The Long Game How to Use Real Estate to Lower Your Taxes: Passive vs. Active Tax Treatment
Nov 7, 2025
Nate Sosa, a CPA with expertise in real estate taxation, joins to reveal powerful tax strategies for real estate investors. He breaks down the mechanics of depreciation and its significance in reducing taxable income. Sosa explains the distinctions between active and passive income, and how specific tax treatments can benefit high-income earners. The discussion also covers cost segregation, smart timing for bonus depreciation, and the unique tax implications of short-term rentals. Listeners can learn to navigate these strategies for maximum savings.
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Depreciation Is Real Estate's Big Tax Edge
- Depreciation is the primary tax advantage of real estate because it reduces taxable cash flow.
- Larger real estate assets create far bigger tax deductions than small depreciable items.
Classify Properties By Depreciation Life
- Know asset classes: residential depreciates over 27.5 years and commercial over 39 years.
- Classify properties correctly because short-term rentals can be treated differently by the tax code.
Use Cost Segregation And Bonus Depreciation
- Hire an engineering firm to run a cost segregation study, not a CPA doing it in-house.
- Use cost segregation and bonus depreciation to accelerate deductions and lower taxes in high-income years.