Rental property tax strategy and finance
Real estate is the most tax-advantaged asset class an individual investor can own. Depreciation offsets income, expenses are fully deductible, cost segregation accelerates the write-off, and 1031 exchanges defer gains indefinitely. The decision most investors are actually facing is narrower than that list: sell a property and pay the tax, or exchange into the next one and keep the whole balance working. The bill on a sale is bigger than the 15% number most people carry in their head, because depreciation recapture and state tax come due at the same time. The articles below explain each mechanism in plain English, including the 1031 rules, the deadlines, and the places an exchange breaks.
Lineage's position: tax treatment is a reason to hold, not a reason to buy. A property that doesn't cover its payment doesn't become a good deal because of depreciation. Where the code does change the math is at the exit, and that's a timing problem. A 1031 gives you 45 days to identify and 180 to close, which is why acquisition, lending, and insurance run on one timeline here. None of this is tax advice. Get a CPA before you act on any specific scenario.
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Read articleThe 1031 exchange timeline: day 0 to day 180, mapped
The 1031 timeline day by day: what has to happen before closing, by day 45, and by day 180, plus where exchanges actually stall and how to build slack into the clock.
Read articleCapital gains on a rental property: the bill is bigger than 15%
The real tax bill when you sell a rental: capital gains, depreciation recapture, NIIT, and state tax, with a worked example, plus the one legal way to defer all of it.
Read articleDST or direct property: what you trade for the easy button
DSTs solve the 45-day identification problem by selling you a fraction of someone else's deal. What you give up, what you keep with direct ownership, and how to decide.
Read articleLike-kind exchange: the most permissive rule in the tax code, explained
Like-kind is the most misunderstood term in Section 1031. What qualifies, what never does, and why the rule is far more permissive than it sounds.
Read articleThe qualified intermediary: the stranger holding all your money
Your QI holds every dollar of your sale proceeds. What a qualified intermediary does, what one costs, and the five questions that separate real ones from cheap ones.
Read articleReverse 1031 exchange: buy first, sell second
A reverse 1031 exchange lets you buy the replacement property before you sell. How the EAT structure works, what it costs, and when it beats the standard exchange.
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Read article1031 exchange rental property: the rules, the timeline, and the trap
How a 1031 exchange defers capital gains on rental property. Rules, the 45/180-day timeline, debt matching, worked example, and where most exchanges fail.
Read articleCost segregation vs. straight-line depreciation
Compare cost segregation and straight-line depreciation for rental properties. Learn which strategy works best for your rental portfolio and how to maximize tax deductions.
Read articleRental property tax benefits: What your CPA should be telling you
Depreciation, mortgage interest, cost segregation, 1031 exchanges, and passive loss rules. A complete guide to the tax advantages of rental property investing.
Read articleCommon questions
What will I owe in taxes when I sell a rental property?
More than the capital gains rate alone. A sale triggers federal capital gains on the appreciation, depreciation recapture on every dollar you deducted while you held it, net investment income tax for higher earners, and state tax where applicable. Those stack. Run the full number with a CPA before you list, because it changes whether selling or exchanging makes sense.
What is a 1031 exchange, and how long do I have?
A 1031 exchange lets you roll the proceeds from one investment property into another and defer the tax instead of paying it. The clock is strict: 45 days from your sale to identify replacement properties in writing, 180 days to close. Both run from the same date. Miss either and the whole exchange fails and the tax comes due.
Can I deduct rental losses against my W-2 income?
Usually not, at higher incomes. Rental losses are passive, and the $25,000 allowance that lets some owners offset ordinary income phases out between $100,000 and $150,000 of adjusted gross income. Above that, losses carry forward and offset future rental income or the gain when you sell. Real estate professional status is the main exception, and it has a real hours test.
Is cost segregation worth it on a single family rental?
Sometimes, and less often than on commercial property. Cost segregation reclassifies parts of the building into shorter depreciation schedules, pulling deductions forward. The study costs money, and on a modest single family house the accelerated deduction may not clear that cost, especially if your losses are already suspended as passive. Ask your CPA to price the study against your specific situation.
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