Real Estate Tax Services
Specialized tax services for real estate investors, landlords, and property owners in DFW. Maximize depreciation, navigate 1031 exchanges, and minimize capital gains.
Real estate offers some of the most powerful tax advantages in the entire tax code—but only if you know how to leverage them properly. From depreciation deductions that create tax losses on profitable properties to 1031 exchanges that defer gains indefinitely, real estate taxation is complex and opportunities are easily missed. Our DFW CPAs specialize in real estate investor taxation, helping landlords, flippers, developers, and property owners minimize taxes and maximize after-tax returns.
Depreciation Basics
| Property Type | Depreciation Period |
|---|---|
| Residential Rental | 27.5 years |
| Commercial | 39 years |
Example:
- Purchase: $500,000 rental ($400K building, $100K land)
- Annual depreciation: $400K ÷ 27.5 = $14,545
- Creates "paper loss" even with positive cash flow
Cost Segregation
Accelerate depreciation by reclassifying property components:
| Category | Life | Examples |
|---|---|---|
| Personal Property | 5 years | Carpet, appliances, fixtures |
| Land Improvements | 15 years | Parking, landscaping, fencing |
| Building | 27.5/39 yrs | Structure, roof, HVAC |
2026 Bonus Depreciation: 60% immediate deduction on short-life assets. Best for properties over $500K.
1031 Exchange Rules
| Deadline | Requirement |
|---|---|
| 45 Days | Identify replacement property (up to 3) |
| 180 Days | Close on replacement property |
Key Rules:
- Qualified intermediary must hold proceeds
- Replacement must be equal or greater value
- Any cash received ("boot") is taxable
- Like-kind is broad: apartment → raw land OK
Rental Deductions
Fully Deductible:
- Mortgage interest (no limit)
- Property taxes (no SALT cap)
- Insurance premiums
- Repairs & maintenance
- Property management fees
- Travel to properties
Must Depreciate:
- Improvements that add value
- Improvements that extend life
- New additions/expansions
Passive Activity Rules
| Situation | Can Deduct Rental Losses Against W-2? |
|---|---|
| AGI under $100K + active participation | Yes, up to $25K |
| AGI $100K-$150K + active participation | Partial (phases out) |
| AGI over $150K | No (passive only) |
| Real Estate Professional | Yes, unlimited |
RE Professional: 750+ hours in real estate AND more time than any other occupation.
Exit Strategies
| Strategy | Benefit |
|---|---|
| 1031 Exchange | Defer all gains indefinitely |
| Installment Sale | Spread gain over multiple years |
| Opportunity Zone | Defer + potential 10% reduction |
| Convert to Primary | Exclude up to $500K (2 of 5 year rule) |
| Charitable Gift | Deduct FMV, avoid all gains |
| Hold Until Death | Step-up in basis erases gains |
Short-Term Rentals (Airbnb/VRBO)
- Average stay ≤7 days: May be classified as business, not rental
- Substantial services: Definitely a business (cleaning, concierge)
- Tax implications: SE tax may apply, but avoids passive loss limits
Additional Deductions:
- Furniture, linens, amenities
- Cleaning supplies & services
- Platform fees, photography
- Local occupancy taxes
Pro Tips
Track Everything from Day One
Keep settlement statements, improvement receipts, repair invoices, and mileage logs. Good records save thousands when you eventually sell.
Understand Repair vs. Improvement
Repairs (fixing what's broken) are deductible immediately. Improvements (adding value) must be depreciated. The distinction matters.
Consider Entity Structure
Holding properties in LLCs provides liability protection and can facilitate estate planning. Discuss with us before purchasing.
Frequently Asked Questions
Need Help With Your Taxes?
Our DFW CPAs specialize in helping individuals and businesses minimize their tax burden. Schedule a free consultation to discuss your specific situation.