A high-earner spouse qualified for Real Estate Professional Status. Cost segregation on three properties paired with depreciation timing reduced the couple's effective rate into the low teens.
A high-income W-2 spouse ($580K) and a real estate investor spouse with 14 properties were paying an effective rate above 33% across the household. The portfolio was generating paper losses, but the W-2 spouse couldn’t deduct them; they were being suspended as passive losses.
We qualified the investor spouse for Real Estate Professional Status (REPS) and material participation in the portfolio. Cost segregation studies on three of the largest properties accelerated depreciation into the current year. The combination converted suspended passive losses into active losses that could offset W-2 income.
The household’s effective rate dropped from above 33% into the low teens. The strategy is repeatable as new properties enter the portfolio, with documented audit-defensible REPS qualification.
Client details anonymized. Results are not typical and vary based on individual tax situations.
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