Rental Home Tax Accountant

We are real estate tax experts. Tax Scout provides tax preparation and advisory for rental property, including residential, commercial, apartments, foreign properties, long-term rentals, short-term vacation rentals, 1031 exchanges, and cost segregation studies.

There are legal tax strategies you can use so you pay little to no tax when you sell a rental. Most landlords never hear about them until it’s too late. We make sure you do.

Aerial view of an Arizona neighborhood for rental property tax accounting services

Rental Property Tax Services

  • Schedule E rental income tax preparation
  • Short-term rental (Airbnb/VRBO) tax strategy, including the STR loophole
  • 1031 exchange guidance to defer capital gains
  • Cost segregation studies – we work directly with a cost segregation expert
  • Depreciation setup and correction, passive loss planning, and sale planning

Many landlords also benefit from holding rentals inside an LLC – see Business Entity Formation to learn how we help set that up.

Cost Segregation Can Save You Tens of Thousands

A cost segregation study breaks your rental into components that depreciate over 5, 7, and 15 years instead of 27.5. Done correctly, it can generate large upfront deductions. We work directly with a cost segregation expert and apply the study properly on your return.

Selling a Rental? Plan Before You List

The biggest rental tax mistakes happen at the sale. Before you list, we plan around:

  • 1031 exchanges to defer capital gains
  • Depreciation recapture – know your real tax bill before you accept an offer
  • Timing the sale across tax years to manage your bracket
  • The Section 121 exclusion when converting between rental and primary residence

Frequently Asked Questions:
RENTAL PROPERTY Taxes

How is rental income taxed?

Rental income is reported on Schedule E and taxed as ordinary income after deducting expenses like mortgage interest, property taxes, insurance, repairs, management fees, and depreciation. Well-documented expenses and correct depreciation often reduce taxable rental income dramatically.

Depreciation lets you deduct the cost of a residential rental building over 27.5 years – and a commercial building over 39 years – even while the property gains value. It is one of the most powerful tax benefits in real estate, and one of the most commonly botched. We set it up correctly and can fix missed depreciation from prior years.

A cost segregation study is an engineering-based analysis that reclassifies parts of your property (flooring, appliances, landscaping, fixtures) into shorter depreciation lives. This front-loads deductions and can save tens of thousands in taxes. We coordinate directly with a cost segregation expert.

A 1031 exchange lets you sell an investment property and defer capital gains tax by reinvesting the proceeds into another investment property. Strict timelines apply – 45 days to identify and 180 days to close – so involve us before you sell.

If your average guest stay is 7 days or less, your property may be eligible for losses that long-term rentals are not eligible for. If your rental is also boosted by a cost segregation study, those losses can offset W-2 or business income – this is the so-called STR loophole. Documentation is critical, and we guide you through it.

Rental schedules are priced per property based on complexity. We usually add $300 per rental to the price of your personal tax return. If it is a business return, such as a partnership or corporation, that is a separate return starting at $800. See our Transparent Pricing page for the full guide.