Real Estate Tax Deductions Guide

The investment-side ones: depreciation, cost segregation with bonus depreciation, and the STR offset. Primary-home deductions (mortgage interest, property tax) are capped, so the real leverage for a high W-2 household is on investment property.

Mortgage interest is limited by loan-amount rules, and property tax falls under the SALT cap. For a high earner these are real but limited — which is why the primary residence isn't where the meaningful tax leverage lives.

Depreciation. Beyond deducting operating expenses, repairs, management, and interest, you depreciate the building itself — and cost seg plus bonus depreciation front-load that. It's a deduction with no cash outflow, which is the leverage.

STR material participation, which can make rental losses non-passive and able to offset W-2 income. That's the lever a capped primary residence can't provide — but it's fact-specific and requires the right structure and records.

The investment deductions flow through your rental activity, not your personal itemized return, and depend on how the activity is structured and your participation. The rules and limits are real, so map them with your CPA rather than assuming.

Model them against your real marginal rate and situation with your CPA. Seeing which levers matter for you is part of a Real Estate Review.