Long Term Strategy for Real Estate Professional

[Joey Harris]

Hi. My wife and I are in escrow on a duplex in our city. We are both 30 and currently we both work full-time W2 jobs. I am considered a high earner and in the top tax bracket currently. Our plan is to move her to part-time next year and have her qualify for REPS. We have good friends who are taking this approach  and we understand all the requirements we need to meet, which we are confident she will be able to do. 

My first question is that can I do a cost seg next year, when she qualifies for REPS (as she doesn’t qualify now), and use that depreciation for my W2 income in the second year of us renting the property? My second question is if I take most of the deprecation on the property in the first 5 years, is it in my best interest to purchase another rental property within those 5 years? Do I need to continue repeating this process to offset my W2 and at what point do you stop? Does it make sense to take this approach if we don’t plan on owning and managing a ton of properties?

 We plan to consult a tax professional but I wanted some general thoughts and considerations prior to that meeting. Thanks!