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Are extra principal payments for commercial mortgage a business expense?

Posted: Tue Nov 19, 2019 12:18 am
by Kennedy
This is probably a stupid question, but if I make extra payments to principal for my commercial mortgage note, I'm assuming this is a business expense? I know the interest is an expense, but what about payments made to the principal for a commercial building mortgage?

Re: Are extra principal payments for commercial mortgage a business expense?

Posted: Tue Nov 19, 2019 12:26 am
by ClassySDLivin
Payments toward the principal of a loan are not directly expenses, but if the mortgage is secured against a commercial property you should be deducting depreciation expense which is based on the basis of commercial property.

Re: Are extra principal payments for commercial mortgage a business expense?

Posted: Tue Nov 19, 2019 1:21 am
by J295
Repayment of principal is not deductible.

Re: Are extra principal payments for commercial mortgage a business expense?

Posted: Tue Nov 19, 2019 6:43 am
by oldcomputerguy
This topic is now in the Personal Finance forum (mortgage and loan issues).

Re: Are extra principal payments for commercial mortgage a business expense?

Posted: Tue Nov 19, 2019 10:06 am
by huai
There are 2 types of business expenses

1: operating that has to be accounted for in the period it’s incurred (mortgage interest, operations salaries, electric bills, software licenses etc)

2: capital expenses that are amortized over the useful life of the capital improvement - this could constitute real estate cost basis, R&D project salaries, vehicles, equipment).

In general you would account for both expenses as they are accrued, not when you pay for them. For operating expenses they payment schedule tends to be very closely aligned with accruing them.