Depreciation and cost segregation
Residential rentals depreciate over 27.5 years, commercial over 39. Cost segregation studies reclassify portions of the building to 5-, 7-, and 15-year lives, accelerating deductions. On a $500,000 residential rental, cost seg commonly front-loads $40,000–$80,000 in deductions.
Passive activity loss rules
Rental losses are passive by default and limited to passive income. Real Estate Professional status removes the limitation for those who meet the 750-hour and majority-of-work tests.
1031 exchanges
Like-kind exchanges defer capital gains when replacement property is identified within 45 days and acquired within 180. QI (qualified intermediary) must hold the proceeds; the seller can never touch them.
Short-term rentals
STRs (average stay under seven days with material participation) escape passive classification entirely. Losses are fully deductible against W-2 or active income. This is one of the biggest tax levers in real estate.
Common questions
- Can I take the STR loophole on a rental I also use personally?
- Only if personal use is below 14 days or 10% of rental days, whichever is greater. Exceeding that triggers vacation home rules and limits losses.
Related
Personal Income Tax Preparation
Federal and state 1040 preparation with year-round planning. Serving individuals in Florida and all 50 states.
Corporation & Partnership Tax Returns
Forms 1120, 1120-S, and 1065 preparation for corporations, S-corps, and partnerships. Multi-state filings handled.
Tax Planning
Year-round tax planning for individuals and business owners. We model decisions before they become tax liabilities.