{"id":1406,"date":"2026-10-04T23:27:30","date_gmt":"2026-10-05T03:27:30","guid":{"rendered":"https:\/\/arvcalc.com\/blog\/year-end-tax-moves-real-estate-investors\/"},"modified":"2026-10-04T23:38:40","modified_gmt":"2026-10-05T03:38:40","slug":"year-end-tax-moves-real-estate-investors","status":"publish","type":"post","link":"https:\/\/arvcalc.com\/blog\/year-end-tax-moves-real-estate-investors\/","title":{"rendered":"Year End Tax Moves for Real Estate Investors (2026)"},"content":{"rendered":"<p>You have 93 days left until December 31, 2026. Every one of these year end tax moves for real estate investors has a hard deadline \u2014 miss it, and you wait 12 months for another shot. Last year I watched an investor lose $18,000 in tax savings because he ordered a cost segregation study on January 3 instead of November 15. Bonus depreciation dropped by 20% on January 1. That delay cost him real money.<\/p>\n<p>These 9 year end tax moves real estate investors should make work best in Q4 because they either expire on December 31, require processing time that eats into the calendar, or produce larger deductions when bunched into a single tax year. Whether you own 1 rental or 30, at least 4 of these moves will save you $2,000\u2013$25,000 in federal taxes.<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_83 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/arvcalc.com\/blog\/year-end-tax-moves-real-estate-investors\/#The_2026_Year_End_Tax_Deadline_Calendar\" >The 2026 Year End Tax Deadline Calendar<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/arvcalc.com\/blog\/year-end-tax-moves-real-estate-investors\/#Move_1_Order_a_Cost_Segregation_Study_Before_Bonus_Depreciation_Drops_Again\" >Move 1: Order a Cost Segregation Study Before Bonus Depreciation Drops Again<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/arvcalc.com\/blog\/year-end-tax-moves-real-estate-investors\/#Move_2_Close_Your_1031_Exchange_Before_the_Clock_Runs_Out\" >Move 2: Close Your 1031 Exchange Before the Clock Runs Out<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/arvcalc.com\/blog\/year-end-tax-moves-real-estate-investors\/#Move_3_Harvest_Capital_Gains_and_Losses_Before_December_31\" >Move 3: Harvest Capital Gains and Losses Before December 31<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/arvcalc.com\/blog\/year-end-tax-moves-real-estate-investors\/#Move_4_Prepay_Deductible_Expenses_in_December\" >Move 4: Prepay Deductible Expenses in December<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/arvcalc.com\/blog\/year-end-tax-moves-real-estate-investors\/#Move_5_Make_Repairs_Not_Improvements_%E2%80%94_Deduct_100_This_Year\" >Move 5: Make Repairs (Not Improvements) \u2014 Deduct 100% This Year<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/arvcalc.com\/blog\/year-end-tax-moves-real-estate-investors\/#Move_6_Max_Out_Retirement_Accounts_Solo_401k_and_SEP_IRA\" >Move 6: Max Out Retirement Accounts (Solo 401(k) and SEP IRA)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/arvcalc.com\/blog\/year-end-tax-moves-real-estate-investors\/#Move_7_Set_Up_Your_LLC_or_S-Corp_Before_January_1\" >Move 7: Set Up Your LLC or S-Corp Before January 1<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/arvcalc.com\/blog\/year-end-tax-moves-real-estate-investors\/#Move_8_Document_Every_Expense_%E2%80%94_Receipts_Mileage_Home_Office\" >Move 8: Document Every Expense \u2014 Receipts, Mileage, Home Office<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/arvcalc.com\/blog\/year-end-tax-moves-real-estate-investors\/#Mileage\" >Mileage<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/arvcalc.com\/blog\/year-end-tax-moves-real-estate-investors\/#Receipts_and_Invoices\" >Receipts and Invoices<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/arvcalc.com\/blog\/year-end-tax-moves-real-estate-investors\/#Home_Office\" >Home Office<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/arvcalc.com\/blog\/year-end-tax-moves-real-estate-investors\/#Move_9_Review_and_Adjust_Estimated_Tax_Payments\" >Move 9: Review and Adjust Estimated Tax Payments<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/arvcalc.com\/blog\/year-end-tax-moves-real-estate-investors\/#Worked_Example_3-Property_Investor_Year_End_Tax_Playbook\" >Worked Example: 3-Property Investor Year End Tax Playbook<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/arvcalc.com\/blog\/year-end-tax-moves-real-estate-investors\/#Year_End_Tax_Moves_Summary_Cost_vs_Savings\" >Year End Tax Moves Summary: Cost vs. Savings<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/arvcalc.com\/blog\/year-end-tax-moves-real-estate-investors\/#How_Real_Estate_Depreciation_Ties_Into_Year_End_Planning\" >How Real Estate Depreciation Ties Into Year End Planning<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/arvcalc.com\/blog\/year-end-tax-moves-real-estate-investors\/#Common_Mistakes_That_Cost_Investors_Thousands\" >Common Mistakes That Cost Investors Thousands<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/arvcalc.com\/blog\/year-end-tax-moves-real-estate-investors\/#Bonus_Depreciation_Phase-Down_Schedule\" >Bonus Depreciation Phase-Down Schedule<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/arvcalc.com\/blog\/year-end-tax-moves-real-estate-investors\/#Year_End_Tax_Moves_for_Real_Estate_%E2%80%94_FAQ\" >Year End Tax Moves for Real Estate \u2014 FAQ<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/arvcalc.com\/blog\/year-end-tax-moves-real-estate-investors\/#Your_Q4_Action_Plan\" >Your Q4 Action Plan<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"The_2026_Year_End_Tax_Deadline_Calendar\"><\/span>The 2026 Year End Tax Deadline Calendar<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Before getting into each move, here is your Q4 deadline calendar. Print this. Pin it above your desk. Every date is a real cutoff with real consequences.<\/p>\n<figure class=\"wp-block-image size-large\">\n<img decoding=\"async\" src=\"https:\/\/arvcalc.com\/blog\/wp-content\/uploads\/2026\/10\/year end-tax-moves-real-estate-investors-2026-1024x576.png\" alt=\"9 year end tax moves for real estate investors before December 31 showing 21123 dollars saved\" width=\"1024\" height=\"576\" class=\"wp-image-1405\" loading=\"lazy\"\/><figcaption>9 year end tax moves that saved one investor $21,123 before December 31<\/figcaption><\/figure>\n<figure class=\"wp-block-table\">\n<table>\n<thead>\n<tr>\n<th>Deadline<\/th>\n<th>Action<\/th>\n<th>Why It Matters<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>Oct 15, 2026<\/strong><\/td>\n<td>Extended tax return due (2025 returns)<\/td>\n<td>Final chance to amend prior-year elections<\/td>\n<\/tr>\n<tr>\n<td><strong>Nov 1, 2026<\/strong><\/td>\n<td>Order cost segregation study<\/td>\n<td>Needs 4\u20136 weeks to complete before Dec 31<\/td>\n<\/tr>\n<tr>\n<td><strong>Nov 15, 2026<\/strong><\/td>\n<td>Identify 1031 replacement properties (if 45-day window falls here)<\/td>\n<td>Miss this and the full exchange fails<\/td>\n<\/tr>\n<tr>\n<td><strong>Dec 1, 2026<\/strong><\/td>\n<td>Make repair expenditures, prepay expenses<\/td>\n<td>Must be paid AND placed in service by Dec 31<\/td>\n<\/tr>\n<tr>\n<td><strong>Dec 15, 2026<\/strong><\/td>\n<td>4th quarter estimated tax payment due<\/td>\n<td>Avoid underpayment penalty<\/td>\n<\/tr>\n<tr>\n<td><strong>Dec 31, 2026<\/strong><\/td>\n<td>Solo 401(k) employee contribution deadline<\/td>\n<td>$23,000 limit ($30,500 if 50+)<\/td>\n<\/tr>\n<tr>\n<td><strong>Dec 31, 2026<\/strong><\/td>\n<td>Close 1031 exchange (if 180-day window ends)<\/td>\n<td>No extensions \u2014 period<\/td>\n<\/tr>\n<tr>\n<td><strong>Dec 31, 2026<\/strong><\/td>\n<td>Harvest capital gains or losses<\/td>\n<td>Must settle by year end for 2026 treatment<\/td>\n<\/tr>\n<tr>\n<td><strong>Dec 31, 2026<\/strong><\/td>\n<td>Place new LLC or S-corp election in service<\/td>\n<td>Entity must be active before Jan 1<\/td>\n<\/tr>\n<tr>\n<td><strong>Apr 15, 2027<\/strong><\/td>\n<td>SEP IRA contribution deadline (with extension: Oct 15)<\/td>\n<td>Last chance for 2026 contributions<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/figure>\n<p>Now let&#8217;s break down each move with exact dollar savings.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Move_1_Order_a_Cost_Segregation_Study_Before_Bonus_Depreciation_Drops_Again\"><\/span>Move 1: Order a Cost Segregation Study Before Bonus Depreciation Drops Again<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>This is the single highest-dollar year end tax move for real estate investors with properties worth $200K+. Here&#8217;s why the urgency: <strong>bonus depreciation is 40% in 2026 and drops to 20% in 2027<\/strong>. In 2028, it hits zero unless Congress acts.<\/p>\n<p>A <a href=\"\/blog\/cost-segregation-study-rental-property\/\">cost segregation study<\/a> reclassifies 20\u201340% of your building&#8217;s depreciable basis from 27.5-year property into 5-year, 7-year, and 15-year categories. At 40% bonus depreciation, you can deduct 40% of those reclassified assets immediately \u2014 in a single tax year.<\/p>\n<figure class=\"wp-block-table\">\n<table>\n<thead>\n<tr>\n<th>Property Value<\/th>\n<th>Reclassified Amount (30%)<\/th>\n<th>Bonus Depreciation (40% in 2026)<\/th>\n<th>Bonus Depreciation (20% in 2027)<\/th>\n<th>Tax Savings Lost by Waiting (24% bracket)<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>$200,000<\/td>\n<td>$48,000<\/td>\n<td>$19,200<\/td>\n<td>$9,600<\/td>\n<td><strong>$2,304<\/strong><\/td>\n<\/tr>\n<tr>\n<td>$400,000<\/td>\n<td>$96,000<\/td>\n<td>$38,400<\/td>\n<td>$19,200<\/td>\n<td><strong>$4,608<\/strong><\/td>\n<\/tr>\n<tr>\n<td>$750,000<\/td>\n<td>$180,000<\/td>\n<td>$72,000<\/td>\n<td>$36,000<\/td>\n<td><strong>$8,640<\/strong><\/td>\n<\/tr>\n<tr>\n<td>$1,000,000<\/td>\n<td>$240,000<\/td>\n<td>$96,000<\/td>\n<td>$48,000<\/td>\n<td><strong>$11,520<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/figure>\n<p>On a $400K rental, the difference between doing the study in 2026 vs. 2027 is $4,608 in real tax dollars. The study itself costs $3,000\u2013$5,000, so waiting a year literally erases the ROI.<\/p>\n<p><strong>Action step:<\/strong> Contact a cost segregation firm by November 1. The study takes 4\u20136 weeks. You need the completed report before December 31 to claim it on your 2026 return. Run your depreciation numbers in the <a href=\"\/depreciation-calculator\">depreciation calculator<\/a> first to see what standard depreciation gives you \u2014 then compare what a cost seg study adds.<\/p>\n<p>Per <a href=\"https:\/\/www.irs.gov\/newsroom\/new-rules-and-limitations-for-depreciation-and-expensing-under-the-tax-cuts-and-jobs-act\" target=\"_blank\" rel=\"noopener noreferrer\">IRS guidance on bonus depreciation phase-down<\/a>, the schedule is fixed: 60% (2024), 40% (2026), 20% (2027), 0% (2028).<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Move_2_Close_Your_1031_Exchange_Before_the_Clock_Runs_Out\"><\/span>Move 2: Close Your 1031 Exchange Before the Clock Runs Out<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>If you sold a property in 2026 and identified a 1031 replacement property, your 180-day exchange window may close on or before December 31. There are zero extensions. The IRS does not grant extra time for holidays, weather, or lender delays.<\/p>\n<p>Two deadlines govern every <a href=\"\/1031-exchange-calculator\">1031 exchange<\/a>:<\/p>\n<ul>\n<li><strong>45-day identification period:<\/strong> From your sale closing date, you have exactly 45 days to identify up to 3 replacement properties in writing to your Qualified Intermediary (QI).<\/li>\n<li><strong>180-day exchange period:<\/strong> From your sale closing date, you have exactly 180 days to close on the replacement property. This is a hard stop \u2014 December 31 of the tax year or 180 days, whichever comes FIRST (unless you file an extension).<\/li>\n<\/ul>\n<p>Here is the catch most investors miss: if you sold a property on July 15, 2026, your 180-day window ends January 11, 2027. But if you did NOT file a tax extension, your exchange actually expires on April 15, 2027 (your tax filing deadline). However, if you sold on August 1 and your 180 days end January 28, you still have until then \u2014 as long as you file an extension.<\/p>\n<p><strong>Action step:<\/strong> Call your QI today. Confirm your exact 45-day and 180-day deadlines in writing. If your 180-day window falls near December 31, do NOT rely on a last-minute closing. Lenders, title companies, and courts all slow down during the holidays. Build a 2-week buffer. For a full breakdown of timeline rules, read the <a href=\"\/blog\/1031-exchange-timeline-deadlines-guide\/\">1031 exchange timeline and deadlines guide<\/a>.<\/p>\n<p>Watch for <a href=\"\/blog\/1031-exchange-boot\/\">1031 exchange boot<\/a> \u2014 any cash or non-like-kind property you receive becomes immediately taxable and defeats the purpose of the exchange.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Move_3_Harvest_Capital_Gains_and_Losses_Before_December_31\"><\/span>Move 3: Harvest Capital Gains and Losses Before December 31<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Tax-loss harvesting is not just for stock traders. Real estate investors with multiple properties, syndication shares, or REITs can strategically sell losing positions before year end to offset gains realized earlier in 2026.<\/p>\n<p>Say you sold a rental in March 2026 for a $60,000 long-term capital gain. You also own a vacant lot that has dropped $25,000 in value. Selling that lot before December 31 creates a $25,000 capital loss that offsets your $60,000 gain \u2014 reducing your taxable gain to $35,000. At the 15% LTCG rate, that saves you <strong>$3,750<\/strong>.<\/p>\n<p>The rules:<\/p>\n<ul>\n<li><strong>Short-term losses<\/strong> offset short-term gains first (taxed at ordinary income rates, 10\u201337%)<\/li>\n<li><strong>Long-term losses<\/strong> offset long-term gains first (taxed at 15\u201320%)<\/li>\n<li>Excess losses of either type cross over to offset the other type<\/li>\n<li>Net capital losses above gains: deduct up to <strong>$3,000\/year<\/strong> against ordinary income, carry the rest forward indefinitely<\/li>\n<\/ul>\n<p>Calculate your capital gains exposure using the <a href=\"\/capital-gains-tax-calculator\">capital gains tax calculator<\/a>. If you sold a second home or vacation property this year, check the specific rules in the <a href=\"\/blog\/capital-gains-tax-second-home\/\">capital gains tax on a second home guide<\/a>. For strategies to reduce or eliminate the tax, see <a href=\"\/blog\/how-to-avoid-capital-gains-tax-on-real-estate\/\">how to avoid capital gains tax on real estate<\/a>.<\/p>\n<p><strong>Action step:<\/strong> Pull your 2026 realized gains report from your brokerage and CPA. Identify any underperforming assets \u2014 vacant land, underwater syndications, REITs trading below your cost basis. Sell before December 31. The trade must SETTLE (not just execute) by year end.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Move_4_Prepay_Deductible_Expenses_in_December\"><\/span>Move 4: Prepay Deductible Expenses in December<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Cash-basis taxpayers (which includes most individual real estate investors) deduct expenses in the year they are paid \u2014 not when they are incurred. This creates a clean acceleration opportunity: pay January expenses in December, and you deduct them on your 2026 return.<\/p>\n<p>What you can prepay before December 31:<\/p>\n<ul>\n<li><strong>Property insurance premiums:<\/strong> Pay the full 2027 annual premium in December. $2,400 policy = $2,400 deduction moved into 2026.<\/li>\n<li><strong>Property management fees:<\/strong> Pay January&#8217;s fee early. $200\/month = $200 extra deduction.<\/li>\n<li><strong>HOA dues:<\/strong> Pay Q1 2027 dues in December. $400\/quarter = $400 acceleration.<\/li>\n<li><strong>Mortgage interest:<\/strong> Make your January 2027 payment in December. On a $200K loan at 7%, January&#8217;s interest portion is ~$1,150.<\/li>\n<li><strong>Professional fees:<\/strong> Prepay your CPA for the 2026 return preparation. $800\u2013$2,000.<\/li>\n<\/ul>\n<p>Combined, you can shift $3,000\u2013$6,000 of expenses from 2027 into 2026 without buying anything new.<\/p>\n<p><strong>When this works best:<\/strong> If your 2026 income is higher than you expect in 2027 (you are in a higher bracket now), prepaying pulls deductions into the higher-bracket year. If you expect more income next year, this move works against you \u2014 save the deductions for 2027.<\/p>\n<p><strong>Action step:<\/strong> Log into your insurance, HOA, and property management portals by December 15. Make payments before the holiday processing delays hit. Keep receipts showing the payment date, not the service period.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Move_5_Make_Repairs_Not_Improvements_%E2%80%94_Deduct_100_This_Year\"><\/span>Move 5: Make Repairs (Not Improvements) \u2014 Deduct 100% This Year<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The IRS draws a hard line between repairs and improvements. Repairs are deductible immediately. Improvements must be capitalized and depreciated over 27.5 years. In Q4, this distinction becomes a tactical decision.<\/p>\n<figure class=\"wp-block-table\">\n<table>\n<thead>\n<tr>\n<th>Repair (Deduct Now)<\/th>\n<th>Improvement (Depreciate Over 27.5 Years)<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Fixing a leaky faucet \u2014 $250<\/td>\n<td>Replacing all plumbing \u2014 $8,000<\/td>\n<\/tr>\n<tr>\n<td>Patching drywall \u2014 $150<\/td>\n<td>Adding a bedroom \u2014 $15,000<\/td>\n<\/tr>\n<tr>\n<td>Replacing a broken appliance \u2014 $600<\/td>\n<td>Upgrading all appliances to stainless \u2014 $4,000<\/td>\n<\/tr>\n<tr>\n<td>Repainting interior \u2014 $1,500<\/td>\n<td>Adding new siding \u2014 $12,000<\/td>\n<\/tr>\n<tr>\n<td>Fixing HVAC \u2014 $400<\/td>\n<td>Installing new HVAC system \u2014 $6,000<\/td>\n<\/tr>\n<tr>\n<td>Replacing broken window \u2014 $300<\/td>\n<td>Replacing all windows \u2014 $10,000<\/td>\n<\/tr>\n<tr>\n<td>Sealing driveway cracks \u2014 $200<\/td>\n<td>Repaving the entire driveway \u2014 $5,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/figure>\n<p>If you spend $3,000 on repairs across your portfolio in December, you get a $3,000 deduction on your 2026 return. That same $3,000 on an improvement only gives you a $109\/year deduction ($3,000 \/ 27.5). At a 24% tax rate, repairs save you <strong>$720 this year<\/strong> vs. $26\/year for an improvement.<\/p>\n<p>The IRS uses a <a href=\"https:\/\/www.irs.gov\/publications\/p527\" target=\"_blank\" rel=\"noopener noreferrer\">facts and circumstances test (IRS Publication 527)<\/a> to determine whether work is a repair or improvement. The three tests: does it adapt the property to a new use? Does it better the property? Does it restore the property? If yes to any, it is an improvement.<\/p>\n<p><strong>Action step:<\/strong> Walk every property in your portfolio this month. Write down every item that needs fixing \u2014 leaky faucets, cracked outlets, worn weatherstripping, broken blinds, peeling paint. Schedule the work for November\u2013December. Pay the contractor before December 31. Keep invoices that describe the work as &#8220;repair&#8221; not &#8220;renovation.&#8221; For a full list of deductible expenses, see <a href=\"\/blog\/rental-property-tax-deductions\/\">rental property tax deductions<\/a>.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Move_6_Max_Out_Retirement_Accounts_Solo_401k_and_SEP_IRA\"><\/span>Move 6: Max Out Retirement Accounts (Solo 401(k) and SEP IRA)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>If you have any self-employment income from real estate \u2014 flipping, wholesaling, property management fees, short-term rental operations \u2014 you can contribute to a Solo 401(k) or SEP IRA and deduct those contributions from your 2026 income.<\/p>\n<p>The 2026 limits:<\/p>\n<ul>\n<li><strong>Solo 401(k) employee contribution:<\/strong> $23,000 ($30,500 if age 50+) \u2014 due December 31, 2026<\/li>\n<li><strong>Solo 401(k) employer contribution:<\/strong> Up to 25% of net self-employment income \u2014 due with tax return (April 15 or October 15 with extension)<\/li>\n<li><strong>Total Solo 401(k) limit:<\/strong> $69,000 ($76,500 if age 50+)<\/li>\n<li><strong>SEP IRA:<\/strong> 25% of net self-employment income, up to $69,000 \u2014 due with tax return<\/li>\n<\/ul>\n<p>The Solo 401(k) employee contribution has a DECEMBER 31 deadline. You cannot make it retroactively. If you earn $80,000 in net self-employment income from flipping and contribute $23,000 to a Solo 401(k), you reduce your taxable income to $57,000. At a 24% bracket, that saves you <strong>$5,520<\/strong>.<\/p>\n<p>The SEP IRA is more flexible \u2014 you can contribute up to April 15 (or October 15 with extension). But if you plan to max out, start funding now so you have the cash available.<\/p>\n<p><strong>Action step:<\/strong> If you do not already have a Solo 401(k) account, open one before December 31. You need the account established (not just funded) by year end. Fidelity, Schwab, and Vanguard all offer free Solo 401(k) plans. Then make your employee contribution before the ball drops. Read our <a href=\"\/blog\/house-flipping-taxes-guide\/\">house flipping taxes guide<\/a> for how self-employment income from flipping is taxed.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Move_7_Set_Up_Your_LLC_or_S-Corp_Before_January_1\"><\/span>Move 7: Set Up Your LLC or S-Corp Before January 1<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>If you have been operating rentals in your personal name and plan to switch to an LLC or S-corp structure, do it before December 31. The entity must be formed and operational by year end for the 2027 tax year elections to take effect on time.<\/p>\n<p>Why the rush:<\/p>\n<ul>\n<li><strong>S-corp election (Form 2553):<\/strong> Must be filed within 75 days of the start of the tax year you want it to apply. If you form the entity on January 15, 2027, you have until March 31, 2027. But if you form it December 15, 2026, the entity exists for 2026 and you can elect S-corp status for all of 2027 with more breathing room.<\/li>\n<li><strong>Asset protection:<\/strong> An LLC provides a liability shield. Every day you own rental property in your personal name, a tenant slip-and-fall lawsuit puts your personal assets at risk.<\/li>\n<li><strong>S-corp tax savings:<\/strong> If your net rental income after all deductions exceeds $40,000\u2013$50,000, the S-corp structure can save you 15.3% self-employment tax on the profit above a reasonable salary. On $80,000 net income with a $40,000 salary: savings of $6,120\/year.<\/li>\n<\/ul>\n<p><strong>Action step:<\/strong> File your LLC with the state secretary of state (most states: $50\u2013$500, online filing, 1\u20135 business days). Get an EIN from the IRS (free, instant online at irs.gov). Open a business bank account. Transfer property deeds into the LLC (check with your lender about due-on-sale clause triggers). Do all of this before December 31 so your entity is active for the full 2027 tax year. Use the <a href=\"\/rental-property-calculator\">rental property calculator<\/a> to model your after-tax returns under different entity structures.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Move_8_Document_Every_Expense_%E2%80%94_Receipts_Mileage_Home_Office\"><\/span>Move 8: Document Every Expense \u2014 Receipts, Mileage, Home Office<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>This is not the glamorous move. No one writes blog posts about organizing receipts. But poor documentation is the #1 reason investors pay more tax than they owe. The IRS does not disallow deductions because you spent the money \u2014 they disallow deductions because you cannot prove it.<\/p>\n<p>Three areas where investors lose the most in audits:<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Mileage\"><\/span>Mileage<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The 2026 IRS standard mileage rate is <strong>$0.70\/mile<\/strong>. If you drove 3,000 miles in 2026 for property inspections, contractor meetings, and tenant showings, that is a $2,100 deduction. But without a mileage log showing date, destination, purpose, and odometer reading, the IRS will disallow every mile. Use an app like MileIQ or a simple spreadsheet. Reconstruct your 2026 driving now \u2014 check your Google Maps timeline, calendar appointments, and bank statements for gas purchases near your properties.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Receipts_and_Invoices\"><\/span>Receipts and Invoices<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Per <a href=\"https:\/\/www.irs.gov\/businesses\/small-businesses-self-employed\/what-kind-of-records-should-i-keep\" target=\"_blank\" rel=\"noopener noreferrer\">IRS recordkeeping requirements<\/a>, you need receipts for any expense over $75. For everything under $75, a log entry is sufficient. Scan every receipt into a cloud folder organized by property address and expense category. December is the time to go through your email, bank statements, and that shoebox of crumpled receipts.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Home_Office\"><\/span>Home Office<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>If you manage rentals from home, the simplified deduction is $5\/sqft up to 300 sqft = $1,500. The actual method (percentage of home expenses) can be higher but requires documentation of total home expenses, square footage of the dedicated office, and exclusive business use. Take photos of your home office setup now \u2014 date-stamped \u2014 and save your utility bills, mortgage\/rent statements, and insurance premiums.<\/p>\n<p><strong>Action step:<\/strong> Block 3 hours this weekend. Pull every bank and credit card statement from January to today. Categorize each rental-related expense. Match to receipts. Flag anything missing and request duplicates from vendors. Estimate the deductions you are leaving on the table \u2014 most investors find $1,000\u2013$3,000 in missed expenses during this exercise.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Move_9_Review_and_Adjust_Estimated_Tax_Payments\"><\/span>Move 9: Review and Adjust Estimated Tax Payments<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>If you owe more than $1,000 in tax above withholdings, the IRS charges an underpayment penalty. The 4th quarter estimated tax payment is due <strong>January 15, 2027<\/strong> (for 2026 income), but most investors base their Q4 payment on Q3 income patterns \u2014 which can leave them short if they sold a property or collected a large capital gain in Q4.<\/p>\n<p>Safe harbor rules to avoid the penalty:<\/p>\n<ul>\n<li>Pay at least 100% of prior year&#8217;s tax liability (110% if AGI &gt; $150,000)<\/li>\n<li>OR pay at least 90% of current year&#8217;s actual tax liability<\/li>\n<\/ul>\n<p>If you sold a property in 2026 and owe capital gains tax, that gain probably is not covered by your regular estimated payments. Run the numbers now. The <a href=\"\/capital-gains-tax-calculator\">capital gains tax calculator<\/a> will tell you the tax owed. Add that to your Q4 estimated payment using <a href=\"https:\/\/www.irs.gov\/forms-pubs\/about-form-1040-es\" target=\"_blank\" rel=\"noopener noreferrer\">IRS Form 1040-ES<\/a>.<\/p>\n<p><strong>Action step:<\/strong> Pull your 2025 tax return (total tax line). Pull your 2026 estimated payment records. Calculate whether you have met the safe harbor. If not, make an additional payment through IRS Direct Pay before January 15. The penalty rate is currently running at ~8% annually \u2014 not catastrophic, but completely avoidable.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Worked_Example_3-Property_Investor_Year_End_Tax_Playbook\"><\/span>Worked Example: 3-Property Investor Year End Tax Playbook<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Let&#8217;s put all 9 moves together for a real-world investor. Meet Sarah \u2014 she owns 3 rental properties and flipped 1 house in 2026.<\/p>\n<pre><code>SARAH'S 2026 PORTFOLIO:\n  Property A: Cleveland SFR, $220K, bought 2023, $1,500\/mo rent\n  Property B: Indianapolis duplex, $310K, bought 2024, $2,400\/mo rent\n  Property C: Memphis SFR, $185K, bought 2025, $1,350\/mo rent\n  Flip: Akron SFR, bought $95K, sold $165K, $32K rehab cost = $38K profit\n\nSARAH'S 2026 INCOME:\n  Rental income (3 properties):     $62,400\n  Flip profit:                      $38,000\n  W-2 income:                       $85,000\n  Total gross income:               $185,400\n\nBEFORE YEAR END MOVES:\n  Standard depreciation (3 props):  $18,327\n  Operating expenses:               $24,600\n  Taxable rental income:            $19,473\n  Flip profit (ordinary income):    $38,000\n  Estimated federal tax on RE:      ~$15,800\n\nYEAR END MOVES SARAH MAKES IN Q4:\n\n  1. COST SEGREGATION \u2014 Property B ($310K)\n     Reclassified: $74,400 (24% of basis)\n     Bonus depreciation (40%): $29,760\n     Additional year-1 deduction: $29,760\n     Tax savings: $29,760 \u00d7 24% = $7,142\n\n  2. 1031 EXCHANGE \u2014 N\/A (no sales pending)\n\n  3. CAPITAL LOSS HARVEST\n     Sells underperforming vacant lot: -$8,000 loss\n     Offsets flip profit: $38,000 - $8,000 = $30,000 taxable\n     Tax savings: $8,000 \u00d7 24% = $1,920\n\n  4. PREPAY EXPENSES\n     Insurance on all 3 properties (2027 premiums): $6,300\n     HOA dues on Property A (Q1 2027): $900\n     CPA fee for 2026 return: $2,200\n     Total prepaid: $9,400\n     Tax savings: $9,400 \u00d7 24% = $2,256\n\n  5. DECEMBER REPAIRS\n     Property A: water heater repair, interior paint = $2,800\n     Property C: fence repair, broken window = $1,400\n     Total repairs: $4,200\n     Tax savings: $4,200 \u00d7 24% = $1,008\n\n  6. SOLO 401(k) CONTRIBUTION\n     Employee contribution from flip income: $23,000\n     Employer contribution (25% of net SE income): $7,125\n     Total contribution: $30,125\n     Tax savings: $30,125 \u00d7 24% = $7,230\n\n  7. LLC FORMATION \u2014 Already has LLCs\n\n  8. EXPENSE DOCUMENTATION\n     Recovered missed mileage deduction: 2,400 miles \u00d7 $0.70 = $1,680\n     Found 14 unreported receipts: $1,850\n     Home office (simplified): $1,500\n     Total recovered: $5,030\n     Tax savings: $5,030 \u00d7 24% = $1,207\n\n  9. ESTIMATED TAX ADJUSTMENT\n     Increased Q4 payment by $4,500 to meet safe harbor\n     Penalty avoided: ~$360\n\nTOTAL YEAR END TAX SAVINGS:\n  Cost segregation:    $7,142\n  Capital loss harvest: $1,920\n  Prepaid expenses:    $2,256\n  Repairs:             $1,008\n  Solo 401(k):         $7,230\n  Documentation:       $1,207\n  Penalty avoided:     $360\n  \u2500\u2500\u2500\u2500\u2500\u2500\u2500\u2500\u2500\u2500\u2500\u2500\u2500\u2500\u2500\u2500\u2500\u2500\u2500\u2500\u2500\u2500\u2500\u2500\u2500\n  TOTAL SAVED:         $21,123<\/code><\/pre>\n<p>Sarah turned a ~$15,800 tax bill into roughly a break-even year on her real estate income. She still owes tax on her W-2, but her rental and flip income is almost entirely sheltered. The cost segregation study cost her $4,500. The Solo 401(k) is money she still owns \u2014 it just moved from taxable to tax-deferred. The repairs needed doing anyway. She spent maybe 20 hours total on these moves and saved $21,123.<\/p>\n<p>Model your own numbers in the <a href=\"\/rental-property-calculator\">rental property calculator<\/a> and <a href=\"\/depreciation-calculator\">depreciation calculator<\/a>.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Year_End_Tax_Moves_Summary_Cost_vs_Savings\"><\/span>Year End Tax Moves Summary: Cost vs. Savings<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<figure class=\"wp-block-table\">\n<table>\n<thead>\n<tr>\n<th>Move<\/th>\n<th>Cost to Execute<\/th>\n<th>Typical Tax Savings<\/th>\n<th>Deadline<\/th>\n<th>Difficulty<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Cost segregation study<\/td>\n<td>$3,000\u2013$7,500<\/td>\n<td>$5,000\u2013$25,000<\/td>\n<td>Nov 1 (order)<\/td>\n<td>Medium<\/td>\n<\/tr>\n<tr>\n<td>Close 1031 exchange<\/td>\n<td>$750\u2013$1,500 QI fee<\/td>\n<td>$10,000\u2013$100,000+<\/td>\n<td>180-day window<\/td>\n<td>High<\/td>\n<\/tr>\n<tr>\n<td>Harvest capital losses<\/td>\n<td>Brokerage commission<\/td>\n<td>$1,000\u2013$10,000<\/td>\n<td>Dec 31<\/td>\n<td>Low<\/td>\n<\/tr>\n<tr>\n<td>Prepay deductible expenses<\/td>\n<td>$0 (paying early)<\/td>\n<td>$500\u2013$3,000<\/td>\n<td>Dec 31<\/td>\n<td>Low<\/td>\n<\/tr>\n<tr>\n<td>Make repairs<\/td>\n<td>Repair costs<\/td>\n<td>$500\u2013$2,500<\/td>\n<td>Dec 31<\/td>\n<td>Low<\/td>\n<\/tr>\n<tr>\n<td>Max retirement accounts<\/td>\n<td>$0 (your money)<\/td>\n<td>$3,000\u2013$18,000<\/td>\n<td>Dec 31 (employee)<\/td>\n<td>Low<\/td>\n<\/tr>\n<tr>\n<td>Set up LLC\/S-corp<\/td>\n<td>$50\u2013$500<\/td>\n<td>$2,000\u2013$8,000\/year<\/td>\n<td>Dec 31<\/td>\n<td>Medium<\/td>\n<\/tr>\n<tr>\n<td>Document expenses<\/td>\n<td>$0 (time only)<\/td>\n<td>$500\u2013$3,000<\/td>\n<td>Dec 31<\/td>\n<td>Low<\/td>\n<\/tr>\n<tr>\n<td>Review estimated taxes<\/td>\n<td>$0<\/td>\n<td>Avoid $200\u2013$1,000 penalty<\/td>\n<td>Jan 15<\/td>\n<td>Low<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/figure>\n<h2><span class=\"ez-toc-section\" id=\"How_Real_Estate_Depreciation_Ties_Into_Year_End_Planning\"><\/span>How Real Estate Depreciation Ties Into Year End Planning<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Depreciation is the backbone of real estate tax strategy, and year end is the time to make sure you are maximizing it. Standard straight-line depreciation gives you a fixed annual deduction ($5,818\/year on a $200K property with 80% building ratio). A cost segregation study front-loads that deduction. But here is the piece many investors overlook: <strong>depreciation recapture<\/strong>.<\/p>\n<p>Every dollar of depreciation you take now gets &#8220;recaptured&#8221; at 25% when you sell \u2014 unless you do a 1031 exchange. So the year end strategy is a two-step play: accelerate depreciation now to reduce current-year taxes, then defer the recapture with a <a href=\"\/1031-exchange-calculator\">1031 exchange<\/a> when you sell.<\/p>\n<p>Read the full mechanics in <a href=\"\/blog\/real-estate-depreciation-how-it-works\/\">real estate depreciation: how it works<\/a>.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Common_Mistakes_That_Cost_Investors_Thousands\"><\/span>Common Mistakes That Cost Investors Thousands<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>After 10+ years of watching investors scramble in Q4, these mistakes come up every single December:<\/p>\n<ul>\n<li><strong>Ordering a cost seg study too late.<\/strong> The study takes 4\u20136 weeks. If you call on December 10, it will not be done by year end. Start in October.<\/li>\n<li><strong>Confusing repairs and improvements.<\/strong> Replacing a roof is an improvement (depreciate over 27.5 years). Patching a roof leak is a repair (deduct now). The IRS does not care what your contractor calls it \u2014 they look at the nature of the work.<\/li>\n<li><strong>Missing the Solo 401(k) employee contribution deadline.<\/strong> The employer portion can wait until your tax filing deadline. The employee portion cannot. December 31 is absolute.<\/li>\n<li><strong>Forgetting that 1031 exchange deadlines include weekends and holidays.<\/strong> Day 45 falls on Christmas? Tough. Identify your properties before December 25 or the exchange fails.<\/li>\n<li><strong>Not adjusting estimated payments for capital gains.<\/strong> You sold a property in September for a $50K gain. Your regular estimated payments do not cover it. January 15 arrives and you owe a penalty on top of the tax.<\/li>\n<li><strong>Paying for improvements and calling them repairs.<\/strong> The IRS knows that a $12,000 &#8220;repair&#8221; on a bathroom is a remodel. Do not play games \u2014 the audit risk is not worth the temporary deduction.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Bonus_Depreciation_Phase-Down_Schedule\"><\/span>Bonus Depreciation Phase-Down Schedule<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<figure class=\"wp-block-table\">\n<table>\n<thead>\n<tr>\n<th>Tax Year<\/th>\n<th>Bonus Depreciation Rate<\/th>\n<th>Status<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>2022<\/td>\n<td>100%<\/td>\n<td>Expired<\/td>\n<\/tr>\n<tr>\n<td>2023<\/td>\n<td>80%<\/td>\n<td>Expired<\/td>\n<\/tr>\n<tr>\n<td>2024<\/td>\n<td>60%<\/td>\n<td>Expired<\/td>\n<\/tr>\n<tr>\n<td>2025<\/td>\n<td>40%<\/td>\n<td>Current<\/td>\n<\/tr>\n<tr>\n<td>2026<\/td>\n<td>40%<\/td>\n<td>Effective now<\/td>\n<\/tr>\n<tr>\n<td>2027<\/td>\n<td>20%<\/td>\n<td>Upcoming<\/td>\n<\/tr>\n<tr>\n<td>2028+<\/td>\n<td>0%<\/td>\n<td>Unless Congress extends<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/figure>\n<p>Per the <a href=\"https:\/\/taxfoundation.org\/taxedu\/glossary\/bonus-depreciation\/\" target=\"_blank\" rel=\"noopener noreferrer\">Tax Foundation<\/a>, bonus depreciation was enacted under the Tax Cuts and Jobs Act (2017) and has been phasing down since 2023. Multiple bills have been introduced to restore 100% bonus depreciation, but none have passed as of September 2026. Plan as if the phase-down holds.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Year_End_Tax_Moves_for_Real_Estate_%E2%80%94_FAQ\"><\/span>Year End Tax Moves for Real Estate \u2014 FAQ<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<div class=\"wp-block-details\">\n<details open>\n<summary><strong>What is the most valuable year end tax move for real estate investors?<\/strong><\/summary>\n<p>For most investors with properties worth $200K+, ordering a cost segregation study before bonus depreciation drops further produces the largest single-year tax savings. On a $400K rental property, a cost seg study can generate $25,000\u2013$40,000 in accelerated first-year deductions at the current 40% bonus rate. At a 24% tax bracket, that translates to $6,000\u2013$9,600 in immediate tax savings. The study costs $3,000\u2013$5,000 \u2014 a 2:1 to 3:1 return. This move becomes less valuable every year as bonus depreciation phases down, making 2026 the second-to-last year to get meaningful bonus treatment. Use the <a href=\"\/depreciation-calculator\">depreciation calculator<\/a> to estimate your standard depreciation baseline, then talk to a cost seg firm about the acceleration potential.<\/p>\n<\/details>\n<\/div>\n<div class=\"wp-block-details\">\n<details>\n<summary><strong>Can I still do a 1031 exchange if my 180 days fall after December 31?<\/strong><\/summary>\n<p>Yes, but only if you file a tax extension. Without an extension, your 1031 exchange period is limited to your tax filing deadline (April 15) or 180 days from the sale, whichever is earlier. If you sold a property in August 2026, your 180-day window extends into February 2027 \u2014 but you need to file Form 4868 (automatic 6-month extension) by April 15, 2027 to get the full 180 days. Filing an extension does NOT extend the 45-day identification period \u2014 that clock runs regardless. Read the full rules in the <a href=\"\/blog\/1031-exchange-timeline-deadlines-guide\/\">1031 exchange timeline guide<\/a>.<\/p>\n<\/details>\n<\/div>\n<div class=\"wp-block-details\">\n<details>\n<summary><strong>Should I prepay expenses or wait until next year?<\/strong><\/summary>\n<p>Prepay if your 2026 income is higher than expected 2027 income \u2014 you pull deductions into the higher-bracket year, maximizing tax savings per dollar. Wait if 2027 income will be higher \u2014 saving the deductions for the higher-bracket year makes each dollar of deduction worth more. Also wait if you are close to the passive activity loss limit ($25,000 for active participants with AGI under $100,000) and prepaying would create excess losses that get suspended anyway. The sweet spot: prepay expenses on properties with the highest taxable income, where the deductions will directly offset real tax liability.<\/p>\n<\/details>\n<\/div>\n<div class=\"wp-block-details\">\n<details>\n<summary><strong>What is the deadline for Solo 401(k) contributions?<\/strong><\/summary>\n<p>The employee contribution (up to $23,000 in 2026, or $30,500 if age 50+) must be made by December 31, 2026. No extensions. The employer contribution (up to 25% of net self-employment income) can be made up to your tax filing deadline \u2014 April 15, 2027, or October 15, 2027 if you file an extension. The account itself must also be established by December 31. You cannot open a Solo 401(k) on January 5 and retroactively make a 2026 employee contribution. If you have flip income or other self-employment real estate income, this is one of the highest-impact <a href=\"\/blog\/house-flipping-taxes-guide\/\">tax reduction strategies for flippers<\/a>.<\/p>\n<\/details>\n<\/div>\n<div class=\"wp-block-details\">\n<details>\n<summary><strong>How do I know if a repair is deductible now or needs to be depreciated?<\/strong><\/summary>\n<p>The IRS applies three tests from the tangible property regulations: (1) Does the expense adapt the property to a new or different use? (2) Does it better the property beyond its original condition? (3) Does it restore the property to its original operating state after a major event? If the answer is YES to any of these, the expense is an improvement \u2014 capitalize and depreciate over 27.5 years. If the expense simply maintains the property in its current working condition (fixing a broken pipe, repainting, replacing a worn appliance with a similar one), it is a repair and fully deductible in the year paid. When in doubt, the safe harbor for small taxpayers allows you to deduct expenses up to $2,500 per item without the repair-vs-improvement analysis. See <a href=\"https:\/\/www.irs.gov\/publications\/p527\" target=\"_blank\" rel=\"noopener noreferrer\">IRS Publication 527<\/a> for the full rules.<\/p>\n<\/details>\n<\/div>\n<h2><span class=\"ez-toc-section\" id=\"Your_Q4_Action_Plan\"><\/span>Your Q4 Action Plan<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Here is the week-by-week execution plan for the rest of 2026:<\/p>\n<p><strong>This week (late September):<\/strong> Pull your 2026 income and expense reports. Calculate your year-to-date taxable income from real estate. Identify which of the 9 moves apply to your situation.<\/p>\n<p><strong>October:<\/strong> Order cost segregation studies. Open a Solo 401(k) if you do not have one. Contact your QI about any pending 1031 exchanges. Walk your properties and list every needed repair.<\/p>\n<p><strong>November:<\/strong> Execute capital loss harvesting. Schedule contractors for December repairs. Begin expense documentation audit \u2014 go through every bank statement.<\/p>\n<p><strong>December 1\u201315:<\/strong> Prepay insurance, HOA, and management fees. Make Solo 401(k) employee contributions. File LLC paperwork if needed. Make repair payments.<\/p>\n<p><strong>December 15\u201331:<\/strong> Verify estimated tax payments meet safe harbor. Confirm cost seg study is complete. Double-check 1031 exchange deadlines. Organize receipts and mileage logs for your CPA.<\/p>\n<p>Every dollar you save in taxes is a dollar that goes back into your next deal. Run your 2026 numbers through the <a href=\"\/rental-property-calculator\">rental property calculator<\/a> and <a href=\"\/capital-gains-tax-calculator\">capital gains tax calculator<\/a> \u2014 the math will tell you exactly which moves produce the biggest return for your portfolio.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>9 year end tax moves for real estate investors before December 31. Cost segregation, 1031 deadlines, capital gains harvesting, and bonus depreciation.<\/p>\n","protected":false},"author":1,"featured_media":1405,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18],"tags":[],"class_list":["post-1406","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-guides"],"_links":{"self":[{"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/posts\/1406","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/comments?post=1406"}],"version-history":[{"count":2,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/posts\/1406\/revisions"}],"predecessor-version":[{"id":1409,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/posts\/1406\/revisions\/1409"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/media\/1405"}],"wp:attachment":[{"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/media?parent=1406"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/categories?post=1406"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/tags?post=1406"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}