The deduction list for a Oceanside STR is extensive: platform fees (Airbnb/VRBO typically charges 3%), cleaning fees you pay, all utilities, internet, cable, furnishings (100% bonus depreciation in 2026), appliances, maintenance and repairs, property management, insurance, mortgage interest, property taxes, depreciation on the building, and a cost segregation study to accelerate depreciation on building components. If you have a home office for managing your STR, that’s deductible too. KDA’s team will conduct a full deduction audit to ensure you’re capturing everything.

The 45-day identification deadline is the most commonly missed in a 1031 exchange. You have exactly 45 calendar days from the sale of your relinquished property to identify up to three replacement properties (or more under the 200% rule or 95% rule). The 180-day closing deadline runs concurrently from the same sale date. KDA’s Oceanside real estate CPA team begins exchange planning months before your sale to ensure you have replacement properties identified and under contract before the clock starts.

House hacking — living in one unit of a multi-unit property and renting the others — is a popular strategy for Oceanside real estate investors. The tax treatment: you allocate income and expenses between personal use (your unit) and rental use (tenant units) based on square footage or unit count. The rental portion generates full deductions including depreciation. When you sell, the rental portion is subject to capital gains and depreciation recapture; the personal portion may qualify for the Section 121 exclusion. KDA’s team will optimize your house hacking tax strategy.

For Oceanside real estate investors who want to do a 1031 exchange but don’t want to manage another active property, a DST is the ideal solution. You exchange your rental property into a fractional interest in a large institutional property — deferring all capital gains and depreciation recapture. The DST sponsor manages the property; you receive passive income distributions. DSTs are particularly popular with investors who are retiring from active management or who can’t identify a suitable replacement property within the 45-day identification window. KDA’s team will advise on DST selection and 1031 exchange compliance.

The IRS classifies income into three categories, each with different tax treatment: (1) Active (earned) income — wages, self-employment income, real estate dealer income; subject to income tax AND self-employment/FICA tax. (2) Passive income — rental income, limited partnership income; subject to income tax but NOT self-employment tax; losses can only offset passive income. (3) Portfolio income — dividends, interest, capital gains; subject to income tax and potentially NIIT; not subject to SE tax. For Oceanside real estate investors, the goal is to maximize passive income (no SE tax) while unlocking passive losses through REPS or the STR loophole.

Real estate investors in Oceanside often overlook retirement account optimization as part of their overall tax strategy. If you have a property management company or other active real estate income, a Solo 401(k) allows contributions up to $69,000 per year (2026) — creating a massive additional deduction. If you qualify for REPS, your rental income may support even larger contributions. KDA’s real estate CPA team will integrate retirement account planning into your comprehensive tax strategy.

Co-ownership of Oceanside rental properties creates both tax opportunities and complications. A partnership or LLC structure allows flexible allocation of income and losses among partners — potentially allocating more depreciation to the partner in the higher tax bracket. However, the allocation must have ‘substantial economic effect’ under IRS rules. KDA’s team will structure your partnership agreement to achieve the optimal tax allocation while meeting IRS requirements, and will prepare the annual partnership return and K-1s.

The passive activity rules are the primary obstacle for real estate investors trying to use rental losses to offset their W-2 income. Under Section 469, rental losses are passive and can only offset passive income — unless you qualify for REPS or the STR loophole. Suspended passive losses accumulate and are released when you sell the property or generate passive income. For Oceanside investors with large suspended passive losses, a strategic sale or the right property acquisition can unlock years of accumulated deductions. KDA’s team will model your passive loss position.

Section 121 is the primary residence exclusion — not an investment property tool. But for Oceanside investors, there is a strategic opportunity: convert an investment property to your primary residence, live there for 2+ years, and then sell with up to $500,000 in tax-free gains. The catch: depreciation recapture is not excluded (it’s taxed at 25%), and gains attributable to periods of non-qualified use (when it was a rental) are not excluded. KDA’s team will model whether a primary residence conversion makes sense for your specific property.

Inflation creates a ‘depreciation timing’ opportunity for Oceanside real estate investors. By front-loading depreciation through cost segregation and 100% bonus depreciation (now permanent under OBBBA), you take deductions when they’re worth the most — today’s dollars. This is especially valuable in high-inflation environments. The flip side: depreciation recapture at sale is based on nominal dollars, so the recapture tax may be less burdensome in real terms. KDA’s Oceanside real estate CPA team will model the inflation impact on your depreciation strategy and optimize the timing of deductions.