There are many income opportunities to pursue if you live in the United States, from investing in shares to vintage vehicles, and even trading cards, to name a few. Different people will have different goals and tastes when it comes to parting cash in the hopes of a return, but a time tested method is to become a real estate investor and invest in rental properties.

The benefits from the onset are threefold; you gain an asset whose value increases over time (just look at examples of how much property has increased in value over recent years), you gain a passive monthly source of income from rental payments, and to top it off, there are certain tax strategies you can utilise to reduce your tax liabilities. And this will be the focus of this site.

Rental Property Tax Advantages

We will explore different tax strategies that a residential rental property owner can take advantage of in a US economy where income from rental property is taxed like many other things. But there are certain tax reduction opportunities real estate investors miss out on due to a lack of knowledge or just not knowing how to navigate the fine print, since rental property tax rules can be a bit confusing.

It goes without saying that, like most people, you want to keep as much of that rental income as possible for your own use. Maybe to diversify your portfolio or to spend on your family and kids. The bottom line? No one wants to lose out on keeping extra cash if they can prevent it - legally.

With that being said, the main focus for this site will be rental property tax deduction strategies that owners can utilise. We will also cover common questions asked in this regard along with other related issues.

The Accelerated Depreciation Method

Owning a rental property has tax benefits. And one of those comes in the form of an accelerated depreciation study (also known as a cost segregation study). Accelerated depreciation for real estate is a common practice utilised by larger rental property owners, but it can also be used by those who have only a few or even one property in their portfolio.

To put it in simple terms, accelerated depreciation on rental property is a tax strategy that reduces your tax burdens. It works by depreciating rental property expenses (capitalized property costs) through reducing the asset value of certain components much faster. The depreciation period for certain parts of your property is accelerated (as not all parts will qualify), meaning a reduction in tax burdens now instead of waiting the normal period. This means more $$ for you now.

To see how much you can reduce in taxes through the accelerated depreciation method, you can use this online rentalpropertytaxhub to get an estimate of tax savings (the calculator accounts for bonus depreciation, which is currently being phased down according to IRS rules).

Accelerated Depreciation Strategy in Action

In order to reduce those tax burdens and release cash early, you would need to obtain an acceleration depreciation report (cost segregation study). You could obtain one the traditional route by using a tax specialist, but the issue here is that it would be very expensive and is more suited for those who have the capital to do so.

But there is a more modern and faster method available for rental owners regardless of how many properties they manage. This method enables you to get a study in 2 to 3 days and costs 5 x less than the traditional route. It’s something that smart rental owners are taking advantage of right now. You can find more about.

Real estate investors and companies use accelerated depreciation for tax purposes because it improves cash flow, reduces tax burdens, and puts more money in their back pocket much faster. It’s not something you should be missing out on either.