Services · Real Estate Tax Planning
Real estate tax planning in Sarasota
Florida’s real estate market deserves a real strategy. Whether you own rental properties, are selling a home or investing in Sarasota’s market, we help you navigate capital gains, depreciation, 1031 exchanges and the Homestead Exemption to protect your returns.
- Year-round planning, not just April
- Based in Sarasota
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The short answer
How is rental property taxed?
Rental income is reported on your federal return, less deductible expenses such as mortgage interest, property tax, insurance, repairs and depreciation. Losses are often limited by the passive activity rules. When you sell, gain is taxed, part of it can be recaptured depreciation, and a 1031 exchange can defer it.
At a glance
- 1031 like-kind exchange planning
- Rental property depreciation strategies
- Capital gains deferral and exclusion
- Florida Homestead Exemption guidance
- Short-term rental (Airbnb/VRBO) tax planning
What it covers
What real estate tax planning includes
1031 like-kind exchange planning
Deferring gain when you sell one investment property and buy another, within the deadlines.
Rental property depreciation strategies
Getting the basis, land split and recovery period right from the first year.
Capital gains deferral and exclusion
The home-sale exclusion, and planning the sale of property you've rented out.
Florida Homestead Exemption guidance
Filing on time and understanding Save Our Homes and portability.
Short-term rental (Airbnb/VRBO) tax planning
Federal rules for short stays plus Florida and Sarasota County taxes on rentals.
Rental expense tracking
Repairs versus improvements, and the records that support each deduction.
1031 exchanges: the deadlines decide
A like-kind exchange lets you sell investment or business real estate and defer the gain by buying replacement property. Since 2018 it applies only to real property, and it runs on two hard clocks: you have 45 days from the sale to identify replacement property and 180 days to close on it. A qualified intermediary has to hold the proceeds — if the money touches your account, the exchange fails.
We work with you and your intermediary before the sale, so the replacement property, the debt and the cash all line up and the deferral holds. Property held primarily for resale, like a flip, generally doesn’t qualify.
We work with you and your intermediary before the sale, so the replacement property, the debt and the cash all line up and the deferral holds. Property held primarily for resale, like a flip, generally doesn’t qualify.
At a glance
The 1031 exchange timeline
Day 0
Sale of the relinquished property closes; the intermediary holds the funds.
Day 45
Deadline to identify replacement property in writing.
Day 180
Deadline to close on the replacement property.
Return
Report the exchange on Form 8824 with your tax return.
Depreciation and the passive loss rules
Residential rental buildings are depreciated over 27.5 years, commercial buildings over 39. Land isn’t depreciated, so the split between land and building matters from day one. Depreciation lowers your tax each year, and it’s recaptured when you sell.
Rental losses are generally passive, and can offset passive income. If you actively participate, up to $25,000 of rental losses may offset other income, phasing out as modified adjusted gross income rises from $100,000 to $150,000. We plan around those limits so losses aren’t wasted.
Rental losses are generally passive, and can offset passive income. If you actively participate, up to $25,000 of rental losses may offset other income, phasing out as modified adjusted gross income rises from $100,000 to $150,000. We plan around those limits so losses aren’t wasted.
Homestead, Save Our Homes and short-term rentals
Florida’s Homestead Exemption reduces the taxable value of your primary home, and Save Our Homes limits how much its assessed value can rise each year. You apply with the Sarasota County Property Appraiser, generally by March 1, and the benefit can be ported to a new Florida homestead within set time limits.
Short-term rentals add more layers: stays of six months or less are subject to Florida sales tax and Sarasota County’s tourist development tax, and federal rules treat a rental with an average stay of seven days or less differently from a long-term rental. We help you get both sides right.
Short-term rentals add more layers: stays of six months or less are subject to Florida sales tax and Sarasota County’s tourist development tax, and federal rules treat a rental with an average stay of seven days or less differently from a long-term rental. We help you get both sides right.
Common mistakes
Mistakes we help you avoid
Touching 1031 proceeds
If sale proceeds reach your account, the exchange generally fails. A qualified intermediary must hold the funds.
Depreciating the land
Only the building is depreciable. Getting the land and building split wrong overstates or understates deductions for decades.
Calling an improvement a repair
Repairs are deducted now; improvements are capitalized and depreciated. The difference matters, and the rules are specific.
Missing the Homestead deadline
The Sarasota County Property Appraiser generally needs the application by March 1. Missing it can cost a year of the exemption.
Forgetting rental taxes on short stays
Rentals of six months or less generally owe Florida sales tax and the county tourist development tax, not just income tax.
Who this is for
Rental owners, investors planning a sale or exchange, owners of short-term rentals, and homeowners selling a primary residence.
Answers
Real Estate Tax Planning: common questions
What type of property can't be used in a 1031 exchange?
Personal residences, property held mainly for resale (such as flips) and, since 2018, anything that isn’t real property. Both the property you sell and the property you buy must be held for investment or business use.
How much of the gain on my home sale is excluded?
If you owned and lived in the home as your main residence for at least two of the last five years, you can generally exclude up to $250,000 of gain, or $500,000 for a married couple filing jointly.
When do I apply for the Homestead Exemption in Sarasota County?
With the Sarasota County Property Appraiser, generally by March 1 of the year you want the exemption, based on owning and living in the home as your permanent residence on January 1.
Do short-term rentals in Sarasota owe extra taxes?
Generally yes. Stays of six months or less are subject to Florida sales tax and Sarasota County’s tourist development tax, in addition to federal income tax on the rental profit.
Can house flippers use a 1031 exchange?
Usually not. Property held primarily for resale is treated as inventory, not investment property, so it generally doesn’t qualify.
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