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Depreciation: The Use of Real Estate

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Since tax-exempt organizations do not benefit from the deductions that result from depreciation, what options do tax-exempt organizations have in acquiring the use of real estate?

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Solution Summary

The use of real estate depreciation are given. Tax-exempt organizations which are used in acquiring real estate is given.

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Options to Acquire Use of Real Estate:
Tax-exempt organizations like public hospitals, government entities or charitable trusts do not have benefit of the depreciation deductions because of not paying taxes. It means there is no tax deduction benefit (related to depreciation) for these organizations in case of owning a property or real estate (Hopkins, 2009). In this situation, there are some options that tax-exempt organizations have to acquire the use of real estate without ownership. Some of them are discussed below.

Leasing:
Tax-exempt organizations have an option to lease property (building) rather than owning in order to gain tax deductions. It is generally known as tax-exempt entity leasing. Under leasing option, there is an advantage for a tax exempt ...

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