Advanced real-estate tax tactics often feel out of reach—but they’re available to any investor who knows where to look. In this guide, we’ll share six high-impact strategies you can put to work today—and point you to our free Tax Strategy Finder for a tailored roadmap.
1. Like-Kind Exchanges (IRC §1031)
What it is: Swapping one investment property for another without immediately recognizing capital gains.
Key benefit: Defer tax on gains by rolling proceeds into your next project.
Authority: IRS “Like-Kind Exchanges” tips for real estate tax planning:
🔗 https://www.irs.gov/businesses/small-businesses-self-employed/like-kind-exchanges-real-estate-tax-tips
2. Cost Segregation Studies
What it is: Breaking a building into shorter-lived components (carpeting, lighting, etc.) for faster depreciation.
Key benefit: Accelerate deductions up front and improve early-year cash flow.
Authority: See Publication 946, Chapter 5 on depreciation:
🔗 https://www.irs.gov/pub/irs-pdf/p946.pdf
3. Opportunity Zone Investments
What it is: Placing gains into Qualified Opportunity Funds (QOFs) to defer—and potentially reduce—capital gains tax.
Key benefit: Defer tax on prior gains until 2026 and eliminate tax on new gains if held 10+ years.
Authority: Full rules on the IRS Opportunity Zones page:
🔗 https://www.irs.gov/credits-deductions/opportunity-zones
4. Bonus Depreciation vs. Section 179
What it is: Electing either immediate expensing (Section 179) or bonus depreciation (Section 168(k)) for qualifying improvements.
Key benefit: Choose the treatment that maximizes write-offs based on your income and costs.
Authority: Details in Publication 946, Chapter 3:
🔗 https://www.irs.gov/pub/irs-pdf/p946.pdf
5. Passive-Activity Loss Planning
What it is: Grouping rental activities or demonstrating material participation to access suspended losses.
Key benefit: Use rental losses to offset other passive—or in some cases active—income.
Authority: IRS Publication 925 on passive activity and loss rules:
🔗 https://www.irs.gov/pub/irs-pdf/p925.pdf
6. Strategic Holding-Period Management
What it is: Timing property sales to optimize long-term capital gains rates and combine with recent write-offs.
Key benefit: Lock in lower rates on gains held over one year and leverage deductions from cost segregation or 1031 rollovers.
Authority: Review Topic 409 on capital gains rates:
🔗 https://www.irs.gov/taxtopics/tc409
Bringing It All Together
These strategies are within reach for any serious investor who wants to keep more of their returns. For a custom report on which tactics match your portfolio, run your numbers through our free Tax Strategy Finder now.