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May 22, 2025 • 1 min read

5 Powerful Tax Strategies for Real
Estate Investors

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Day 5: The Short-Term Rental (STR) Loophole – Beat Passive Loss Limits & Lower Your Taxes

Most real estate investors assume they can’t use rental losses to offset W-2 income unless they qualify as a real estate professional.
BUT… there’s a workaround: The Short-Term Rental (STR) Loophole (IRC § 469).

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How?

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Unlike long-term rentals, short-term rentals aren’t considered passive—meaning you can deduct rental losses against ANY income (without needing REPS status).

How to Qualify for the STR Loophole

To use STR losses to offset W-2 income:

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  • The property must be rented for an average of 7 days or less per stay (OR)

  • You must provide significant services (cleaning, meals, concierge, etc.)

This turns your rental income into a “business” rather than a passive investment!

Example: How the STR Loophole Works

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  • You buy a short-term rental for $500,000 and rent it out via Airbnb.

  • Thanks to cost segregation, you take a $100,000 depreciation deduction in year one.

  • Without STR rules: You couldn’t use the loss against your W-2 job.

  • With STR rules: You deduct the full $100,000 loss, lowering your taxable income.
     

  • Result? If you’re in the 35% tax bracket, that’s $35,000 in immediate tax savings!

Final Thoughts: The Power of Real Estate Tax Planning

This wraps up our 5-part series, but we’ve only scratched the surface!
Real estate investing isn’t just about making money—it’s about keeping more of it.
Which of these strategies are you using? Let’s talk! 🚀

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