Tax & Legal for Real Estate Investors

1031 Exchange Calculator

Model tax-deferred exchange scenarios

Rental Cash Flow Calculator

See after-tax cash flow impact

1031 Exchange

A tax-deferred exchange under IRS Section 1031 that allows investors to sell an investment property and reinvest the proceeds into a "like-kind" property, deferring capital gains taxes.

Bonus Depreciation

A tax provision allowing investors to deduct a large percentage of certain asset costs in the first year of ownership rather than spreading the deduction over the asset's useful life. Often used in conjunction with cost segregation studies.

Capital Gains Tax

Tax paid on the profit from selling a property. Short-term capital gains (held less than one year) are taxed as ordinary income. Long-term capital gains (held more than one year) are taxed at lower rates of 0%, 15%, or 20% depending on income level.

Cost Segregation

A tax strategy that accelerates depreciation deductions by identifying and reclassifying components of a building into shorter depreciation schedules (5, 7, or 15 years instead of 27.5 or 39). Can generate significant tax savings in the early years of ownership.

Depreciation

A tax deduction that allows property owners to deduct the cost of the building (not land) over its useful life — 27.5 years for residential and 39 years for commercial property. Depreciation reduces taxable income without requiring an actual cash outlay.

Depreciation Recapture

When you sell a property, the IRS "recaptures" depreciation deductions you previously claimed by taxing that amount at a rate of up to 25%. This is a key consideration when calculating the true after-tax profit on a sale and why many investors use 1031 exchanges.