Tax Planning for Real Estate Investors (Advanced)

Categories: Federal Tax, IRS CE
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About Course

This two-hour advanced continuing education course provides tax professionals with a practical, federal-tax-focused understanding of the major issues facing real estate investor clients across the full investment lifecycle — from acquisition and depreciation, through operation and the passive activity loss rules, to eventual disposition through a like-kind exchange or installment sale. The course is built for enrolled agents and other tax return preparers who already handle individual returns and want to move confidently into real estate-focused planning.

Participants examine MACRS depreciation and cost segregation strategies, the passive activity loss rules under IRC §469 including the material participation tests and the real estate professional exception, the capitalization regulations distinguishing a deductible repair from a capital improvement, the business interest expense limitation under IRC §163(j), the like-kind exchange rules under IRC §1031 following the TCJA’s limitation to real property, and the installment sale method under IRC §453. Throughout the course, the focus remains on federal tax law as it applies to real estate investors, not on state or local real estate law.

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What Will You Learn?

  • Apply MACRS depreciation rules and cost segregation strategies to residential and nonresidential rental property
  • Apply the passive activity loss rules under IRC §469, including the material participation tests and the real estate professional exception
  • Distinguish a deductible repair from a capital improvement under the tangible property capitalization regulations
  • Apply the business interest expense limitation under IRC §163(j) as it applies to real estate
  • Apply the like-kind exchange rules under IRC §1031 following the TCJA's limitation to real property
  • Apply the installment sale method under IRC §453 and its interaction with depreciation recapture

Course Content

Module 1 – Depreciation and Cost Recovery for Real Estate Investors
This module covers MACRS recovery periods for residential and nonresidential rental property, allocating purchase price between land and building, cost segregation study fundamentals, bonus depreciation and Section 179 interaction with real property, unrecaptured Section 1250 gain, and a worked illustration combining these depreciation layers.

  • Depreciation and Cost Recovery for Real Estate Investors

Module 2 – Passive Activity Loss Rules — §469, Material Participation, and Real Estate Professional Status
This module addresses the general passive activity loss framework under IRC §469, the seven material participation tests, the $25,000 active participation exception and its phase-out, the two-part real estate professional test, the self-rental trap under Treas. Reg. §1.469-2(f)(6), and the release of suspended losses upon a fully taxable disposition.

Module 3 – Repairs vs. Improvements and Interest Expense Limitations
This module covers the tangible property capitalization regulations as applied to rental real estate, the routine maintenance safe harbor, the business interest expense limitation under IRC §163(j), the real property trade or business election and its ADS depreciation consequence, the de minimis safe harbor, and the small taxpayer safe harbor for buildings.

Module 4 – Like-Kind Exchanges (§1031) and Installment Sales
The final module covers the like-kind exchange rules under IRC §1031 following the TCJA's limitation to real property, boot and the related-party two-year rule, the qualified intermediary requirement, reverse and build-to-suit exchange structures, the installment sale method under IRC §453, and how depreciation recapture interacts with an installment sale.

Final Assessment – Tax Planning for Real Estate Investors (Advanced)
You have completed an advanced review of federal tax planning for real estate investors, covering depreciation and cost recovery, the passive activity loss rules, repair-versus-improvement determinations and the interest expense limitation, and the tax consequences of a real estate disposition through a like-kind exchange or an installment sale. You are now prepared to demonstrate your understanding of the key concepts. The following final examination assesses your knowledge of the material covered in all four modules. A passing score of 70% is required to successfully complete the course.

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