Case Studies
Three engagements, with the numbers.
Actual client result
Case Study 01
$600,000 in Year-One Depreciation Against a Seven-Figure W-2
Senior software engineer · Public AI hardware company · $1M+ W-2 · 2025
The situation
Alex was on track to clear $1,000,000 in W-2 income in 2025, with almost nothing standing between that income and the IRS. He wanted to use real estate to change that. He also worked sixty-hour weeks, which ruled out Real Estate Professional Status. REPS requires 750 hours in real property trades and more time there than in your actual job. For someone with his schedule that test is unreachable.
What we did
Alex acquired a high-end short-term rental. STRs sit outside the passive activity rules that trap most rental losses, provided the average stay is seven days or less and the owner materially participates. He qualified under the 100-hour test: more than 100 hours of participation, and more hours than any other single person involved, including cleaners and the co-manager. Once he was clearly over that line, we ran a cost segregation study to pull decades of future depreciation into year one.
The result
The study unlocked over $600,000 in first-year depreciation. Because Alex materially participated, the loss was active rather than passive, which meant it offset his W-2 income directly instead of sitting suspended. Combined federal and state tax savings: $250,000.
Why this works
The 100-hour test is the whole strategy. Alex logged his hours as he went and kept his participation above every vendor’s. Without that documentation the $600,000 deduction becomes a suspended passive loss, and a suspended passive loss does nothing for a W-2 earner.
Projected result
Case Study 02
$500,000 in Depreciation, Planned Before the Foundation Was Poured
Business owner · $900,000 annual income · $2M ground-up STR build · Projected 2026
The situation
David earns $900,000 a year running his own company. In 2024 he bought land intending to build a luxury short-term rental from the ground up, a project running around $2,000,000. He came to me with a question most people ask about two years too late: what is this going to do to my taxes when it’s finished?
What we did
We built the tax plan into the construction schedule instead of waiting for a certificate of occupancy. On an existing building, a cost segregation engineer works backward — reverse-engineering what the wiring, the flooring, and the site work must have cost from a single purchase price and a walkthrough. On a ground-up build, none of that reconstruction is necessary. Every invoice, change order, and architectural drawing already exists. The cost data isn’t estimated, it’s documented. Working from the plans, we identified the components that would qualify for accelerated treatment: site work and landscaping, exterior and decorative lighting, removable floor coverings, dedicated circuits serving specific equipment rather than the building itself. Fifteen-year land improvements and five-year personal property, all eligible for bonus depreciation in the year the property is placed in service. Add to this the non-passive loss treatment by renting it in 2026 with an average stay of seven-days or less and materially participating to create massive tax savings.
The projected result
Roughly $500,000 in bonus depreciation for the 2026 tax year, when the build is completed and placed in service. Projected tax savings: approximately $175,000.
Why the sequencing matters
Bonus depreciation attaches to the year a property is placed in service, not the year construction starts. That makes the completion date a planning decision rather than a construction milestone. Once the building is finished and the contractors are paid, the invoice-level detail that makes a study this precise gets harder to assemble with every passing month. David’s study will be built from primary records because we knew to keep them. The material participation requirement still applies once the property opens, and that’s part of the plan. But the depreciation work was determined before the foundation was poured.
Projected result
Case Study 03
100 Hours Instead of 750
Physician and spouse · $1M+ household income · Projected 2026
The situation
Dr. Julian earns over $1,000,000. He and his spouse arrived with a plan already in hand: buy long-term rentals, have the non-working spouse pursue Real Estate Professional Status, and use the resulting losses to offset his income. It’s a legitimate strategy and it works for the right family. It also demands 750 hours a year, more than half of all working time spent in real property trades, and documentation good enough to survive an exam. They came to me before buying anything. Once we walked through what 750 hours actually looks like week to week, the plan stopped making sense for them.
What we did
We pivoted to short-term rentals before they acquired their first property. The STR strategy reaches the same destination — losses that offset high W-2 income — through a 100-hour material participation test rather than a 750-hour test. They are now purchasing a property that will serve as their retirement home later.
The projected result
Roughly $400,000 in bonus depreciation and over $140,000 in tax savings.
Why the timing mattered
Had they bought long-term rentals and invested hundreds of thousands of dollars first and then discovered the 750 hours was unworkable, the fix would have meant selling, converting, or carrying suspended losses for years. The most valuable thing that happened in this engagement happened before any money moved.
Your situation is not one of these
Every number on this page came out of a specific set of facts: a specific income, a specific property, a specific amount of time the client was willing to put in. Yours will be different, and the honest answer to “what would this save me” is that I don’t know until we look. What I can tell you on a 30-minute call is whether there’s a strategy here worth pursuing at all, and if there isn’t, I’ll say so.
Names and identifying details have been changed to protect client confidentiality. Figures reflect rounded actual client outcomes except where marked as projected. Tax results depend entirely on individual circumstances, and no outcome is guaranteed. Nothing on this page constitutes tax advice for your situation.
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