Reclassifies property components into shorter depreciation categories to front-load deductions.

• Have you run a cost segregation study on any property acquired in the last 5 years?
• For properties acquired before 2020: Have you filed a Form 3115 to catch up on retroactive depreciation? High Value
• Do you own any commercial property worth $500K+? Cost seg ROI is almost always positive year one.
• Have you documented all short-life components (appliances, carpeting, HVAC, land improvements) separately from the structure cost?

First-year expensing on 20-year-or-less property components. Phase-down in progress — act now.

• Are you applying bonus depreciation to 5-, 7-, and 15-year property components identified by your cost seg study?
• 2026 timing window: Bonus depreciation drops to 20% for 2026. Are acquisitions planned for late 2025 or early 2026 to maximize the 40% rate? Time-Sensitive
• Passive activity loss rules: Do you qualify as a real estate professional (750+ hours, more than any other profession)? If not, have you explored the short-term rental exception?
• Have you modeled the tax impact of bonus depreciation vs. passive loss limitations for your specific income profile?

Defers capital gains taxes indefinitely when rolling sale proceeds into like-kind replacement property.

• Are you planning any property sales in the next 12 months? Every sale without 1031 planning is a potential missed deferral.
• Do you have a qualified intermediary (QI) identified? Funds cannot pass through your hands — the QI must be engaged before closing. Must Do First
• 45-day ID deadline: Have you identified potential replacement properties before starting the exchange?
• Depreciation recapture planning: Do you know your Section 1250 recapture exposure? At 25% federal, this often exceeds the capital gains liability.
• Step-up planning: For long-held properties with large deferred gains, have you modeled the estate planning angle (step-up in basis at death eliminates deferred gain)?

For RE investors who manage their portfolio from home — often overlooked because "I'm not a business."

• Do you have a space used exclusively and regularly for managing your real estate business (reviewing financials, communicating with tenants, planning)?
• Have you measured the square footage of your home office as a percentage of total home square footage?
• Are you deducting the proportional share of mortgage interest/rent, utilities, insurance, repairs, and depreciation attributable to the office space?
• Business use only: The space must be used exclusively for business — a guest bedroom doubles as an office doesn't qualify.

Property visits, investor events, and market research trips — all potentially deductible if properly documented.

• Are you tracking mileage for all property visits, contractor meetings, and property management activities? (67 cents/mile in 2024)
• Do you attend real estate conferences (BiggerPockets, local REIA meetings, industry events)? Registration + travel + hotel = deductible.
• Out-of-state market research trips: Are you deducting airfare, hotel, and meals (50%) for trips to evaluate new markets or properties?
• Documentation: Do you keep contemporaneous records (mileage log, receipts, business purpose notes) that survive an IRS audit?

The tax bill most investors don't see coming — planning ahead reduces or eliminates it.

• Do you know your total accumulated depreciation on each property? This is your recapture exposure if you sell.
• Installment sale structure: For properties with large recapture, have you modeled spreading payments across years to manage the tax rate impact?
• 1031 into the exit: Are you using 1031 exchanges to defer recapture indefinitely, then using estate step-up to eliminate it entirely at death?
• Opportunity Zone strategy: Have you evaluated rolling gains into Qualified Opportunity Zone investments to defer and reduce recapture?

How you hold real estate determines how it's taxed. Most investors use the wrong structure as portfolios grow.

• Have you reviewed your entity structure in the last 2 years with a tax advisor (not just a lawyer)? Legal protection and tax efficiency are different goals.
• Active vs. passive income: For short-term rentals, development, or property flipping — are you exposed to 15.3% SE tax on net income?
• S-Corp election: If you earn $150K+ in active RE income, have you evaluated an S-Corp with a reasonable salary to reduce SE tax on distributions? High Value
• QBI deduction: Are you maximizing the Section 199A 20% deduction on pass-through income? Rules vary by entity type and income level.
• Management company structure: For portfolios with $500K+ in annual rents, have you evaluated separating management into an S-Corp for retirement contribution access?