Bonus depreciation is the turbocharger for cost segregation studies. Without bonus depreciation, reclassified assets are depreciated over 5, 7, or 15 years. With 100% bonus depreciation (restored permanently in 2025), those same assets are fully deducted in year one. For a Tempe investor buying a $1M commercial property, this can mean $300,000–$400,000 in first-year deductions — potentially eliminating your entire tax liability for the year and creating a net operating loss to carry forward.

Beyond the 2.5% flat income tax, Arizona offers real estate investors: (1) no state estate or inheritance tax — your heirs keep more; (2) Opportunity Zone investments in designated Tempe areas for additional capital gains deferral; (3) relatively low property tax rates compared to national averages; (4) no tax on long-term residential rental income at the state TPT level; and (5) a business-friendly regulatory environment that makes operating rental properties simpler than in many other states. KDA’s Tempe team will ensure you’re capturing every Arizona-specific tax advantage.

The 14-day rule (also called the vacation home rule) applies when you use a rental property personally for more than 14 days OR more than 10% of the days it’s rented, whichever is greater. If you exceed this threshold, the property is classified as a ‘vacation home’ — deductions are limited to rental income (you cannot generate a loss), and the property may not qualify for the STR loophole. KDA’s Tempe team tracks personal use days carefully for STR clients and advises on how to stay below the threshold to preserve full deductibility.

The difference comes down to proactive strategy versus reactive compliance. A regular CPA files what happened. A real estate CPA at KDA Inc. plans what will happen — structuring your acquisitions, timing your cost segregation studies, advising on 1031 exchanges before you sell, and ensuring your entity structure maximizes every deduction available under the tax code. For Tempe investors, that difference is often tens of thousands of dollars annually.

The Net Investment Income Tax (NIIT) is a 3.8% surtax on investment income — including rental income and capital gains from real estate — for high-income taxpayers. It applies to the lesser of your net investment income or the amount by which your MAGI exceeds $200,000 (single) or $250,000 (married). For Tempe real estate investors, NIIT can add $38,000 on a $1M capital gain. The primary strategies to avoid NIIT: qualify for REPS (rental income becomes non-passive, exempt from NIIT) or use the STR loophole (same result). KDA’s team will model your NIIT exposure and identify avoidance strategies.

Yes — and in many cases, a single rental property owner benefits the most from professional guidance because they’re less likely to know the strategies available to them. A cost segregation study on a single property can generate $15,000–$40,000 in first-year deductions. Proper passive activity loss tracking can unlock deductions in future years. KDA’s Tempe team makes these strategies accessible to investors at every level.

Short-term rental owners in Tempe can deduct: mortgage interest, property taxes, insurance, utilities (if you pay them), cleaning and maintenance, property management fees, Airbnb/VRBO platform fees, furnishings and appliances (via bonus depreciation), linens and supplies, repairs, advertising and photography, professional fees (CPA, attorney), and depreciation on the building and improvements. If you use the property personally, deductions must be prorated between rental and personal use days. KDA’s Tempe team will ensure you capture every allowable deduction and apply the correct proration method.

The Arizona vs. California tax comparison for real estate investors is stark. California’s 13.3% top rate vs. Arizona’s 2.5% means: (1) rental income is taxed at 5.3x the rate in CA vs. AZ; (2) capital gains on property sales cost dramatically more in CA; (3) depreciation recapture is taxed at 13.3% in CA vs. 2.5% in AZ. For a Tempe investor with a $2M portfolio generating $100,000 in annual rental income, the state tax savings of investing in Arizona vs. California is approximately $10,800 per year — or $108,000 over 10 years. KDA’s team will run the full comparison for your situation.

The short-term rental (STR) tax loophole allows investors to use losses from qualifying STR properties to offset W-2 income, business income, or other active income — bypassing the passive activity loss rules that normally prevent rental losses from offsetting non-passive income. To qualify, your STR must have an average guest stay of 7 days or fewer, AND you must materially participate in the rental activity (500+ hours per year, or meeting one of the other material participation tests). KDA’s Tempe team has helped dozens of high-income W-2 earners use this strategy to eliminate five and six-figure tax bills.

For Tempe real estate investors going through divorce, the tax-free transfer rule (IRC Section 1041) means property can be divided without immediate tax consequences. But the receiving spouse inherits the tax liability — the low basis, accumulated depreciation, and suspended passive losses all transfer with the property. A property that looks equal in value may be very unequal in after-tax value. KDA’s Tempe real estate CPA team will prepare a comprehensive after-tax analysis of all real estate assets to support equitable divorce negotiations.