One of our clients (we’ll call him David for confidentiality) had been paying a consistent (and painful) six-figure tax bill for the last five years. He owned a successful business and was doing well financially, but felt like there had to be a better way to keep more of what he earned. That’s when we introduced him to a tax strategy involving a single short-term rental. By using the short-term rental loophole and pairing it with a cost segregation study, we were able to accelerate depreciation in a way that dramatically reduced his taxable income, all without needing him to qualify as a real estate professional.
The impact was immediate. David’s tax liability for the year was cut by more than half compared to the previous year. He told us it was the first time in a long time that he felt empowered instead of frustrated during tax season. Now, with a solid framework in place, he’s looking to expand his short-term rental portfolio, knowing each one isn’t just a real estate asset, it’s a strategic tax move.
