Straight answers on the strategy.

Sometimes, but it is the exception, not the default. Rental real estate is generally treated as a passive activity, and passive losses can only offset passive income. The two main ways through: the special $25,000 allowance (which phases out between $100k and $150k of modified AGI and is therefore unavailable to most high earners), or qualifying as a Real Estate Professional with material participation, which can make the activity non-passive. Only in that non-passive case can the losses generally offset ordinary W-2 income. Whether you can do this is entirely fact-specific.

Under the rules summarized in IRS Publication 925, one spouse must spend more than 750 hours during the year in real property trades or businesses in which they materially participate, AND more than half of all the personal services they perform in any trade or business during the year must be in real property trades or businesses. On top of that, you must materially participate in your rental activities (often via a valid grouping election). For a married couple filing jointly, the hours of only one spouse are counted toward the tests, but that one spouse must clear both bars. Contemporaneous time logs are essential.

A cost segregation study is an engineering-based analysis that breaks a building into its components and reclassifies many of them (fixtures, certain finishes, land improvements, and more) into shorter depreciation recovery periods than the building itself. That front-loads depreciation deductions into the early years of ownership. Combined with bonus depreciation where available, it can produce a large paper loss in year one, which, when your activity is non-passive, may offset other income including W-2 wages.

Cost segregation is specialized engineering work, and we run the study through an independent firm we partner with so it integrates cleanly with the rest of your Repsie engagement. All services, from strategy and coordination to the study itself, substantiation, and entity-level filing, are billed through Repsie as a single engagement. We do not unbundle the study or refer clients out for it; our partner relationships give us preferred pricing and a consistent deliverable we can stand behind in audit defense. For a single-family rental or small residential property in the $500–600k range, the cost-seg coordination component is typically around $3,500 (varies by property). We do not order the study until after closing. Timing it post-close protects you from sinking costs into a property that does not actually transact.

They are two separate tests that both have to be satisfied. REPS is about your overall involvement in real property trades or businesses (the 750-hour and more-than-half tests). Material participation is about each specific rental activity, whether you are involved on a regular, continuous, and substantial basis, measured by one of several IRS tests (for example, more than 500 hours in the activity). Passing REPS removes the automatic 'passive' label; material participation in the activity is what then lets the resulting losses be treated as non-passive.

Real-estate-based strategies carry real audit risk, and REPS time logs in particular are a known area of IRS scrutiny. We do not pretend otherwise. What we do is build for substantiation from the start: contemporaneous time records, a defensible cost segregation study from a qualified provider, clean entity books, and consistent year-over-year reporting. The goal is positions that are supportable on their facts and under current law. No legitimate advisor can promise you will never be examined. Anyone who does should be a red flag.

It depends on alignment within a single tax year. When the pieces come together, meaning one spouse qualifies and materially participates, the right property is acquired, and a cost segregation study is completed, the resulting depreciation can show up on that year's return. If you acquire late in the year, or qualification takes time to establish, the meaningful impact may land the following year. Timelines vary entirely with your facts, and we will be candid about what is realistic for your situation.

Yes. A §1031 like-kind exchange lets you defer capital gains tax and depreciation recapture when you sell an investment property and reinvest the proceeds into a qualifying replacement property. We coordinate the qualified intermediary (QI), the written identification of replacement candidates, and the closing of the new property, and we can pair it with the same REPS and cost-segregation work we do for new acquisitions. Section 1031 was left fully intact by the One Big Beautiful Bill signed July 4, 2025.

Two hard, non-negotiable deadlines, both running concurrently from the day your relinquished property closes. (1) Identify replacement property in writing to your QI within 45 calendar days. (2) Close on the replacement property within 180 calendar days. Calendar days: weekends and holidays do not extend either window. You also cannot take constructive receipt of the sale proceeds; the QI must hold them throughout. The property must be held for productive use in a trade, business, or investment. Primary residences and fix-and-flip inventory do not qualify. Late-year sales (October–December) can shorten the 180-day window because Section 1031 also requires closing by the due date of your tax return for the year of sale, which may force you to file an extension to preserve the full 180 days.

Most CPAs are excellent at compliance, meaning reporting what already happened, but far fewer architect proactive strategy across legal structure, REPS qualification, property selection, and cost segregation. Repsie brings the strategy, the legal structuring, the property acquisition, and the entity-level filings under one roof, so the plan we design and what eventually shows up on a return are built by the same team. The strategy call is where we walk through how the engagement would work for your specific situation.

We work alongside. Repsie handles the entity side: the 1065 or 1120-S for your investment LLC, the substantiation package, the cost-seg coordination, and the REPS strategy. Your existing CPA continues to prepare your personal 1040 and any non-real-estate business returns. We coordinate directly with them on the K-1s and supporting schedules so nothing falls through the cracks. Most clients prefer this. They keep the personal-tax relationship they already trust, and we own the piece their CPA wasn't built to architect.

The advisory membership is $99/month and covers ongoing REPS strategy, quarterly check-ins, entity oversight, and full access to the Repsie Member App. Inside the app you manage your REPS time log, track material-participation requirements, upload and store every document tied to the strategy (closing docs, leases, receipts, cost-seg deliverables, K-1s, audit substantiation), and pull from our shared document library: operating agreements, REPS log templates, audit-defense checklists, property onboarding packets, and the rest of the pertinent paperwork needed to manage and maintain qualifying properties. Entity setup (LLC or S-corp) is $999 one-time. Cost segregation coordination is estimated at $3,500, depending on the property and engineering firm engaged. The investment-entity tax return (1065 or 1120-S) is $1,500 annually. The optional REPS Audit Defense rider is $495/year. Your personal 1040 stays with your existing CPA. We don't price that.

It's the workspace you live in once you're a client. You log REPS hours in real time, see exactly where you stand against the 750-hour and material-participation thresholds, store every document tied to the strategy in one audit-ready place, and access our shared library of templates and reference materials: operating agreements, REPS logs, audit-defense checklists, property onboarding and maintenance documentation, and the rest of the paperwork we use to keep qualifying properties compliant. Your strategist sees the same dashboard you do, so quarterly check-ins start from real data instead of catch-up.