All Forum Posts by: Rohullah Sharifi

An important point to remember is that cost segregation and bonus depreciation are not gifts or free deductions—they reduce your depreciable basis in the property. As a result, when the property is sold, depreciation recapture rules apply, potentially increasing your taxable gain.

Additionally, the recent increase in the State and Local Tax (SALT) deduction cap is currently set to remain in effect through 2030, unless modified by future legislation.

I’m a strong proponent of Short-Term Rentals (STRs) when structured correctly, as they can offer significant tax advantages — particularly the ability to generate non-passive income without qualifying as a Real Estate Professional.

To fully benefit from this strategy, it's important that you:

1. Actively participate in managing the property, and

2. Maintain detailed records and logs to document your material participation hours (e.g., time spent on guest communications, cleaning coordination, repairs, marketing, etc.).

Proper documentation not only supports your position in the event of an audit, but it's also essential for meeting the IRS thresholds for material participation under the STR exception.

happy to help.

Congratulations on your new investment!

To take full advantage of the tax benefits, you'll need to either actively participate in the rental activity or consider a Short-Term Rental (STR) strategy, which can potentially reclassify your income as non-passive if certain criteria are met.

I also recommend maintaining detailed and accurate accounting records from the start — this includes tracking income, expenses, and any personal vs. rental use — as this will be essential for proper tax reporting and maximizing deductions.

Let me know if you'd like help.

In order to fully benefit from the tax advantages, you must either meet the Real Estate Professional (REP) status and materially participate in the activity, or I would recommend considering a Short-Term Rental (STR) strategy to reclassify the income as non-passive. Otherwise, proceeding with a cost segregation study may increase your passive losses, which could be suspended if you are unable to offset them against passive income.

When you sell your home, you can exclude up to $500,000 of profit (if married filing jointly) from taxes, but any gain above that may be taxable. The best way to lower the taxable amount is to keep good records of all major improvements you’ve made over the years—such as remodels, additions, or a new roof—since these increase your cost basis. You can also subtract selling costs like realtor commissions and closing fees. Beyond that, the main options are using any capital losses you may have to offset gains or planning the timing of other income in the year of sale.

Under Section 1031 of the IRC, taxpayers may defer recognition of gain or loss when exchanging like-kind property. This allows the basis of the relinquished property to carry over to the replacement property, preserving the tax benefit until a later sale.

The deferral applies only if no “boot” (cash or non-qualifying property) is received. If boot is involved, gain must be recognized to the extent of the boot. Without boot, both gain and loss are deferred until the replacement property is ultimately disposed of.

1. legitimate 

2. have proper supporting documents 

3. maintain record until statute of limitation expires

4. balance it 

5. DON'T play Audit lottery

1. Invest in STR

2. or else one spouse may participate to meet "Material Participation Test" to qualify 

3. LTR can go to passive income/loss, 

4. C/F to future due to high income, which can't benefit you now

5. If you do STR you can do Cost Seg as well that will benefit you

6. Make sure you understand Cost Seg "Pros & Cons" before deciding

7. Cost Seg is a Recapture in the future, which will lower the purchased basis

1. find property for rental, use a realtor

2. register an LLC for the rental

3. purchase is until the LLC

4. Do STR to have the "Non-passive income"

5. Or participate actively in LTR & Meet "Material Participation Test"

1. STR is good to do cost seg and keep the property

2. LTR is good when you plan for long term renting it

3. being in high income category

4. if LTR, make sure you meet the "Material Participation Test" requirement

5. Or one spouse doesn't have W2 job, can be use as REP