Real Estate Tax
Cost segregation is one chapter of real estate taxation. The rest — like-kind exchanges, passive activity rules, dealer versus investor status, QBI for rentals, opportunity zones, and partnership structures — decides whether the depreciation ever matters.
Start here
5 piecesNo background assumed — the pieces that build the foundation.
Brief · Intro · 4 min
Appealing your property tax assessment: how ad valorem appeals work
Property tax appeals contest the assessor's valuation, not the tax rate. The process runs on short deadlines, local assessment ratios, and the three valuation approaches — and component-level data from a cost segregation study can support the case on functional obsolescence and equipment misclassification.
Brief · Intro · 3 min
Vacation home tax rules: Section 280A and the 14-day test
Section 280A decides whether a mixed-use vacation property is a residence or a rental. Personal use beyond 14 days or 10% of rental days caps deductions at rental income; under 15 rental days, income isn't reported at all — the Augusta rule.
Brief · Intro · 4 min
Home office deduction: the rules, the methods, and the recapture
The home office deduction requires exclusive and regular business use of a space that is the principal place of business. Self-employed taxpayers choose between the $5-per-square-foot simplified method and actual expenses with depreciation; W-2 employees get nothing through 2025's permanent extension of the TCJA suspension.
Brief · Intro · 3 min
How short-term rentals are taxed: Schedule E, Schedule C, and the 7-day rule
A short-term rental's tax treatment turns on average stay length and services provided. Most STRs report on Schedule E without self-employment tax; hotel-like operations with substantial services belong on Schedule C. The 7-day rule separately governs whether losses escape the passive activity limits.
Brief · Intro · 3 min
Allocating purchase price to land: the first depreciation decision
Land never depreciates, so every property purchase requires splitting the price between land and building. Assessor ratios, appraisals, and replacement-cost studies are the accepted methods — and an aggressively low land allocation undermines every depreciation deduction built on top of it.
The working layer
9 piecesThe practitioner's day-to-day rules, mechanics, and traps.
Guide · Working · 7 min
The QBI deduction for rental real estate: when Section 199A applies
Rental real estate qualifies for the 20% Section 199A deduction only if it rises to a trade or business — or fits the 250-hour safe harbor of Rev. Proc. 2019-38. This guide covers the trade-or-business standard, the safe harbor's requirements, aggregation, the wage/UBIA limits, and why cost segregation detail feeds directly into the UBIA computation.
Guide · Working · 8 min
The passive activity rules: Section 469 from first principles
Section 469 sorts every activity into passive or non-passive and lets passive losses offset only passive income. This guide covers the seven material participation tests, the per-se passive treatment of rentals, the $25,000 allowance, real estate professional status, grouping elections, self-rental recharacterization, and what happens on disposition.
Guide · Working · 9 min
Section 1031 exchanges: the complete guide to deferring gain on real estate
A like-kind exchange under Section 1031 defers gain on the sale of investment real estate by rolling it into replacement property. Since the TCJA, only real property qualifies. This guide covers the 45- and 180-day deadlines, qualified intermediaries, boot, related-party rules, reverse and improvement exchanges, and how the replacement property depreciates.
Brief · Working · 4 min
Energy credits for residential landlords: what actually applies
Most residential energy credits were built for homeowners or builders, not landlords. Section 45L belongs to the builder, Section 179D reaches only four-stories-plus residential, and the homeowner credits largely ended after 2025 — leaving landlords a narrower menu than the marketing suggests.
Brief · Working · 3 min
Installment sales of real estate: Section 453 and the recapture trap
Section 453 spreads gain on seller-financed property sales across the years payments arrive, via the gross profit ratio. The exception that surprises sellers: all Section 1245 depreciation recapture is recognized in the year of sale, cash or no cash — a direct hazard for cost-segregated buildings.
Brief · Working · 4 min
The 3.8% net investment income tax on real estate
NIIT applies to rental income and property gains for taxpayers above $200,000/$250,000 MAGI — unless the activity is non-passive and rises to a trade or business. Real estate professionals, the safe harbor of Reg. §1.1411-4(g)(7), self-rentals, and grouping decide who escapes.
Brief · Working · 4 min
How the IRS audits real estate professional status
Real estate professional claims are examined on hours: the 750-hour and more-than-half tests, the contemporaneity of the log, and whether the taxpayer confused spousal aggregation rules. The cases are won or lost on records made in real time.
Brief · Working · 4 min
Opportunity zones after 2026: what's left of the deferral
The original qualified opportunity zone deferral ends December 31, 2026 — every deferred gain becomes taxable then, and the 10% basis step-ups expired for recent investments. The 10-year exclusion on appreciation survives, and 2025 legislation reshaped the program going forward.
Brief · Working · 4 min
Why real estate lives in partnerships: debt basis and Section 752
Real estate is overwhelmingly held in LLCs taxed as partnerships because partners get basis for the entity's debt under Section 752 — supporting loss deductions and tax-free refinancing distributions that S corporations cannot deliver.
Pro details
2 piecesSpecialist nuance: edge cases, interactions, and planning.
Guide · Pro · 7 min
Dealer versus investor: the character question in real estate
Whether a taxpayer holds real estate as a dealer or an investor decides whether gain is ordinary income or capital gain, whether installment reporting and 1031 exchanges are available, and whether the property depreciates at all. The line is drawn by a multi-factor facts test, softened only slightly by Section 1237.
Brief · Pro · 4 min
Section 754 elections: inside basis step-ups for real estate partnerships
A Section 754 election lets a partnership adjust inside basis when an interest transfers by sale or death (Section 743(b)) or when distributions create disparities (Section 734(b)) — converting a buyer's or heir's outside basis into depreciable inside basis, often amplified by a cost segregation study on the step-up.