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What could the S-corp and cost-segregation strategy save you?

Two levers get most of the attention: an S-corporation election that cuts self-employment tax, and a cost-segregation study that accelerates rental depreciation. Plug in your own numbers and see the federal math. Then take it to your CPA.

I'm a real estate broker, not a CPA, tax advisor, or attorney. This page is education, not tax or legal advice.

Not tax or legal advice. I'm a real estate broker, not a CPA, tax advisor, or attorney. This is a simplified, federal-only estimate for education. Your real numbers depend on facts only your CPA and attorney can evaluate.

1. S-corporation election

Compares self-employment tax as a sole proprietor or single-member LLC with payroll tax on a reasonable salary.

Self-employment tax today$28,234
Payroll tax on salary$15,300
Payroll tax saved$12,934
Extra income tax (lost SE deduction, smaller QBI)-$6,042
Extra yearly costs-$2,500
Net yearly savings$4,393

Uses the 2026 Social Security wage base of $184,500. Ignores the 0.9% Additional Medicare Tax, QBI income limits, state taxes, and health-insurance and retirement effects.

2. Rental depreciation + cost segregation

Estimates year-one depreciation and what a paper loss is worth if it is allowed against your other income.

Depreciable basis (price less land)$480,000
Reclassified to 5/7/15-year property$120,000
Bonus depreciation, year 1$120,000
Building depreciation (39-year)$9,231
Total year-1 depreciation$129,231
Straight-line only, no study$12,308
Taxable rental result-$99,231
Estimated year-1 tax saved$23,815

This is a deferral, not a permanent saving. Sale triggers recapture: up to 37% on the reclassified portion (about $44,400 here if fully recaptured) and up to 25% on building depreciation. A 1031 exchange or holding until death can defer or avoid it. Ignores the excess business loss limit and the passive-loss $25,000 allowance.

Combined year-one federal estimate
$28,208

S-corp net savings plus rental tax saved, on the inputs above. Treat it as a conversation starter with your CPA, not a forecast. I'm not a CPA or an attorney, and nothing here is tax or legal advice.

Read this before you rely on it

What the calculator leaves out

  • Federal only. Florida has no state income tax, but if you live or earn elsewhere, state rules change the answer.
  • The loss has to be usable. A rental loss offsets other income only if it is nonpassive. That usually means a short-term rental you materially participate in (average guest stay of 7 days or less) or qualifying as a real estate professional (750+ hours and more than half of your working time in real property trades or businesses). Both are fact-and-documentation tests.
  • Depreciation is recaptured. Selling triggers tax on what you deducted. The strategy defers tax. It doesn't erase it, unless you exchange under Section 1031 or hold until death.
  • Reasonable salary. The IRS expects an S-corp owner to pay a reasonable salary for the work they do. Setting it too low is an audit risk.
  • Not modeled: the 0.9% Additional Medicare Tax, QBI income limits, the excess business loss limit, AMT, health-insurance and retirement-plan effects, and partial-year details in the cost-segregation schedule.

Disclaimer: MaxLife Realty and Ryan Solberg are real estate professionals, not certified public accountants, tax advisors, or attorneys. Nothing on this page is tax, legal, or accounting advice, and no CPA-client or attorney-client relationship is created. Tax rules change and depend on your facts. Consult a qualified CPA or tax attorney before acting.

Next step

Looking at a rental? Let's run the property numbers first.

I can pull rents, comps, and expenses for a specific Central Florida property. Your CPA then decides how it fits your tax picture.

Talk to RyanShort-Term Rental Estimator