- Rental property returnsSchedule E, partnership and LLC returns for properties held with partners.Learn more about Rental property returns →
- DepreciationCorrect schedules, cost segregation coordination and bonus depreciation.Learn more about Depreciation →
- Passive loss planningThe $25,000 allowance, real estate professional status and short-term rentals.Learn more about Passive loss planning →
- Sales & exchangesGain and recapture calculations and 1031 exchange deadlines.Learn more about Sales & exchanges →
Depreciation, and the 2025 bonus
Residential rental buildings are depreciated over 27.5 years and commercial buildings over 39 years. A cost segregation study can reclassify parts of a property into shorter lives, and the 2025 tax law made 100% bonus depreciation permanent for qualifying property acquired after January 19, 2025. New Jersey and New York generally don't follow federal bonus depreciation, so state returns need separate schedules.
Passive loss rules
- If you actively participate, up to $25,000 of rental losses can offset other income, phasing out between $100,000 and $150,000 of modified adjusted gross income.
- Real estate professionals (more than 750 hours and more than half of your working time in real property businesses) can treat qualifying rental losses as non-passive.
- Short-term rentals with an average stay of seven days or less aren't treated as rental activities under these rules, which can change the result entirely.
Selling and exchanging
When you sell, depreciation you took (or could have taken) is generally taxed at up to 25% as unrecaptured Section 1250 gain. A 1031 exchange can defer the gain if you identify replacement property within 45 days and close within 180 days, through a qualified intermediary. Nonresident sellers of New Jersey and New York property also face state estimated tax requirements at closing.
Frequently asked questions
Can my rental losses offset my salary?
Possibly. Up to $25,000 if you actively participate and your income is under the phase-out range, or more if you qualify as a real estate professional or the property is a short-term rental you materially participate in.
Is cost segregation worth it?
It depends on the property's cost, your holding period and whether you can use the losses. For larger properties it can produce significant early deductions.
What are the 1031 exchange deadlines?
You generally must identify replacement property within 45 days and complete the purchase within 180 days of selling, using a qualified intermediary.
Do I need an LLC for my rental property?
An LLC is mainly a liability decision; a single-member LLC is usually disregarded for federal tax. We can help you understand the tax side and coordinate with your attorney.