W2 depreciation offset

[Matt Hunter]

Hello, I am new here and looking for help. If this is the wrong platform forgive me. I am an active three year STR investor with 4 current STR properties. In January of 2023 my business was sold. :) Unfortunately, my deal was structured with a transaction bonus payment of 2.5M that came to me on a W2 payroll check. I have bought and cost segged two new STR properties this year which will provide around $400K in depreciation offset. I am working on securing an RV/MH Park at a price of nearly 2.5-3M to cost seg for 1.5M in bonus depreciation this year to nearly wipe out the remaining federal tax liability. My question is, can I take nearly 2.5m in depreciation offset against the W2 earning. My wife and I file married and up until April 2023 she was our real estate professional as she stayed at home and worked the real estate business. Now that I am out of the corporate world, we both manage and have REPS to actively participate. I am currently operating the real estate with a single member LLC and my wife has an S-corp for consulting services. Seems like I get a lot a mixed responses from certain tax professionals on this subject. Please help.
 

[Michael Plaks]

@Matt Hunter

The only reason you're getting mixed responses is that those who say "yes you can" are somehow not aware of the fairly new Excess Business Losses limitation. Which basically limits your net business loss for one year to $500k, with the rest pushed forward. And since your sale of the business came on W2, it does NOT figure into the net business loss calculation.

Here is the official IRS summary: https://www.irs.gov/newsroom/excess-business-losses

Sorry, I'm only a messenger...

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