For realtors and property management companies

You manage 20 units. You're leaving $26K a year on the table.

Cost seg, REPS, §1031, §469 grouping election, S-Corp salary reasonable for commission income. None of which TurboTax even asks about.

What realtors and PMs get wrong (and what we fix)

Real Estate Professional status (REPS) unlocks unlimited passive-loss offset against ordinary income. Most realtors qualify by hours and don't claim it.

Real Estate Professional Status (REPS)

Spend >750 hours/year and more than 50% of personal-service time in real-property trades/businesses. Election lets rental losses offset W-2 / commission income without the §469 $25K cap or phaseout. Time log is the audit centerpiece, we template the calendar to survive scrutiny.

IRC §469(c)(7); Treas. Reg. §1.469-9

Cost segregation on rental property

A 20-unit building purchased for $2M typically has $400-600K of §1245 personal property and 15-yr land improvements. Bonus depreciation (60% in 2024) plus §168(g) recapture timing = $80-120K first-year deduction. We engineer it with a licensed cost-seg engineer.

IRC §168(e); §168(k); Rev. Proc. 87-56

§1031 like-kind exchange coordination

Identification period 45 days, exchange period 180 days. Reverse exchanges, build-to-suit exchanges, partial boot handling. We coordinate the QI, structure the deferral chain, and model the §453 installment alternative when 1031 isn't clean.

IRC §1031; §1031(a)(3); Treas. Reg. §1.1031(k)-1

S-Corp election for high-commission realtors

Commission income on Schedule C above $150K starts paying SE tax that an S-Corp salary + distribution split can reduce. Reasonable comp documented against MLS/NAR data. Solo 401(k) contributions on top. We model the breakeven and run the 2553.

IRC §1361; §1366; Form 2553; Rev. Rul. 74-44

§469 grouping election (Reg. 1.469-4)

Group rental activities as a single activity to clear material-participation thresholds. Once made, election binds future years, we document the grouping statement attached to the return so the IRS can't unwind it.

Treas. Reg. §1.469-4; §1.469-11(b)(3); Rev. Proc. 2010-13

Short-term rental loophole (avg. stay ≤7 days)

Average rental period 7 days or less = NOT a "rental activity" for §469 purposes. Material participation alone (100 hours and more than anyone else) unlocks loss against ordinary income, no REPS required. Airbnb operators routinely qualify. We track the average-stay calc per property.

Treas. Reg. §1.469-1T(e)(3)(ii)(A)

Real example · 20-unit property manager · $1.4M GRI

Cost segregation on a $2.1M apartment building plus REPS election plus §469 grouping. First-year accelerated depreciation $96K against $230K of management commission income.

$26,200 federal tax saved · year one

Plus a §1031 exchange chain modeled for the next disposition (2 more buildings deferring $340K of recognized gain).

What's included

Schedule E + Form 8825 for entity-held rentals

Property-by-property tracking, suspended PAL carryforwards, basis schedules.

REPS time log template

Audit-defensible calendar showing 750-hour test and 50% personal-service test by quarter.

Cost seg coordination

We engage the engineer, review the report, file Form 3115 for §481(a) adjustment on existing properties.

§1031 QI coordination + deferral tracking

Identification list, boot calc, depreciation carryover basis, Form 8824 filing.

Have us run the REPS + cost seg Talk through your portfolio

689-331-5723 · info@zerofusstaxes.com · Same-day response

2024 figures: bonus depreciation 60% (§168(k), phasing 80→60→40→20→0 through 2027); §469 $25K active-participation allowance phased out MAGI $100-150K; REPS thresholds 750 hours and 50%+ personal services per §469(c)(7). §1031 limited to real property after TCJA (2018). Educational page, engage Zero Fuss Taxes for realtor and property-management tax services.