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 to $80,000 in deductions. The land itself never depreciates, so the purchase-price allocation between land and building is the first number worth getting right.
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. The hours have to be documented contemporaneously; a spreadsheet built the week before an audit does not hold up.
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. Boot, debt-replacement shortfalls, and closing-cost treatment are where deferred exchanges quietly turn partially taxable.
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. In Florida the income tax answer is only half the picture: transient rentals of six months or less also owe state sales tax and county tourist development tax, and platform collection does not always cover every obligation.
Entity structure for holding property
How you hold the property affects liability, financing, and the eventual exit:
- LLCs taxed as disregarded entities or partnerships are the default for appreciating property
- S corporations are usually the wrong wrapper for real estate, because getting property out later is a taxable event
- Multi-member deals need an operating agreement that matches how the K-1s will actually be issued
- Out-of-state owners keep Florida property on their home-state return, with Florida adding no state income tax of its own
Selling: recapture and exit planning
Depreciation claimed during ownership is recaptured at sale at rates above the long-term capital gains rate, and cost segregation makes the recapture math more involved. Planning the exit (1031, installment sale, or paying the tax in a low-income year) works far better when it starts before the listing agreement is signed.
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.
- Do I owe Florida taxes on my short-term rental?
- Yes, two of them: state sales tax and the county tourist development tax on stays of six months or less. Some platforms collect part of this for you, but the registration and any uncollected pieces remain your responsibility.
- Should each rental be in its own LLC?
- That's a liability and lending question as much as a tax one. Separate LLCs isolate risk per property but multiply state filings and bank accounts. Taxwise, one multi-property LLC and several single-property LLCs can look identical.
- Does a cost segregation study make sense on a smaller property?
- Sometimes. The study has a fixed cost, so the acceleration has to be worth it, and it matters most when you have income for the extra deductions to offset. We run the math before you commission one.
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Personal Income Tax Preparation
Federal and state 1040 preparation with year-round planning. We handle W-2, 1099, K-1, rental, and crypto income for individuals in Florida and all 50 states.
Corporation & Partnership Tax Returns
Forms 1120, 1120-S, and 1065 preparation for corporations, S-corps, and partnerships, plus owner K-1s, shareholder basis tracking, and multi-state filings.
Tax Planning
Year-round tax planning for individuals and business owners. We project the year's income quarterly and model decisions before they become tax liabilities.
More industries we serve
Tax & Accounting for Consultants & Freelancers
Schedule C vs S-corp, home office deductions, self-employment tax, quarterly estimates, and Solo 401(k) retirement plans for consultants and freelancers.
Tax & Accounting for Content Creators
1099-NEC and 1099-K platform income, brand deals, gifted products at fair market value, home studio deductions, and multi-state sponsorship income for creators.
Tax & Accounting for Gig Economy Workers
Tax help for Uber, Lyft, DoorDash, and Instacart drivers: standard mileage deduction, phone and platform fees, Schedule C, and quarterly estimated payments.
Tax & Accounting for Nonprofits
Form 990, 990-EZ, and 990-N preparation, bookkeeping, and state charity solicitation registration for 501(c)(3) organizations and private foundations.