Stop scrolling. This is a real strategy, but you better do it the right way.
There’s something people call the STR loophole, or short-term rental tax strategy, and a lot of high-income earners are using it to reduce their taxable income.
Here’s the simple version.
You buy an additional property. Let’s say $400,000.
Now here’s the key.
If you run that property as a true short-term rental, and you materially participate in the business, it may not be treated the same as a regular passive rental.
In certain situations, it can be treated more like an active business.
Now pair that with a cost segregation study.
That’s where a specialist breaks the property into different components so parts of it can be depreciated faster.
And when it’s structured correctly, that can create a big deduction in year one.
You’ll hear people throw around numbers like 25% to 30%.
So on a $400,000 property, that could potentially create around $100,000 to $120,000 in accelerated depreciation.
So if you made $120,000 in regular income, and you qualify to use that deduction the right way, that deduction could potentially wipe out a big chunk of your taxable income.
And on top of that, you still own an income-producing property.
But listen closely.
Do not freestyle this.
You need a CPA who understands short-term rentals, material participation, and cost segregation.
Done correctly, it can be a powerful strategy.
Done wrong, you’re just begging the IRS to kick your door in wearing steel-toed boots.
Comment STR and I’ll send you a simple breakdown of how this strategy works.
Like and follow for more real estate tips — I’m Chris Graves, and that’s your mortgage minute.
#ShortTermRental #CostSegregation #RealEstateTaxStrategy
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