The Neuman Group
The Real Estate Professional Play
This isn't a loophole or a gimmick — it's how sophisticated real estate investors have lowered their taxes for decades, straight out of the tax code. If your spouse qualifies as a real estate professional, the paper losses from a building you own can legally cancel out your active income — not just rental income, all of it. Here's the move: buy a leveraged building, run a cost segregation study to front-load the depreciation, and watch most of your federal tax disappear. Then layer on a management LLC, a SEP IRA, and putting your kids on payroll. We lay out the pros, the cons, and the real risks below — straight, no spin — and cite where each piece comes from. Slide the numbers and see it on your own figures.
Put 20–25% down so your cash controls a much bigger asset — and you depreciate the whole building, not just your down payment.
It breaks the building into fast-depreciating parts, so a huge slice of the value is written off in year one with bonus depreciation.
On a joint return, if your spouse qualifies as a real estate professional (750+ hours, more than half their work time, material participation), that depreciation legally offsets your active income — and the LLC + SEP IRA + kids shelter even more, every year.
Every field is yours to change — type a number or drag a slider. Rough illustration, not tax advice.
The Tax Wipeout
Year one is front-loaded by the cost-seg study. The rest depreciates straight-line.
| Year | Depreciation | Cumulative | Fed tax saved |
|---|
Stack It Even Higher
The building wipes out this year. But set up an LLC to manage it and the shelter keeps working every year after — even when there's no fresh building. The LLC pays a management fee (earned income), which funds a SEP IRA. Put the kids on payroll for real work and their wages are deductible to you and nearly tax-free to them — and each one can fund their own retirement account.
Read this before you quote any of it. This is a rough illustration to start a conversation with your CPA — not tax, legal, or investment advice, and not a promise of any result. The whole thing hinges on genuinely qualifying as a real estate professional (750+ hours, more than half your working time in real property trades, plus material participation) — the IRS scrutinizes this hard. Tax figures use approximate 2025 federal brackets and ignore the NIIT, AMT, QBI, state nuances, phase-outs and itemized vs. standard deductions. “Wiping out” income can create a loss carryforward, not always a same-year zero. Cost-seg results vary by property; depreciation is recaptured when you sell. Bonus depreciation rules change with legislation. SEP IRA limits (25% of comp, up to $70,000 for 2025), IRA limits ($7,000), and a child's standard deduction (~$15,750 for 2025) are approximate and change yearly; the family-payroll FICA exemption applies only to certain entity structures and the children must do real, age-appropriate work at reasonable wages. State tax uses a single approximate top marginal rate (state, or state + city for New York City) applied to the same income — real state tax is bracketed and several states do not follow federal bonus depreciation (New Jersey decouples; New York and others have their own rules), so the state portion of the wipeout is often smaller than shown. Run every number with a qualified CPA before acting.
Straight With You
No spin. This is a powerful, legal strategy — but it isn't free money and it isn't for everyone. Here's the honest picture so you can decide with your eyes open.
Every claim above traces back to the IRS itself. Don't take our word for it — read the source.
Tell us your income and your budget. We'll find an actual South Florida property, bring in a cost-seg team and your CPA, and put real numbers on the page.
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