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Every Freedom Commercial Real Estate guide on tax-advantaged cre, newest first.
When real estate passes to an heir, its tax basis usually resets to fair market value at death, erasing the built-in gain the original owner was carrying. Here is how that reset actually works, where it breaks down for a fund interest, and what community property changes.
Owning commercial real estate in a state where you don't live can create a tax filing obligation in that state, on top of whatever your home state already requires. Here is why location decides the first filing, what a home state credit does and does not fix, and how a partnership's K-1 carries the obligation across state lines.
A K-1 rental loss is almost always passive, which means it offsets passive income rather than wages. Here is exactly what it can and cannot reach, and what happens when nothing is there to absorb it.
A property sold eleven months after purchase and the same property sold thirteen months after purchase can produce very different tax bills on an identical dollar of gain. Here is the one-year test that decides which rate applies, and the Section 1231 rule that changes the answer for most commercial real estate.
Real estate professional status removes rental real estate from the passive activity category, but only for a taxpayer who clears two tests measured against everything else they do for a living. Here is what each test actually requires, how the grouping election and the spousal strategy work, and why the status does nothing for a passive fund interest.
A 1031 exchange defers gain by matching one piece of real property against another, inside a tight closing window. A Qualified Opportunity Fund defers gain from almost any asset sale by reinvesting just the gain itself, on a very different clock. Here is where each deferral actually goes, and what a 2025 tax law changed about the second one.
Depreciation lowers taxable income while a property is held and raises taxable gain when it is sold. Here is how that gain splits between ordinary income, unrecaptured Section 1250 gain taxed at a maximum 25%, and ordinary capital gain, and which deferral tools actually reach it.
A 1031 exchange is a procedure before it is a tax benefit, and most of the procedure is two deadlines that start on the same day. Here is what each clock measures, the three ways to identify replacement property, why the intermediary has to be in place before closing, and the ordinary situations where the arithmetic runs out.
A depreciation loss on a K-1 is not automatically a deduction on a return. Here is why the passive activity rules park it, which income is eligible to absorb it, how the suspended balance is tracked, and the single event that releases the whole thing.
A cost segregation study splits one purchase price into land, 5-year, 7-year, 15-year, and 39-year property. Here is what the engineering work involves, how a look-back study catches up depreciation on a building already owned, and the conditions under which the fee is not worth paying.
Bonus depreciation does not apply to the building. It applies to the shorter-lived property inside and around it, plus qualified improvement property. Here is the 20-year rule that decides eligibility, the acquisition tests that catch used property, and the carve-outs most summaries skip.
The tax benefits of commercial real estate come from four mechanisms that only make sense together: depreciation creates the deduction, a Schedule K-1 delivers it, the passive activity rules decide whether it can be used, and recapture decides what the IRS takes back at sale.
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