{
“@context”: “https://schema.org”,
“@type”: “FAQPage”,
“mainEntity”: [
{
“@type”: “Question”,
“name”: “What is a 1031 exchange and how can a CPA help me use it?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “The 1031 exchange is how the wealthiest real estate investors in Pasadena build multi-generational wealth — by never paying capital gains tax during their lifetime. Every exchange defers the tax, and if you hold the replacement property until death, your heirs receive a stepped-up basis that eliminates the deferred gain entirely. KDA’s Pasadena real estate CPA team has guided hundreds of exchanges and will ensure yours is structured to maximize deferral and minimize risk.”
}
}, {
“@type”: “Question”,
“name”: “Should I use an S-Corp for my real estate investing business?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “The S-Corp question for real estate investors in Pasadena requires careful analysis. For fix-and-flip investors who are treated as dealers by the IRS (ordinary income, self-employment tax), an S-Corp can save 15.3% in SE tax on a reasonable salary allocation. For buy-and-hold rental investors, S-Corps create significant disadvantages. KDA’s team will analyze your specific mix of active and passive real estate activities and recommend the entity structure that minimizes your total tax burden.”
}
}, {
“@type”: “Question”,
“name”: “What expenses can I deduct for my Airbnb or short-term rental property?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “The deduction list for a Pasadena 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.”
}
}, {
“@type”: “Question”,
“name”: “What is a Delaware Statutory Trust (DST) and how does it work in a 1031 exchange?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “A DST solves the biggest challenge of a 1031 exchange: finding a suitable replacement property within 45 days. By investing in a DST, you immediately satisfy the identification requirement while deferring all taxes. DSTs offer access to institutional properties — class A apartments, Amazon distribution centers, net-lease pharmacies — that individual investors couldn’t access directly. The trade-off is passive ownership with no control. For Pasadena investors looking to exit active management while deferring taxes, a DST is often the optimal 1031 exchange strategy. KDA’s team will guide you through the DST selection process.”
}
}, {
“@type”: “Question”,
“name”: “What is the difference between Section 179 and bonus depreciation for real estate?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “The key practical difference: Section 179 cannot create a tax loss, while bonus depreciation can. For real estate investors in Pasadena who want to maximize first-year deductions and potentially generate a net operating loss to offset W-2 or business income (through REPS or STR loophole), bonus depreciation is the superior tool. Section 179 is more commonly used for equipment and vehicles in operating businesses. KDA’s Pasadena team will determine the optimal depreciation strategy for your specific portfolio.”
}
}, {
“@type”: “Question”,
“name”: “How does Airbnb income get reported on my tax return?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “Airbnb sends a Form 1099-K if you receive more than $600 in payments (2026 threshold). Your income is reported on Schedule E for most STRs, with all allowable deductions netting against gross rental income. If your property qualifies for the STR loophole (average stay ≤7 days, material participation), net losses can offset your other income. KDA’s Pasadena team will ensure your Airbnb income is reported correctly, all deductions are captured, and your STR loophole eligibility is documented.”
}
}, {
“@type”: “Question”,
“name”: “How do I prove material participation in my short-term rental to the IRS?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “Material participation documentation is the difference between a successful STR loophole claim and an IRS audit loss. You need: (1) a daily time log with specific activities and hours; (2) records of guest communications (Airbnb/VRBO message history); (3) receipts and invoices for maintenance and supplies; (4) evidence of your management decisions. KDA’s Pasadena real estate CPA team provides a complete documentation kit and conducts annual reviews to ensure your records are audit-ready.”
}
}, {
“@type”: “Question”,
“name”: “What is a ground lease and how is it taxed?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “For Pasadena investors with highly appreciated land, a ground lease is a powerful alternative to selling. Instead of triggering capital gains on the land sale, you lease the land for 50–100 years, receiving annual rent payments taxed as ordinary income. The land remains in your estate and passes to heirs with a stepped-up basis. The tenant builds and depreciates improvements on your land. KDA’s Pasadena real estate CPA team will model the after-tax comparison between selling the land outright and entering a ground lease arrangement.”
}
}, {
“@type”: “Question”,
“name”: “How do I handle real estate investments in a divorce?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “Real estate division in a Pasadena divorce requires careful tax analysis because the ‘equal’ division of assets is rarely equal on an after-tax basis. A property worth $1M with a $200,000 basis (significant accumulated depreciation) has a much larger embedded tax liability than a property worth $1M with a $900,000 basis. The receiving spouse inherits the low basis and will owe taxes on the full gain when they eventually sell. KDA’s team will calculate the after-tax value of each property and help you negotiate a truly equal settlement.”
}
}, {
“@type”: “Question”,
“name”: “How does the $25,000 passive loss allowance work for rental property owners?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “The $25,000 allowance is the ‘consolation prize’ passive loss rule for middle-income rental property owners. If your AGI is under $100,000 and you actively participate in your rental, you can deduct up to $25,000 in rental losses against your W-2 income. The allowance phases out at $50 cents per dollar of AGI between $100,000 and $150,000. For most Pasadena investors earning above $150,000, this allowance is completely phased out — making REPS or the STR loophole the only paths to unlocking rental losses. KDA’s team will identify which strategy applies to your income level.”
}
}
]
}