Wondering about business deduction

The upfront tax deductions that President Barack Obama has proposed for businesses could have the same impact as the federal home buyers tax credit.

To get the market going, the home buyers program pulled future purchases into the present, giving the Long Island and Queens real estate business its hottest month ever - at least 3,985 closings in June, which the Multiple Listing Service of Long Island said was a 15-year high.

Giving businesses a 100 percent write off up front on their capital investments instead of over years could pull future capital projects into the present. There could be more jobs and more cash, as the administration hopes.

The problem? There's been a lull in real estate activity here since the record closings. Pending contracts in July were down 17.5 percent compared to a year ago and unchanged from June. July closings fell 25 percent from a year ago and sank 53.4 percent from June, when the end of the month was the initial closing deadline for the home buyers tax credit.

Could the same lull occur with the business tax break once it ends in 2011?

In Melville, home developer Craig Axelrod thinks the proposed tax break would get the economy rolling long after.

A capital write-off could really blow some business into his Emmy Energy, a new company that's been trying to get off the ground selling solar and wind energy systems.

"I think it's fantastic," he said of the Obama's idea. "I think it really makes going green and putting renewable energy on your building a no brainer."

After opening its showroom in January, the firm's not thinking of doing any more capital work but said a capital tax write off for potential clients could snowball for Emmy Energy, allowing the new business to hire more employees.

So far, commercial real estate owners have been inquiring about green energy, but they're all on the fence about buying, Axelrod said.

"People are interested, but people are more in survival mode and trying to hold on," he said. "I think this might push them more into proactive mode."

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