Since rental losses are typically passive, the best way to offset W-2 income is through Real Estate Professional Status (REPS) (750+ hours) or Short-Term Rentals (STRs) (100+ hours and more time than anyone else managing the property), which allow real estate losses, including depreciation, to offset active income.A cost segregation study accelerates depreciation, generating large upfront deductions.

With the right tax strategy, you can maximize deductions and reduce liabilities, while having the right insurance and reserves in place will protect you from unexpected costs.By Implementing a quarterly financial review to assess performance and make adjustments to avoid cash shortfalls.

But ya have to make some educated prognostications in life.Add this to the information your processing - What your talking about doing is eliminating around $4000 or interest expense (which is deductible anyway so really could be a real impact of eliminating $2800 or so) of debt in exchange for paying over $10K in capital gains tax (don't forget possible state gains tax as well).  

Maintain detailed records to substantiate deductions for materials, labor, and expenses, which can significantly reduce taxable income.While an S-Corp provides tax savings, it also requires payroll management and compliance with formalities, making it essential to stay organized or consult a tax professional for ongoing compliance.This post does not create a CPA-Client relationship.

Generally though, you can deduct interest on the mortgage up to a certain point.

Deduct from Returns: You can deduct each investor's share of the fee directly from their monthly returns.

ChatGPT tells me that the cash out proceeds even if only reimbursing myself is non deductible because the proceeds are not reinvested in property

Where the depreciation and expenses for the property can be deducted by the owner. 

Tax Benefits: Rental property owners can deduct expenses like property taxes, insurance, maintenance, and depreciation, which could offset income.

I’ve been working with real estate financials for a while, and I keep seeing one mistake that costs investors thousands: poor bookkeeping leading to missed tax deductions.🚨 Common issues I see:❌ Not properly tracking repairs vs. capital improvements❌ Missing out on cost segregation & depreciation write-offs❌ Scrambling at tax time instead of planning proactivelyI’d love to hear from the group—what’s been your biggest tax headache as an investor?