Who we work with
We work with investors and real estate businesses that have moved past a rental or two. You own a substantial portfolio, or real estate is a real business for you, and your tax picture has grown with it.
Maybe you’re adding doors every year, mixing long-term and short-term rentals, holding properties in several LLCs, or owning the building your other business operates from. Each acquisition and sale has a tax side, and the decisions you make before closing often matter more than anything done at tax time.
- Growing portfoliosLong-term rentals, short-term rentals, and commercial property, often across several entities.
- Investors with other incomeBusiness owners and high earners who want rental losses to work for them, not sit unused.
- Real estate as a businessOwners who spend real hours on their properties and want their time and records to count.
The tax challenges real estate investors face
The rules that make real estate tax-friendly also come with conditions. Planning ahead is what turns them into savings.
Passive loss limits
Rental losses are generally passive, so they can only offset passive income. If your income is too high for the small rental allowance, depreciation losses may carry forward unused until you qualify or sell.
Depreciation timing
Buildings are normally depreciated over 27.5 or 39 years. Cost segregation and bonus depreciation can move deductions forward, but only if the study and the timing are planned around the rest of your income.
Recapture when you sell
Depreciation you take now can be taxed when you sell, and some of it at higher rates than capital gains. A sale, an exchange, or holding longer each lands differently, so we model it before you list.
Proving your hours
Real estate professional status and the short-term rental rules depend on material participation and hour tests. Without contemporaneous records, the IRS can disallow the losses.
Entity structure
Separate LLCs protect your assets, but each one adds bookkeeping and reporting. The right structure balances liability protection, financing, and a clean tax picture.
Investor or dealer
Flipping properties can be treated as ordinary business income instead of investment gain, which may bring self-employment tax with it. How you hold and sell property affects how it’s taxed.
Strategies that often fit real estate investors
Every portfolio is different. These are strategies we often review with real estate clients.
- Cost segregationCan move years of depreciation into the year you buy or improve a property.
- Real estate professional statusIf you or your spouse qualify, rental losses may offset your other income instead of sitting suspended.
- The short-term rental loopholeShort average stays plus your own hours can make losses usable without full professional status.
- The 20% QBI deductionRental activity that rises to a trade or business may qualify for the pass-through deduction.
- Roth conversion in a low-income yearA year with large depreciation deductions can be a good year to convert retirement money to Roth.
- Your IRA can buy real estateA self-directed IRA can hold rentals, with strict rules on how you may use and manage them.
- Own the building, rent it to yourselfIf you also own an operating business, holding its building in a separate LLC can add protection and planning options.
Advanced strategies for higher-income owners
Larger portfolios, big gains, and passing property to the next generation call for more advanced planning.
- The 1031 exchangeSell investment real estate and defer the gain and depreciation recapture by buying replacement property on time.
- Qualified Opportunity ZonesDefer a capital gain and possibly avoid tax on the growth by investing in an Opportunity Zone fund.
- The 3.8% net investment income taxReal estate professional status and grouping elections can keep rental income out of the 3.8% tax.
- Charitable remainder trustSell a highly appreciated property inside a trust with no tax at the sale and take income for life.
- Family limited partnershipGift interests in your properties to family, often at a discount, to use less of your estate tax exemption.
- Lifetime gifts and SLATsMove future appreciation out of your estate under the $15 million exemption.
Everything under one roof
One monthly Tax Plan, starting at $475 per month and priced by the size and complexity of your portfolio. No juggling a bookkeeper, a preparer, and a separate advisor.
See all services- Year-round tax planningWe model acquisitions, improvements, and sales before you close, not after.
- Business and personal tax returnsYour partnership, LLC, and S corp returns plus your personal return, included in your plan.
- Bookkeeping by propertyClean books for each property and entity, so you can see what every door actually earns.
- Payroll, sales tax, and 1099sPayroll for any management company, 1099s for contractors and property managers, and sales and lodging tax filings where they apply.
- Quarterly estimated paymentsCalculated for you, with personal and business amounts shown separately.
- IRS audit protection and representationWe can represent you before the IRS, including on passive loss and participation questions.
- CFO-style reportingPortfolio cash flow and performance reporting so you can decide what to buy, hold, or sell.
- Direct access to your advisorCall before you sign the contract, not after.
An illustrative example: selling vs. a 1031 exchange
Picture an investor who sells a rental property for $2,000,000. The original cost was $1,400,000, and $600,000 of depreciation has been taken, so the adjusted basis is $800,000 and the gain is $1,200,000.
For illustration purposes. Tax law may change, which may change these calculations slightly.
| Sell and pay tax | 1031 exchange | |
|---|---|---|
| Depreciation recapture: $600,000 × 25% | $150,000 | $0, deferred |
| Remaining gain: $600,000 × 20% | $120,000 | $0, deferred |
| Net investment income tax: $1,200,000 × 3.8% | $45,600 | $0, deferred |
| Federal tax due now | $315,600 | $0 |
With an exchange, about $315,600 of federal tax stays invested in the next property instead of going to the IRS this year. Oklahoma personal tax on a sale is figured separately; Oklahoma has its own capital gain deduction for some Oklahoma property held five years or more, which we check before you decide.
An exchange defers tax; it doesn’t erase it. The old basis carries into the new property, so less depreciation is left to take. The deadlines are strict: 45 days to identify replacement property and 180 days to close, using a qualified intermediary. If you hold the property until death, your heirs generally get a stepped-up basis.
Illustrative example. The investor and figures above are hypothetical, used to explain how the strategy works. They are not a client and not a promise of results. The example assumes the investor is in the top federal brackets, a 25% maximum rate on unrecaptured depreciation, a 20% capital gain rate, and that the 3.8% net investment income tax applies to the full gain. This page is educational and is not tax advice for your situation.
Questions real estate investors ask us
Can my rental losses offset my business or W-2 income?
Sometimes. Rental losses are generally passive, but real estate professional status, the short-term rental rules, and a limited allowance for active participants at lower incomes can each change that. We look at your hours, your properties, and your income to see what applies.
Is a cost segregation study worth it for my property?
It depends on the property’s cost, when you placed it in service, and whether you can use the losses this year. We run the numbers with you before you pay for a study.
What happens to my depreciation when I sell?
Depreciation you’ve taken can be recaptured and taxed when you sell, and part of the gain may be taxed at higher rates than a typical capital gain. We plan your exit ahead of time, including whether an exchange or a different timing may make sense.
Do you work with investors outside Oklahoma?
Yes. We’re based in Norman and fully virtual, and we work with investors in Oklahoma and beyond, including portfolios with properties in several states.
Should I do a 1031 exchange or just pay the tax?
It depends on whether you want to stay in real estate, what the replacement property looks like, and your long-term plans. An exchange keeps more money working for you now, but it carries the deferred gain forward. Paying the tax can make sense in a low-income year or if you’re leaving real estate. We run both with your numbers.
Does the 3.8% net investment income tax apply to my rentals?
Usually, if you aren’t a real estate professional and your income is over $250,000 (married filing jointly) or $200,000 (single). Rental income and gains count as investment income. Qualifying as a real estate professional who materially participates, or renting to your own active business, can keep it out.
How can I pass my rental properties to my kids?
Common tools include gifts of LLC or partnership interests, a family limited partnership, and simply holding property until death, which generally gives heirs a stepped-up basis that wipes out deferred gain and recapture for income tax. The right mix depends on the size of your estate and your goals.
Watch the stories
One-minute stories about owners like you. Illustrative story; the people are fictional and are not clients. See all story videos.
Free strategy finder
Find the tax strategies that fit you.
Answer six quick questions and see which of our 46 strategies may fit real estate investors and your goals. About a minute, and your answers stay in your browser.
Find my strategies →Free tax calculators
What could a strategy save you?
- S corp
- Solo 401(k)
- Augusta Rule
- Hiring your kids
- Oklahoma PTE