Real Estate Investment & Tax Strategy
Real assets. Real depreciation. Real returns.

Why Real Estate Is the Foundation of HNW Tax Strategy

No asset class combines income generation, tax efficiency, and long-term appreciation as effectively as well-selected real estate. The depreciation that real estate generates — particularly when accelerated through cost segregation — can shelter not just the property's own income but significant income from other sources, depending on the client's passive activity profile.

For clients who qualify as real estate professionals under Section 469, real estate losses are not passive. They offset ordinary income from any source — including the income from a law practice, a medical practice, or a business operation. A physician whose spouse manages the family's real estate investments and qualifies as a real estate professional can use the depreciation from a $3 million acquisition to offset a significant portion of the physician's annual professional income.

Our Proprietary Deal Platform

We source acquisitions through our real estate partner — a professional with 20 years of experience as a mobile home park broker — whose market relationships and deal flow give our clients access to opportunities that are not broadly marketed.

Mobile home parks have become one of the most sought-after alternative asset classes for well-understood reasons: tenants own their homes and rent the land, producing very low maintenance obligations for the park owner; turnover is extremely low because moving a mobile home is expensive; and demand consistently outpaces supply in most markets.

Commercial real estate — including medical offices, professional offices, self-storage, and net-lease retail — offers an exceptional tax profile because of the specialized systems and improvements that qualify for accelerated depreciation. Every acquisition includes an in-house cost segregation study coordinated directly with the tax return filing from year one.

Cost Segregation — The In-House Advantage

A standard commercial building is depreciated over 39 years on a straight-line basis. A cost segregation study reclassifies building components — electrical systems, plumbing, HVAC, specialty flooring, site improvements, parking — into 5-year, 7-year, and 15-year property. With 100% bonus depreciation now permanent, all qualifying personal property and 15-year improvements can be fully deducted in the year placed in service.

On a $3 million property, a cost segregation study typically identifies $900,000 to $1.2 million of accelerated property — generating $330,000 to $444,000 of first-year federal tax savings at the top marginal rate. We do this work internally, which means it is faster, better integrated with the return, and more cost-effective than outsourcing to a third-party engineering firm.

The Basis Step-Up Analysis Every Real Estate Investor Needs

Real estate investors face a planning tension that requires careful modeling: the conflict between income tax efficiency and estate tax exposure. Assets transferred to irrevocable trusts during lifetime save estate tax on future appreciation but carry a carryover basis. Assets held until death receive a full step-up to fair market value, eliminating decades of unrealized gain including accumulated depreciation recapture.

For heavily depreciated properties with modest future appreciation, the basis step-up is often more valuable than the estate tax savings from a lifetime transfer. For properties with significant appreciation ahead, the calculation may favor the lifetime transfer.

We model both scenarios for every significant holding — comparing the combined after-tax outcome of holding versus transferring. That analysis requires a firm that understands both the income tax side and the estate planning side simultaneously, and it is exactly the kind of integrated thinking that distinguishes our approach from advisors who operate in silos.