Friday Weekly Q&A Call - 07/24/2026 · 🏠 Lower Taxes w/ Ryan

Lyn Cueto

Jul 27 (edited) • 📸 Recorded Calls

Friday Weekly Q&A Call - 07/24/2026

Link: https://www.skool.com/taxes/classroom/ec6893ee?md=d433f5b5415f4318987e18632a6244cd

Here's a summary of the key takeaways from this session:

Real Estate Professional (REP) Status

To claim REP status, one spouse typically must give up their W-2 job and focus on real estate full-time.
Requirements: 750+ hours per year in real estate activities (more than any other job), plus 500+ material participation hours on a specific property — all tracked per calendar year, not per month.
REP status only helps if you own long-term rentals (for cost segregation/depreciation losses). It provides no extra benefit for short-term rental (STR) investors, since STR losses aren't subject to the same passive loss limitations.
You don't need a real estate license to qualify — hours worked are what matter. A license only becomes necessary if your state requires one for the specific activity (e.g., selling property).
There are 19 recognized "real property trade or business" categories (realtor, flipper, wholesaler, property manager, developer, etc.) — meaning hours can come from managing your own or even other people's properties.

LLCs and Financing

Moving a mortgaged property into a single-member LLC when both spouses are on the loan can trigger lender pushback, since the bank underwrote both borrowers.
If a lender rejects the transfer, options are to revert the deed back to personal names or add both spouses to the LLC (which creates a partnership return/K-1s).
LLCs primarily exist for asset protection and anonymity — not for extra tax deductions. Rental income/expenses are treated the same whether held personally or in an LLC.
Holding company structures (e.g., a Wyoming LLC owning the title to a state-level rental LLC) generally make sense once equity reaches roughly $1–1.5M, not based on number of doors alone.

Cost Segregation Strategy

Cost seg accelerates depreciation but doesn't create new value — it pulls forward a future benefit, which gets recaptured (partially or fully) upon sale.
Best used when you expect a large passive gain (e.g., from a syndication K-1) that you want existing passive losses to offset — a "lazy 1031" style strategy.
Not worth doing on a property you plan to sell soon, or on lower-value properties (biggest bonus depreciation benefit tends to show up around $400K+ purchase price).
Passive loss carryforwards should be checked (Form 8582) before deciding whether a new cost seg is even useful.

Section 121 Primary Residence Exclusion

Selling within 3 years of moving out of a former primary residence can exclude up to $500K (married) of capital gains — but this is a hard cliff, not a phase-out. Miss the deadline by even a day, and the entire exclusion is lost.
Decision to sell vs. keep renting should weigh: tax-free gain available, current mortgage rate (hard to replace), uniqueness/irreplaceability of the property, and STR income performance — not just profitability.

Other Notes

Lifetime Learning Credit: 20% of up to $10,000 in qualified education expenses (max $2,000 credit); no degree or half-time enrollment required; phases out at higher household incomes (roughly $160K–$180K MFJ for 2026).
Big tax law changes are rare and slow-moving (1986, 2017) — no need to panic-plan around potential future repeals of current provisions like bonus depreciation.

General mindset: Real estate tax strategy isn't about chasing every deduction — it's about matching the right tool to the right goal (income offset, liability protection, or long-term wealth building) and understanding that most of these levers (REP status, cost seg, LLCs, 1031/121 exclusions) trade timing and structure, not free money. As Kevin put it: don't let the tax tail wag the dog — make the real estate and life decision first, and let the tax strategy support it, not drive it.

Thank you all for joining!

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Friday Weekly Q&A Call - 07/24/2026