Real Estate Tax Strategy Posts

TL;DR: Signing a contract before January 20, 2025 does not always lock you out of 100% bonus depreciation. The law looks at when you acquired the property, and the IRS has detailed rules for that date. If you bought a finished building, the date can…

TL;DR: Whoever pays for the work is generally the one who depreciates it. Landlord pays, landlord depreciates. Tenant pays, tenant depreciates. What almost nobody gets right is the schedule: the lease term does not set it. A seven-year lease does no…

TL;DR Usually not. If you donate a building after cost segregation, the tax code cuts your charitable deduction by the depreciation recapture that would have been taxed as ordinary income if you had sold the building instead. That rule is Section 17…

TL;DR: A property is placed in service on the day it is ready and available for its intended use, not the day you close on it and not the day a tenant moves in. That date decides which tax year your depreciation starts, and it is the gate on everyth…

TL;DR: If nobody on your team has ever brought up cost segregation, it almost certainly wasn't a decision. It was an oversight. Every advisor around you has a lane: your tax professional prepares the return from what's in front of them, your wealth …

TL;DR: Electing out of bonus depreciation means telling the IRS you do not want the 100 percent first-year write-off on a class of property. It sounds like refusing free money, and most years it would be. But a deduction you cannot use this year is …

TL;DR To split land from building for rental property depreciation, divide your total cost in proportion to the fair market value of each piece. If you aren't certain of those values, IRS Publication 527 lets you use the ratio of assessed values fro…

TL;DR: If you own a commercial building that qualified for the 179D energy efficient building deduction and nobody ever claimed it, you may be able to claim it now on your current return with Form 3115, without amending old returns. The automatic ac…

TL;DR: A land improvement is anything built on the dirt that is not the building itself. The parking lot, the sidewalks, the fence, the landscaping, the site lighting, the storm drains. The IRS puts those in their own asset class, separate from the …

TL;DR: A mobile home park is mostly roads, pads, utility lines and site work, not a building. Those items are generally 15-year land improvements, and 15-year property qualifies for 100 percent bonus depreciation when it was acquired and placed in s…

TL;DR: Less than most owners fear, and none of it to find out whether a study is worth doing. What documents you need for a cost segregation study depends on how the building came to you. Buy it, and the closing statement and purchase agreement carr…

TL;DR: Congress removed solar and wind from the five-year property list for anything that began construction after December 31, 2024. A separate five-year route is still open, but it runs on a different clock and a different set of definitions. Clea…

TL;DR: If you bought a rental years ago and never had a cost segregation study, IRS Form 3115 lets you claim the depreciation you missed on one current return, without amending old ones. It works because depreciating short-life components over the b…

TL;DR: Nobody at the entity level. Who gets the cost segregation deduction in a partnership is answered by the operating agreement, which splits the depreciation and sends each piece out on a K-1. Whether a partner can actually use their piece is a …

TL;DR: When a self-directed IRA buys real estate with a loan, part of the income is taxed as Unrelated Debt-Financed Income (UDFI), at trust tax rates, on Form 990-T. A Solo 401(k) can usually make the same leveraged real estate purchase with no UDF…

Choosing between a Delaware Statutory Trust and a traditional 1031 exchange determines whether you stay actively managing properties or transition to a completely hands-off, diversified passive investment portfolio. This detailed breakdown explores …

TL;DR: Commercial real estate owners who renovate without using Partial Asset Disposition (PAD) and Qualified Improvement Property (QIP) are overpaying taxes on work they've already done. PAD lets you write off the remaining basis of components you …

When evaluating commercial real estate syndications, most passive investors make the critical mistake of trusting glossy, AI-generated pitch decks that project massive multi-fold returns. Learning how to properly underwrite these deals using raw fin…

A cost segregation look-back study allows real estate investors to recapture years of missed accelerated depreciation without amending prior tax returns. By identifying and reclassifying building components into shorter recovery periods, such as 5, …

TL;DR: If you invested in a qualified opportunity fund before 2027, the tax you've been putting off is due on December 31, 2026. No exceptions. A new law called the One Big Beautiful Bill Act made the QOZ program permanent, but it didn't push that d…

Many real estate investors mistakenly believe that gifting property to their children while alive is the best way to avoid future estate taxes. However, in most cases, this strategy backfires by denying your heirs a crucial tax benefit known as the …

TL;DR: Partial Asset Disposition (PAD) is a tax election that lets real estate investors, both residential rental and commercial, write off the remaining basis of building components like roofs, HVAC, flooring, and plumbing when those components are…

Discover how to supercharge your real estate investments by combining the powerful tax deferral of Opportunity Zones with the accelerated depreciation benefits of cost segregation studies. This post breaks down the strategic advantage of this often-…

TL;DR: The One Big Beautiful Bill Act (OBBBA), signed in 2025, restored 100% bonus depreciation permanently for property both purchased and placed in service after January 19, 2025, with a cost segregation study. Property purchased before January 19…