All Forum Posts by: Matthew Schumacher

Hi Charles, because the sale was considered completed 3.5 years ago and you met the ownership and use tests for the home sale exclusion, you would not owe additional capital gains tax upon receiving the full payoff from the buyer's resale. The interest you received during the installment period is taxable as ordinary income, but the principal payments, including the final payoff, are not subject to additional capital gains tax.  
​Internal Revenue Service

Great breakdown on cost segregation and how it can be a powerful tool for increasing cash flow! Many investors and STR owners miss out on this strategy simply because they don't realize how much of their property can be reclassified for shorter depreciation schedules.

A few additional things to consider:

✅ Bonus Depreciation: Did you know that cost segregation studies can be even more powerful when paired with bonus depreciation? While recent tax law changes have started phasing it down from 100%, it’s still a great way to accelerate deductions.

✅ Partial Asset Disposition: If you've made upgrades to your property (like replacing old HVAC, flooring, or lighting), a cost segregation study can help you write off the remaining basis of those old assets in the year you replace them.

✅ STR Tax Loophole: If your STR qualifies for material participation, your cost segregation study could help offset W2 or active income, unlike traditional long-term rental passive losses. This is a huge tax advantage for STR investors!

Hey there! It’s great that you’re being proactive about tax strategy—there are definitely ways to optimize and legally minimize what you owe. A strong CPA who understands STRs (Short-Term Rentals) and real estate tax strategies can be a game-changer. Look for someone well-versed in:

✅ STR Loophole – Unlike traditional rental real estate, STRs can qualify for material participation rules, allowing for potential active losses to offset W2 income.
✅ Cost Segregation Studies – Accelerated depreciation can help shelter income in the right circumstances.
✅ Entity Structuring – The right entity setup (LLC, S-Corp, or even a hybrid structure) can impact tax efficiency.
✅ Tax-Advantaged Retirement Strategies – Combining real estate with SEP IRAs, Solo 401(k)s, or even Defined Benefit Plans can help defer or reduce taxes.
✅ Deductions & Write-Offs – From travel expenses (legit business purposes) to home office deductions, it’s all about maximizing what’s legally allowed.

I’d be happy to dive in to more specifics with you. Feel free to DM me!"