Could REPS make tax savings more valuable than cash flow?

[Kathleen Rogers]

My husband works for a commercial developer (W-2) and is a small owner (K1) so our understanding is that he qualifies for REPS. We're looking at buying an STR to self-manage but with rates and prices where they are, the cash flow projections are dismal. However, I think, with REPS, we can deduct the expenses and depreciation against his W-2/K1 income which make the overall picture look appealing. Am I thinking of this the wrong way?

[Kelly O'Keefe]

Hi @Kathleen Rogers

REPS is a very powerful tax strategy that can offset W-2 income. However, STR will not count towards REPS. You can still take the STR Loophole which will have a similar strategy to offset taxes. Depending on the amount that is offset it could be beneficial even if the property has a low cash flow.

Hope this helps