Top Tax Strategies for Real Estate Investors

Introduction

Real estate isn’t just about cash flow and appreciation—it’s also one of the most tax-advantaged investments. Savvy investors use the tax code to keep more of their profits.

Top Tax Strategies

1. Depreciation

• Deduct property value over 27.5 years (residential) or 39 years (commercial).

• Reduces taxable income significantly.

2. Mortgage Interest Deductions

• Interest on investment loans is deductible.

3. 1031 Exchange

• Defer capital gains taxes by reinvesting proceeds into another property.

• Popular among buy-and-hold investors scaling portfolios.

4. Cost Segregation

• Accelerate depreciation by categorizing assets separately (e.g., appliances, roofing).

• Creates massive upfront tax savings.

5. Real Estate Professional Status (REPS)

• Active investors may qualify to offset ordinary income with real estate losses.

Risks & Considerations

• Consult a CPA familiar with real estate.

• Improper structuring can trigger IRS audits.

• Each strategy has eligibility rules.

Call to Action

Looking to maximize your after-tax returns? Contact us for referrals to real estate CPAs and guidance on implementing the best tax-saving strategies.