Legal Question in Business Law in California

The purchase of a capital asset (like real property) does not give you a tax deduction for your purchase. The building (as compared to the land) can be depreciated over a period of time and the annual depreciation will offset the rental income just like your other paid expenses, even though you do not pay out money each year for the purchase price.

Bottom line: The purchase of rental property is not a business expense.

I suggest you retain a good CPA and do tax planning so that you can take appropriate tax deductions and plan for the tax cost of yourself as well as your business.

I agree with the previous answer. When a business purchases an asset with a long life, such as a building, the appropriate accounting for both tax and "book" purposes is to capitalize it and depreciate it over a certain number of years, not more rapidly than permitted by the tax code. Also, to the extent the purchase price includes land in addition to the structure, the land is not depreciable and hence is never "written off," neither in the year of purchase nor over time.