Depreciation and interest deductions can generate paper losses that reduce your taxable income, and those losses either offset other income now or accumulate to offset gains later.

From a tax perspective, STRs are unique because they can be treated very differently than long-term rentals, and that can open the door to powerful deductions and planning strategies as you grow into flips and traditional rentals later.Key tax points to keep in mind as you start:Short-term rental income (average stays of 7 days or less) is generally treated as Non passive income, not passive, so you may avoid passive loss limitations that normally restrict rental deductions.Because STRs are considered a business, you may be able to take accelerated depreciation or even use cost segregation to front-load deductions against your active income.If you materially participate in managing the property (screening guests, coordinating cleaning, handling bookings), losses can often offset W-2 or contractor income, a major tax advantage early on.As you expand into flips, know that flips are taxed as ordinary active income (similar to your contractor work), not capital gains.

Further, not sure of your purchase range, but you would need a rather large purchase to generate $300k in losses.

It’s a story for another type of forum…lol.This year, our tax pro mentioned the $150K limit on the $25K rental loss deduction.

Correct, you would be able to deduct 100% of the rental losses on your return assuming you file a joint return.Best of luck!

Insurance covered repairs and loss of income, and the remodel brought the home up to a higher standard, supporting the strong resale value.

You open yourself to a lot of options if your spouse if able to claim real estate professional status.That means all your rental activities(that you can group together) will be treated as active instead of passive.With the help of cost segregation studies, you can utilize the added losses to offset your other income such as wages, interest, dividends, etc.

You can write off 100% of your business deductions as long as they are ordinary and necessary.The next question is how much of my rental losses can I offset against my other forms of income such as wages, interest and dividends. 

I sold Property #1 with capital losses (Class C Midwest property with no capital gains).

Hey BP family,Frustrated that your real estate "paper losses" can't offset your W-2 income?