The tax code was written to reward real estate investors. Here's how to use every legal advantage available to you.
The IRS lets you deduct the cost of a residential property over 27.5 years. Buy a $200K rental? That's a $7,272/year paper deduction — even if the property goes up in value. This often creates a "paper loss" that offsets your rental income tax.
Sell a property and roll your profits into a like-kind property within 180 days — defer capital gains taxes indefinitely. Do this repeatedly and you can build a multi-million dollar portfolio while legally deferring taxes for decades.
A cost segregation study breaks your property into components (flooring, HVAC, fixtures) that depreciate over 5-15 years instead of 27.5. Accelerate massive deductions in year 1. Works best on properties over $300K.
Qualify as a Real Estate Professional (750+ hours/year, majority of work time in RE) and your rental losses can offset W-2 or business income with no limit. This is one of the most powerful legal tax strategies available.
S-Corp, LLC, or land trust — the right entity structure protects assets, separates liability, and creates additional deduction opportunities for health insurance, home office, and business expenses. Get this right early.
Under current law, qualifying personal property (5-15 year class) may be eligible for accelerated bonus depreciation. Combine with cost segregation for maximum year-1 write-offs. Work with a CPA who specializes in real estate.
This guide is educational. Tax strategies must be implemented with a licensed CPA who specializes in real estate. Laws change. Your specific situation matters. The tools below can help you find the right professional.
For landlords with rental income and business entities. Handles Schedule E automatically.
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