{
“@context”: “https://schema.org”,
“@type”: “FAQPage”,
“mainEntity”: [
{
“@type”: “Question”,
“name”: “What is the QBI deduction and does it apply to rental real estate?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “The QBI deduction can add 20% savings on top of all your other real estate deductions. For a Los Angeles investor with $200,000 in net rental income that qualifies for QBI, the deduction is $40,000 — saving $14,800 in federal taxes at the 37% rate. Qualification requires your rental activity to be a ‘trade or business,’ which is met through REPS, the STR loophole, or the 250-hour safe harbor. KDA’s real estate CPA team will document your rental services hours and structure your activities to maximize QBI eligibility.”
}
}, {
“@type”: “Question”,
“name”: “How do I pay my children through my real estate business to shift income?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “Income shifting to children through your real estate business is a legitimate tax strategy when done correctly. Your child must perform real, documented work — property management tasks, administrative work, photography, social media management for your rentals. Pay must be reasonable for the work performed. For children under 18 in a sole proprietorship or disregarded LLC, wages are exempt from FICA tax — saving you 15.3% on top of the income tax rate differential. KDA’s Los Angeles team will document the arrangement properly to withstand IRS scrutiny.”
}
}, {
“@type”: “Question”,
“name”: “What is a cost segregation study and how does it save taxes?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “A cost segregation study is an engineering-based tax analysis that reclassifies components of your real estate from 27.5-year (residential) or 39-year (commercial) depreciation to 5-, 7-, or 15-year property. This accelerates your depreciation deductions dramatically. For example, a $500,000 rental property might have $100,000–$150,000 reclassified to shorter-lived assets, generating $100,000+ in first-year deductions when combined with 100% bonus depreciation. KDA’s Los Angeles team coordinates cost segregation studies and integrates them into your overall tax strategy.”
}
}, {
“@type”: “Question”,
“name”: “What is California’s real estate withholding requirement?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “California’s 3.33% real estate withholding is a significant consideration for Los Angeles property sales. The withholding applies to the GROSS sales price — not the gain — meaning on a $1M sale, $33,300 is withheld regardless of your actual tax liability. For investors doing a 1031 exchange, this withholding must be avoided entirely (using FTB Form 593-E) or it will reduce your exchange proceeds and potentially trigger taxable ‘boot.’ KDA’s Los Angeles real estate CPA team will prepare all required withholding certificates and coordinate with your escrow officer.”
}
}, {
“@type”: “Question”,
“name”: “What happens to my rental property losses when I sell the property?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “Suspended passive losses are one of the most valuable ‘hidden assets’ on a real estate investor’s balance sheet. For Los Angeles investors who have been unable to use rental losses due to the passive activity rules, the eventual sale of the property releases all accumulated losses in one year. A property with $300,000 in suspended losses generates a $300,000 deduction in the year of sale — potentially eliminating the entire tax on the gain. KDA’s Los Angeles real estate CPA team tracks your passive loss carryforwards and incorporates them into your sale planning.”
}
}, {
“@type”: “Question”,
“name”: “What is the tax treatment of real estate options?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “A real estate option gives the buyer the right (but not the obligation) to purchase property at a set price within a specified period. Tax treatment for the option buyer: the option premium paid is not immediately deductible — it becomes part of the property’s basis if the option is exercised, or a capital loss if the option expires. Tax treatment for the option seller: the premium received is not immediately taxable — it’s recognized as income when the option is exercised (as part of the sale proceeds) or when it expires (as ordinary income or capital gain depending on the seller’s status). KDA’s Los Angeles team will structure real estate option transactions for optimal tax treatment.”
}
}, {
“@type”: “Question”,
“name”: “What are the deadlines for a 1031 exchange?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “A 1031 exchange has two critical deadlines: (1) the 45-day identification period — you must identify potential replacement properties within 45 days of closing your relinquished property; and (2) the 180-day exchange period — you must close on the replacement property within 180 days of selling. Both deadlines are absolute — missing either one disqualifies the exchange and triggers full tax liability. KDA’s Los Angeles team tracks these deadlines meticulously and coordinates with your qualified intermediary to ensure compliance.”
}
}, {
“@type”: “Question”,
“name”: “How does inflation affect my real estate tax strategy?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “In an inflationary environment, Los Angeles real estate investors face a specific tax challenge: depreciation deductions are fixed in nominal dollars, but the tax savings they generate decline in real (inflation-adjusted) terms over time. A $10,000 depreciation deduction in 2035 is worth less in real terms than the same deduction today. The solution is front-loading depreciation through cost segregation and bonus depreciation — taking the maximum deductions as early as possible. KDA’s team will model the inflation-adjusted value of different depreciation strategies for your Los Angeles properties.”
}
}, {
“@type”: “Question”,
“name”: “How does the $25,000 passive loss allowance work for rental property owners?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “The $25,000 passive loss allowance allows rental property owners who ‘actively participate’ in their rentals to deduct up to $25,000 in rental losses against non-passive income — even without REPS qualification. Active participation is a low bar: you just need to make management decisions (approve tenants, set rents, authorize repairs). However, this allowance phases out between $100,000 and $150,000 of AGI — completely eliminated at $150,000. For Los Angeles investors with AGI above $150,000, the STR loophole or REPS is needed to unlock rental losses.”
}
}, {
“@type”: “Question”,
“name”: “How do I handle real estate investments in a divorce?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “For Los Angeles 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 Los Angeles real estate CPA team will prepare a comprehensive after-tax analysis of all real estate assets to support equitable divorce negotiations.”
}
}
]
}