What properties can a plumbing business buy within tax code

Question

I need some help understanding what kind of property I can buy in my business withour breaking any tax rules. Its the end of the year and I have money to get rid of and I would like to buy property. Can I buy land and put a shop on it, can i buy mixed use retail/upstairs rental. Can any of you tax guys help me out here. I want to push the code right to where its about to snap and I am still honest in my dealing. thanks

Bob Langworthy · Answer

@Bryan Young, in addition to tax advice, you should seek legal advice. Most attorneys will advise a separate entity for the real estate. Can your plumbing company own real estate? Yes, but talk to an attorney. Bear in mind that if you do buy real estate, you can not deduct the purchase price as an expense. You would have to depreciate the building over 39 years. Land is not depreciated. In my case, I bought a 4 office building with an LLC in my wife's name and my accounting practice (a separate entity) is the anchor tenant.

If you are looking for tax deductions, here are some thoughts:

1) Talk to your accountant about the Section 199A deduction. It's claimed on your 1040 and can be up to 20% of your qualified business income.

2) If there is a piece of equipment or a vehicle that you need, now would be the time to buy it.

3) Retirement plans? A SEP IRA allows you to invest the lesser of $55,000 or 25% of your income.

Congratulations on a good year,