Real Estate Tax Planning
Tax planning for real estate investors and rental property owners.
Entity structure, depreciation, rental income and the decisions that change the tax bill before year end. For investors with one rental, a growing portfolio, or short-term rentals, in Florida and nationwide.
What we plan
The decisions that move the number
Entity structure
Holding properties personally, in an LLC, or in a partnership: what each means for taxes, liability and the paperwork, reviewed before the next purchase.
Depreciation and improvements
Depreciation claimed correctly from year one, repairs and improvements classified the right way, and a look at whether a cost segregation study is worth it for your property.
Rental income and short-term rentals
Schedule E done right, short-term rental rules, passive loss limits and how your own participation changes what you can deduct.
Buying, selling and exchanging
Timing a sale, 1031 exchange considerations, capital gains versus ordinary income, and what the closing statement means for the return.
Out-of-state and foreign owners
Investors who live outside Florida or outside the United States and own property here: filing obligations, withholding and reporting handled virtually.
Year-end review
A standing review before December 31 with the portfolio in front of us: estimated payments, planned purchases or sales, and the bookkeeping the return will need.
How it works
Start with the portfolio, not the return
The introductory call covers what you own, how it is held and what is planned for the next twelve months. From there, a planning engagement is scoped and quoted in writing: a written plan for the year, the bookkeeping that supports it, and the return prepared from decisions made on purpose. Monthly accounting and tax preparation can be added so the whole picture sits with one firm.
Questions
Common questions
I have one rental. Is planning worth it?
Often yes. Depreciation, repairs versus improvements and how the income is reported are decisions that apply from the first property, and they are cheaper to get right than to fix.
Do you work with investors outside Florida?
Yes. The firm is based in Port St. Lucie and works with investors nationwide, and with foreign owners of U.S. property, by phone, video and secure document exchange.
Can you also prepare the returns and keep the books?
Yes. Planning, monthly accounting and tax preparation can sit with the same team, so the plan, the books and the return agree with each other.
Will you tell me if a strategy does not apply to me?
Yes. The plan is based on your records and the facts of your portfolio, not on a strategy sold to everyone. If something does not fit, you hear it on the call.
What we see
Five decisions owners get wrong without a plan
None of these is exotic. Each one shows up on returns we are asked to fix, and each is cheaper to decide on purpose than to repair later.
1. Depreciation left on the table
Residential rental buildings are depreciated over 27.5 years, and the IRS treats that depreciation as taken whether you claimed it or not, so the recapture at sale arrives either way. Skipping it costs the deduction now and the tax later. A missed depreciation history can often be caught up, but it is a project, not a line on next year's return.
2. Repairs and improvements mixed up
A repair is deducted in the year you pay it; an improvement is added to the property and depreciated. Roofs, HVAC systems and remodels usually fall on the improvement side, and the safe-harbor elections that let smaller amounts be deducted have to be made on a timely return. Deciding before the invoice is paid is easier than arguing about it afterwards.
3. Short-term rentals reported like long-term ones
Average guest stay, the services you provide and your own use of the property change how the income is reported, whether losses are limited, and in some cases whether self-employment tax applies. A property rented for an average of seven days or less is not treated as a rental activity under the passive loss rules, which cuts both ways depending on your participation.
4. Losses nobody can use this year
Rental losses are passive by default. Up to $25,000 a year can offset other income if you actively participate, and that allowance phases out between $100,000 and $150,000 of modified adjusted gross income. If the allowance has phased out and no exception applies, unused passive losses generally carry forward. They may offset passive income later or become deductible when you sell your entire interest in the activity in a fully taxable sale to an unrelated buyer. We check which rules apply before counting on a deduction.
5. A sale timed without the numbers
A rental sale can bring tax on the gain, including the portion tied to depreciation, and your other income that year affects the bill. A qualifying 1031 exchange may defer some or all of the gain. Replacement property generally must be identified within 45 days and received within 180 days or the tax-return due date, including extensions, whichever comes first. For a typical deferred exchange, arrange the qualified intermediary before closing so you do not receive the proceeds. The time to plan is before listing, not after the contract.
What the plan changes
Within our agreed planning scope, we review the decisions that matter to your portfolio before year end or an upcoming transaction and put the recommendations in writing. We also identify the records and bookkeeping needed to support them. If a strategy does not fit your facts, we say so.
Planning a purchase, a sale, or just next year?
Complimentary 15-minute introductory call. Have the property list in front of you.