Not coordinating passive losses across properties

Cost segregation creates large passive losses that can offset rental income from other properties. If your properties aren't being managed as a unified tax strategy, you're likely leaving significant deductions unused. The IRS passive activity loss rules are complex but well-documented — and proper coordination is where the real tax savings live.

🏡 Industry Insights

You've built a portfolio. Nobody's shown you the tools that make it compound faster.

Cost segregation, 1031 exchanges, QOZs, DSTs — the IRS publishes the rules. Most real estate investors either don't know these strategies exist or have advisors who don't coordinate them. The difference is six figures a year.

20-40%

First-year depreciation boost from a cost segregation study

$500K+

Typical tax deferral on a properly structured 1031 exchange

15+ years

Capital gains deferral available through Qualified Opportunity Zones

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Based on typical client scenarios. Individual results vary depending on your specific situation.

Common issues

Where real estate firms typically have gaps.

Patterns we see most often in this industry.

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You're Depreciating Everything Over 27.5 or 39 Years

A cost segregation study reclassifies building components (HVAC, electrical, fixtures, paving) into shorter depreciation schedules — 5, 7, or 15 years instead of 27.5 or 39. The IRS has approved this methodology since the 1990s. Published case studies from the ASCSP show that cost segregation typically accelerates 20-40% of a property's value into the first few years. For a $2M property, that can mean $150K+ in additional first-year deductions.

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Your 1031 Exchange Strategy Isn't Connected to Your Investment Strategy

A 1031 exchange defers capital gains tax — but only if the replacement property fits your overall wealth plan. Too often, investors rush into a replacement property to meet the 45-day identification deadline without considering whether the new asset fits their long-term portfolio. Delaware Statutory Trusts (DSTs) are one IRS-approved option for investors who want 1031 deferral without taking on another active property.

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You Have Either Too Many LLCs or Too Few

Asset protection in real estate isn't about the number of LLCs — it's about the structure. Legal and tax professionals widely recommend series LLCs, holding company structures, and property-specific entities based on risk profile. Many investors either have every property in one LLC (maximum liability exposure) or a separate LLC for each (unnecessary complexity and cost).

The Foundation Review is a 60-minute working session at no cost.

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Common mistakes

Frequent missteps in real estate.

Not doing a cost segregation study on commercial or residential rental properties +

Cost segregation is IRS-approved and has been upheld in Tax Court repeatedly. For properties valued above $500K, the study typically pays for itself 5-10x over in accelerated depreciation. The ASCSP (American Society of Cost Segregation Professionals) publishes case studies showing typical results. If you own rental property and haven't done a cost seg study, you're likely overpaying taxes.

Rushing a 1031 exchange without a long-term portfolio strategy +

The 45-day identification window creates pressure that leads to bad property choices. DSTs (Delaware Statutory Trusts) are one IRS-approved 1031 option that provides income without active management. QOZs (Qualified Opportunity Zones) offer capital gains deferral plus potential tax-free growth. Having these options mapped before you sell gives you real choices — not a forced timeline.

Using one LLC for all rental properties +

If one property has a liability event (injury, environmental issue), a single-LLC structure exposes every other property in that entity. Tax and legal professionals widely recommend a holding company with separate LLCs for each property or property group based on risk. The cost of proper structuring is a fraction of what a single lawsuit can reach.

Typical opportunities

Common areas of recovery.

Opportunities we typically identify for real estate firms.

Cost Segregation

20-40% accelerated

Reclassifying building components into shorter depreciation schedules — IRS-approved since the 1990s

1031 Exchange Strategy

$500K+ deferred

Capital gains tax deferral through proper identification and replacement — including DST options

Entity Restructuring

Risk reduction

Holding company + property-specific LLCs to isolate liability across the portfolio

Passive Loss Coordination

Significant tax savings

Using cost seg losses to offset income across the entire portfolio

Real-World Example

What a Foundation Review actually looks like.

An anonymized engagement from our work with real estate businesses.

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Real Estate Investment Firm

$4.8M portfolio income

A 12-property portfolio owner was approaching a major liquidity event — selling two properties with significant embedded gains. The focus was on the transaction, but there was no estate plan, no life insurance to cover estate tax exposure, and the owner's retirement savings were minimal relative to net worth because everything was tied up in real estate.

What the Foundation Review found

No life insurance despite a growing estate — projected estate tax liability of $1.2M+ with no liquidity to pay it, meaning heirs would be forced to sell properties at potentially distressed prices
Zero retirement savings outside of real estate equity — an annuity or retirement plan could provide diversification and guaranteed income that doesn't depend on property values or occupancy rates
The upcoming sale was eligible for a 1031 exchange into DSTs, but more importantly the deferred gains created a future estate tax problem that needed life insurance to solve
Also identified: entity structure exposed all 12 properties to cross-liability — referred to their attorney for restructuring

Result

The Foundation Review placed an ILIT-owned life insurance policy to cover projected estate tax liability (through Ash Brokerage), established a retirement plan to begin building non-real-estate savings, and coordinated with their CPA on the 1031 exchange strategy. The life insurance solved the liquidity problem that would have forced the family to liquidate properties to pay estate taxes.

Details anonymized and modified. Individual results vary — your Foundation Review will be specific to your situation.

Why Good Deals

An integrated alternative.

One firm. Investments, tax, insurance, business advisory.

Good Deals consolidates investment management, tax strategy, insurance planning, and business advisory into one CFA-led practice. Operator background spans dozens of companies and many industries.

For your industry specifically: we coordinate with your existing CPA and attorney rather than replacing them.

CFA-led investment analysis and portfolio management.
Operator background across multiple industries.
Registered fiduciary — legally obligated to act in your interest.
Investments at Altruist; insurance through BackNine when an audit identifies a need.
90-day money-back on every V-CFO engagement.
Austin, TX.

Book a Foundation Review.

A 60-minute working session focused on real estate. No cost.