Which of the two doors fits your household?
Two minutes, and you'll have a number. Then you'll know which of the two doors, real estate professional status or the short-term-rental loophole, actually fits a household like yours.
Most doctors overpay their taxes for one reason. Nobody ever showed them that the tax code is a list of incentives, not a list of penalties.
Depreciation is one of those incentives. Buy a rental, and the code lets you write down the building over time, on paper, even while it cashflows and climbs in value. Do a cost-segregation study and take bonus depreciation up front, and that write-down can land in year one instead of being spread across three decades.
The catch is who gets to use that loss against a physician's W-2 income. There are two doors into it, and most households only ever qualify for one. This estimator shows you the size of the deduction, then sorts you into the door that is actually open to you.
Door 1: Household REPS
One spouse can log the hours, or the physician can cut back clinical time. Real Estate Professional Status shelters the whole household's income.
Door 2: The STR loophole
Both work full time in the clinic. A short-term rental you materially participate in lets the loss offset your W-2 income with no REPS required.
Run your estimate
How this estimate works
No black box. The deduction is the same math for both doors. What changes between doors is who is allowed to use it, and that is what your answers above decide. Every assumption is a starting point your CPA and a cost-segregation study will sharpen.
| Step | Assumption |
|---|---|
| Building value | About 80% of the purchase price. Land does not depreciate, so we set it aside. VERIFY split with CPA |
| Accelerated portion | About 25% of the building value gets reclassified into shorter-life assets by a cost-segregation study. VERIFY 25% with cost-seg study |
| Bonus depreciation | 100% of that accelerated portion is deductible in year one for 2026 acquisitions, under the post-2025 tax law. VERIFY 100% for 2026 |
| First-year paper loss | Purchase price × 0.80 × 0.25. That is the deduction this estimate hands you. |
| Marginal rate | Approximated from married-filing-jointly-style brackets: 35% at $487k+, 32% at $384k+, 24% at $202k+, 22% at $95k+, otherwise 12%. VERIFY bracket table with CPA |
| Estimated tax savings | Paper loss × your marginal rate. |
Get your number, plus the methodology
Want this estimate and the full breakdown as a PDF you can hand to your CPA? Drop your email and we will send it over, along with the question worth asking them: "Can we run a cost-segregation study on a rental this year?"
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Semi-Retired MD provides education, not tax, legal, or investment advice. These are estimates only, not tax advice. Real estate carries risk, work, and the occasional broken toilet. Run everything here past your own licensed professionals. Draft prepared for internal review; all numbers marked VERIFY must be confirmed before publication.