Your Landlord Can Collect Rent All Year and Tell the IRS He Lost Money. Here Is How.

Depreciation is a deduction the IRS gives you for owning real estate. You deduct part of the building's value every year, even while the property collects rent and may grow in value.

Cost segregation takes it further. A cost segregation study breaks the property into components and front-loads years of depreciation into year one.

The result is a paper loss that offsets income without spending additional cash. The property cash flows, the value grows, and the tax return shows a loss.

The problem is what the loss can touch. Rental losses are passive by default, so putting them against your W-2 or business income takes the right status, like Real Estate Professional Status or the short-term rental rule. Get the status wrong and the losses sit trapped for years.

And if you're earning $500K or more, book a call with my team at Tax Alchemy. Link in bio or comment WEALTH.