qualifying expenses as a dollar-for-dollar reduction in tax liability. By restoring and repurposing historic properties for commercial real estate use, investors can benefit from these tax credits while preserving architectural heritage.

Low-Income Housing Tax Credits (LIHTC)

This program aims to promote and facilitate the development of affordable housing. Investors can receive tax credits for investing in qualifying projects that provide housing for individuals and families with low income. These credits can be used to offset tax liability or sold to generate immediate cash flow. Commercial real estate investors can partner with developers to take advantage of LIHTC incentives while addressing the critical need for affordable housing.

Energy Efficiency Programs

Government programs promoting energy efficiency in commercial real estate can lead to significant cost savings and increased property value. Incentives may include grants, tax credits, or rebates for implementing energy-efficient upgrades, such as HVAC systems, lighting, insulation, and renewable energy installations. By incorporating energy-efficient practices and technologies, commercial real estate investors can reduce operating expenses, attract environmentally conscious tenants, and improve their bottom line.

Small Business Administration (SBA) Loan Programs

The Small Business Administration (SBA) offers loan programs that provide financing options for small businesses, including those in the commercial real estate sector. The 7(a) Loan Program and the CDC/504 Loan Program are two prominent SBA initiatives. These programs offer favorable terms, lower down payment requirements, and longer repayment periods. These are attractive for investors seeking funding for commercial real estate property acquisitions or expansions.

Foreign Investor Programs

Many countries have programs aimed at attracting foreign investment in commercial real estate. These programs may include investor visa programs or specific incentives for foreign investors. For example, the EB-5 Immigrant Investor Program in the United States provides a pathway to obtain a green card for investors who invest a specified amount in a qualifying commercial project. By participating in foreign investor programs, commercial real estate investors can tap into international markets and access additional sources of capital.

Government Grants for Commercial Real Estate Investors

Government grants provide a valuable source of funding for investment properties beyond tax credits and deductions. The U.S. government offers numerous grant programs that offer substantial financial support to commercial real estate investors who meet specific project criteria. Whether you are an experienced investor, a beginner, or an out-of-state investor, there are opportunities to secure government funds for eligible projects.

Emergency Capital Repair Grant

This grant, administered by the U.S. Department of Housing and Urban Development (HUD), focuses on enhancing the safety and health of tenants in investment properties.

HOME Investment Partnerships Program

With an annual budget of $2 billion, this federal block grant is designed to facilitate the construction, purchase, or renovation of housing for individuals and families with low-income.

RESTORE Act Construction and Property Grants

Established under the RESTORE Act of 2012, these grants are funded by the Gulf Coast Restoration Trust Fund, which receives penalties from the Deepwater Horizon disaster. The grants provide substantial financial support to developers involved in constructing or rehabilitating properties in the Gulf Coast region.

Main Street Grants

This grant program, overseen by HUD, aims to revitalize and preserve historic downtown areas. Developers can access significant funds to renovate or repurpose downtown buildings while maintaining their historic character.

Bottom Line

The government programs for the commercial real estate investors offer valuable incentives and opportunities for growth. These provide avenues for investors to maximize returns, contribute to community development, and align their investments with sustainable and socially responsible goals. By leveraging these programs and grants, investors can navigate the complex real estate landscape, mitigate risks, and drive positive economic impact while achieving their financial objectives.

Assetmonk is a specialized alternative investment platform that focuses on offering lucrative investment options, specifically in the area of commercial real estate structured debt. For commercial real estate investors looking for attractive opportunities, Assetmonk provides exclusive access to these investments.

Investors can participate in these opportunities through the platform with a minimum investment threshold of $12,000. This allows a broader range of investors to enter the commercial real estate market and take advantage of the potential returns it offers.

One notable aspect of investing through Assetmonk is the potential to achieve an impressive 17 percent Internal Rate of Return (IRR). This demonstrates the platform's commitment to providing investors with the chance to generate substantial returns on their investments.

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Q1. How does commercial investing work?

A. Commercial investing involves the purchase, ownership, and management of properties intended for commercial purposes.

Q2. What real estate strategy makes the most money?

A. Structured debt backed by real estate is a type of fixed-income investment that utilizes real estate assets, such as mortgages or real estate-backed securities, as collateral. These investment products allow investors to gain exposure to the real estate market without the need to directly own or manage properties. By investing in structured debt backed by real estate, investors can benefit from the potential returns generated by the underlying real estate assets. 

Q3. How to invest in income-producing real estate?

A. You can invest in income-producing real estate via commercial real estate structured debt. You can invest with just $12k and get fixed-income payments. 

Q4. Is commercial real estate investing worth it?

A. Yes, commercial real estate investing is worth it. The rental income and appreciation from commercial real estate are much higher than residential properties.