How are you handling 2026 taxes with year-end buys? Curious what others are doing

Question

November question for the buy and hold guys —

I’m in Delray Beach, 33446 - Monarch Lakes townhouses mainly. I have one that can close mid-Nov - $242k + about $60k rehab, ARV around $420k, rent $2100 low end comps. Rehab done in Jan.

My CPA says if I close in Nov and place in service before Dec 31 I can start depreciation this year, even if tenant goes in Jan - is that how you guys do it? Or do you count placed in service as when rent starts?

Also - cost seg - do you do it year 1 on a $60k rehab or wait until after DSCR refi at $420k appraised? I’m at 70% LTV 30-year DSCR, and my ROE math gets messed up if I accelerate too much year 1 vs after refi pulling $126k out.

Last thing - I’m tracking 200 out-of-state owners in one zip - 20+ year owners, Michigan/Ohio/New York - if I close another one in Dec vs Jan, how do you plan taxes around that?

What’s your cutoff - do you rush to close before year-end for tax reasons or wait to keep next year clean?

Just trying to see how others handle Nov/Dec closings vs Jan.

Ashish Acharya · Answer

Muyees, this is exactly the kind of year-end planning question investors should be asking before closing rather than after.

One distinction I'd look at is the placed-in-service date. Closing in November doesn't necessarily mean you start depreciating the property in November. For a rental, you generally want to determine when it's actually ready and available for its intended rental use.

I'd also model the cost seg and rehab timing separately. The question isn't just how much depreciation you can generate, but when the property and improvements are placed in service and how much of the resulting tax benefit you can actually use.

For the Nov vs. Jan decision, I'd compare the after-tax outcome rather than rushing to close solely for a deduction. If the deal makes sense on its own, then the year-end tax timing can be another factor.

And with the number of out-of-state owners you're working with, I'd be curious how many of them are asking you similar year-end tax questions. That's probably a bigger opportunity than just solving it for one property.

Aaron Zimmerman · Answer

Good questions.

1. Your cpa is absolutely correct that you can start depreciating so long as the property is rent ready and advertised for rent.

2. For cost seg, I’d see how much in losses you can accelerate and if that’s beneficial/you could use the losses. You don’t necessarily need to wait on a refi.

3. I would have a little more sense of urgency if you’re trying to accelerate losses but I also wouldn’t cut corners on the rehab just for tax benefits. Better to do things the right way.

Scarlett Hayes · Answer

I’d be careful about rushing a closing just for the tax benefits. My understanding is that depreciation generally starts when the property is ready and available for rent, not necessarily when the first tenant moves in. With the rehab and DSCR refi involved, I’d also have the CPA model both cost-seg scenarios before deciding. I’d rather make the right investment move than force a December closing just to get a deduction.

As a real estate marketing and referral partner, I also focus on connecting property owners, investors and prospective renters with suitable rental opportunities. I’m always looking to build good relationships and help create valuable connections in the real estate market. Interested to hear what others are doing as well.

Muyees Ayilara · Answer

Ashish — thank you, this is exactly why I tagged this question for year end.

You are right on placed in service. My CPA said Nov close, but what you are saying makes more sense — it is not placed in service until it is actually ready and available for rent, not just when I close. For my Monarch Lakes deal, rehab finishes in Jan, so I should not be counting Nov depreciation.

And the cost seg timing point is huge. I was going to do cost seg on the $60k rehab in year 1, but if I refi at $420k appraised after DSCR, doing it after refi makes the math cleaner. I do not want to accelerate too much in year 1 and then pull $126k out on refi and mess up my ROE.

On your last question — yes, a lot of them are asking. I am tracking 200 out of state owners in one zip, 20+ year owners from Michigan, Ohio, New York. At least half are asking me the same Nov vs Jan question right now. That is a bigger conversation than just my one property.

Appreciate you breaking this down. Can I send you the Monarch Lakes numbers so you can model Nov vs Jan after tax for me? I want to show my buyers the real difference.

Muyees Ayilara · Answer

Aaron — appreciate you jumping in, thank you.

That clears up #1 for me — rent-ready + advertised = placed in service even if tenant starts Jan. My CPA said same, good to get second confirmation.

On #2 — cost seg — that's where I'm stuck. On this Monarch Lakes deal: $242k purchase + $60k rehab = $302k all-in, ARV $420k, I refi at 70% LTV and pull ∼$126k out.

If I cost seg year 1 on $302k basis, I get big loss year 1, but then after refi my basis / ROE math gets messy. Do you usually tell clients to cost seg on purchase + rehab basis before refi, or wait until after DSCR refi at $420k appraised to maximize it?

And #3 — 100% agree, not cutting corners on rehab for tax. I'd rather close Jan clean than rush Dec with bad rehab.

Do you work with a lot of FL out-of-state owners doing DSCR? I send a lot of 33446 deals to CPAs and looking for one who knows FL + cost seg well.

Muyees Ayilara · Answer

Thanks Ametria — super practical point on the year-end logistical risk. You're right, title/lender/appraiser delays in last 2 weeks of Dec are real. My takeaway too — don't force a Nov/Dec close just for tax if rehab is Jan anyway.

I'm leaning to keep this one as 2027 placed in service vs pushing for Dec. Cost seg I’ll model after the $420k DSCR refi so ROE on the $126k out is clean. Will share how it models.

Good tip on getting timeline in writing early + insurance/entity ready — I’ll use that for the ones I'm tracking that CAN close Dec.

Appreciate the agent side view!

Ametria Chaney · Answer

Good thread, Muyees. I'll add the transaction-side view: year-end closings carry real logistical risk — title companies, lenders, and appraisers all run thin the last two weeks of December, and a delayed closing can push you into January anyway. If the tax benefit is the main reason to rush, make sure the deal still makes sense on its own merits; a deduction shouldn't rescue a marginal purchase. One practical tip from the agent side: if you do push for December, get your lender and title company to commit to the timeline in writing early, and keep insurance and entity paperwork ready to go. The investors I see handle this best start planning their year-end purchases in October, not mid-November. Curious how your cost-seg modeling turns out.

Muyees Ayilara · Answer

Thanks Ametria — super practical point on the year-end logistical risk. You're right, title/lender/appraiser delays in last 2 weeks of Dec are real. My takeaway too — don't force a Nov/Dec close just for tax if rehab is Jan anyway.

I'm leaning to keep this one as 2027 placed in service vs pushing for Dec. Cost seg I’ll model after the $420k DSCR refi so ROE on the $126k out is clean. Will share how it models.

Good tip on getting timeline in writing early + insurance/entity ready — I’ll use that for the ones I'm tracking that CAN close Dec.

Appreciate the agent side view!

Scarlett Hayes · Answer

That makes sense, Muyees. I think waiting until the property is fully ready and the refinancing is settled is a sensible approach rather than rushing the process. I appreciate you sharing your experience and perspective. I’m always interested in learning how investors approach these decisions, and I look forward to building more connections and sharing opportunities within the real estate space.

Muyees Ayilara · Answer

Thanks Scarlett — that's what my CPA said too, ready and available vs first tenant. Good point on not forcing Dec close just for deduction. My rehab is Jan so placed in service would be Jan anyway, so depreciation would be 2027 not 2026. For cost seg I'm leaning to wait until after DSCR refi at $420k so my ROE math on the $126k pull stays clean. Appreciate the marketing/connecting angle too.

How are you handling 2026 taxes with year-end buys? Curious what others are doing

How are you handling 2026 taxes with year-end buys? Curious what others are doing

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