A building depreciates over decades. The carpet, the cabinets, the parking lot and the landscaping do not. Split them out and a large part of the deduction lands in the first years instead of the thirty-ninth.
Annual income, what you would pay for the property, what kind of building, and where you live. It draws what you pay in tax now beside what you would pay with one building — and then what this year’s saving is worth in ten years.
Where your money actually goes: your income, your bracket, and the share that leaves before you ever see it — then what owning a building does to that share.
It takes the whole first-year write-off off your income. Whether you are allowed to is the next section, and it is the part that decides everything.
What it is, who it is for, what a study costs and roughly what it gives back — without the seminar tone.
The depreciation play in plain English: what it is, who it is for, what a study costs and roughly what it gives back.
The overview: depreciation and cost segregation together, and who each one actually works for.
Both are usually mentioned last. They belong first.
The risk stated up front instead of buried: what a defensible study looks like, and what gets a deduction thrown out.
A high-salary buyer usually cannot use the loss the year it is created — not without real-estate-professional status or the short-term-rental route. A study that produces a deduction you are not allowed to take yet is a fee, not a saving. Read this part before the number.
Deductions taken early are recaptured as income when the building sells, unless the gain rolls into a 1031. Anyone showing you the shelter without the bill at the end is telling you half of it.
The passive-loss wall has a door in it, and it is narrow enough that most people fail on paperwork rather than on effort.
One person — not the household — has to clear both in the same year: more than 750 hours in real property work (about 14.4 hours every week, all year), and more than half of all their working hours. On a joint return the two spouses’ hours cannot be added together. That is why this is almost never the person with the big salary — they cannot clear the second test — and almost always the partner.
Counts: managing tenants, repairs and maintenance you do or directly supervise, showings, advertising, tenant screening, overseeing contractors, acquiring property. Does not count: reviewing financials, market research, ROI spreadsheets, arranging financing, education and seminars. Employee hours do not count unless you own more than 5% of the employer. The hours most people log most eagerly are the ones on the second list.
Not on the study. Our own audit-risk page says it plainly: the IRS frequently challenges real-estate-professional status from people with demanding full-time careers, and it wants a contemporaneous log — written as it happened, not reconstructed in April from a calendar and a memory.
The two-minute check before anybody buys anything: whose hours, against what other job, and whether the pace from here to December is realistic. It answers with the two IRS tests scored on your numbers — and it says no out loud when the answer is no, because a shelter you cannot use is a fee, not a saving.
The evidence behind the write-off. Your partner says what they did in a sentence — typed or dictated — and it dates it, times it, ties it to the property and rules it in or out against the IRS lists, keeping the contemporaneous record that survives being asked for. Warns when the year is behind pace, and refuses to quietly count the hours that do not count.
One buyer, one building, the study, the schedule, and what landed on the return.
The routes to the same result and how deep each one goes, so somebody can pick the path that fits them instead of being sold one.
The same arithmetic as the guide, driven by our own county data for a property you name instead of an illustration: the 5/15/27.5-year splits, the bonus, the fee, ten years of deduction with and without the study — and a finished example on a live listing, one click.
We are not your accountant and this is not tax advice. Everything here is arithmetic on public records and the numbers you type — run it past the person who signs your return before you act on it.
Two ways to act on it.