Real Estate Tax Strategy.
Real Estate Tax Strategy is a high-level consultative advisory service that structures property holdings, optimizes depreciation, and defers capital gains for real estate investors. Because real estate is the most tax-favored asset class in the Internal Revenue Code, operating without sophisticated tax architecture means needlessly surrendering hundreds of thousands of dollars to the IRS. Handled personally by Alan Balmer, CPA, this service structures Section 1031 like-kind exchanges, coordinates engineering-based cost segregation studies, and establishes defensible Real Estate Professional Status (REPS) frameworks. The outcome is maximized operational cash flow, tax-free portfolio compounding, and total compliance defense.
Critical Decision Triggers: When You Need Counsel.
Operating without proactive strategy risks unnecessary taxes, penalties, and audit friction. These are the specific turning points when engaging senior counsel changes your financial outcome.
You Are Selling a Property with Significant Capital Gain
You are facing hundreds of thousands of dollars in federal capital gains taxes, 25% depreciation recapture, and 3.8% Net Investment Income Tax (NIIT), and must initiate a Section 1031 exchange before closing.
Your Depreciation Deductions Are "Trapped" (Suspended Losses)
You invested heavily in rental properties, but your CPA informs you that your losses are "passive" and cannot offset your W-2 or business income under IRC § 469.
You Purchased or Built Commercial/Multifamily Property
You placed substantial property into service and need an engineering-based cost segregation study to accelerate 5-year, 7-year, and 15-year components to generate immediate tax write-offs.
Qualifying for Real Estate Professional Status (REPS)
You or your spouse spend substantial time managing real estate and want to qualify as a Real Estate Professional under IRC § 469(c)(7) to deduct real estate losses against ordinary income.
Expanding Across State Borders
You are acquiring investment properties in Oklahoma, Florida, Colorado, or Hawaii, requiring non-resident state filings and multi-state nexus management.
Real-World Case Precedents
A DFW real estate investor sold an industrial flex building in Fort Worth for $2,850,000, facing an estimated $410,000 in capital gains and depreciation recapture taxes. With the rigid 45-day identification clock ticking, his previous accountant failed to coordinate with the Qualified Intermediary (QI). Alan stepped in, structured a compliant 3-Property Identification Rule package, coordinated replacement property contracts across two states, and successfully completed the exchange within the 180-day statutory window—legally deferring 100% of the tax liability.
A business owner acquired a commercial retail center in Denton County for $3,200,000. Under default straight-line 39-year depreciation, her annual deduction was just $65,000. Alan coordinated a comprehensive cost segregation study, reclassifying 24% of the asset basis into land improvements, specialty electrical, and specialized interior finishes eligible for accelerated bonus depreciation. The year-one deduction surged to over $520,000, sheltering her entire active operational income and returning $180,000 in liquid capital directly back into her expansion fund.
Texas & Multi-State Jurisdictional Scope
Tax outcomes depend not just on federal codes, but on how state statutes, residency tests, and cross-border apportionment rules intersect. Alan Balmer, CPA leverages decades of nationwide practice to construct defensive, multi-jurisdiction frameworks.
Texas Real Estate Holding Advantages
Texas has no personal state income tax and no state capital gains tax, making the long-term holding of Texas real estate exceptionally profitable.
Texas Series LLCs and Asset Holding Architecture
We structure Texas limited liability companies (LLCs) and holding entities to provide statutory liability segregation between individual properties while streamlining federal tax reporting on a single pass-through return.
Multi-State Portfolio Coordination
Many Texas investors diversify into vacation rentals, farmland, or commercial syndications in other states. Alan handles the multi-state non-resident strategy, state withholding certificates (such as Hawaii HARPTA), and state depreciation adjustments across all 50 states.
Decisions & Tradeoffs: Strategic Reality.
Every tax decision involves tradeoffs between cash liquidity, audit exposure, compliance complexity, and permanent tax savings.
| Tax Classification / Strategy | Qualifying Requirements | Tax Deductibility Scope |
|---|---|---|
| Passive Real Estate Investor | Default status for anyone not meeting active or professional tests. | ✓ Losses are suspended and can only offset other passive rental income. |
| Active Participation ($25K Allowance) | Own at least 10% and make bona fide management decisions. | ✓ Up to $25,000 in rental losses can offset non-passive income; phases out between $100K and $150K MAGI. |
| Short-Term Rental (STR) Exception | Average guest stay is 7 days or less, AND owner materially participates (100+ hours). | ✓ Rental losses are treated as non-passive, offsetting W-2 and business income without REPS status. |
| Real Estate Professional Status (REPS) | 750+ hours in real property trades, >50% working hours, plus material participation. | ✓ 100% of real estate losses become non-passive, sheltering unlimited ordinary income and business profits. |
| Section 1031 Like-Kind Exchange | Identify replacements within 45 days, close within 180 days, Qualified Intermediary. | ✓ 100% deferral of capital gains, 25% depreciation recapture, and 3.8% NIIT on relinquished property. |
Who This Is For. And Who It Is Not For.
We maintain absolute alignment with our clients. Selective engagements ensure maximum focus, strategic depth, and high-value results.
Ideal Fit Criteria
- ✦ Individuals and partnerships managing residential, commercial, or industrial portfolios valued between $1,000,000 and $30,000,000+.
- ✦ Property owners preparing to sell real estate within the next 30 to 90 days who need bulletproof exchange structuring and timeline management.
- ✦ Doctors, executives, and business founders whose spouses can qualify for Real Estate Professional Status (REPS) to legally wipe out household tax liabilities.
- ✦ Investors acquiring properties valued at $750,000+ who want to harvest immediate liquidity through engineering-based cost segregation.
Who This Is Not For
- — Taxpayers selling their personal residence (governed by the IRC § 121 $250K/$500K home sale exclusion, not commercial 1031 exchanges).
- — Owners of a single rental home generating minimal cash flow where advanced structuring fees would exceed annual tax benefits.
- — Anyone seeking to retroactively "invent" 750 hours of real estate professional time after an audit notice arrives (we do not participate in unsupportable time claims).
What Alan Balmer Delivers.
When you retain Alan Balmer, PC for Real Estate Tax Strategy, you receive:
Section 1031 Exchange Architecture & Defense Memo
Clear structuring guidelines detailing debt replacement requirements, equity transfer calculations, and 45-day/180-day compliance protocols coordinated directly with your Qualified Intermediary.
Cost Segregation Feasibility & Accelerated Depreciation Schedule
In-depth review of your commercial or residential property basis, coordinating with qualified engineers to accelerate 5-, 7-, and 15-year property under current bonus depreciation rules.
Real Estate Professional Status (REPS) Defense Protocol
A structured operational system and contemporaneous time-logging framework designed to withstand IRS examination under IRC § 469(c)(7).
Multi-Property Entity Structuring Blueprint
Entity allocation recommendations (Holding LLCs, Operating LLCs, Series LLCs) balancing legal asset protection with pass-through tax efficiency.
Passive Activity Loss (PAL) Carryforward Optimization
Accurate tracking and harvesting of accumulated suspended passive losses across all properties to offset future disposition gains.
Tailored Scope for Your Situation
Have a unique transaction, multi-entity portfolio, or complex interstate requirement? Alan Balmer structures bespoke scopes designed around your exact capital timeline.
What the Client Must Provide
Elite tax strategy is a collaborative partnership. Defensible tax posture requires complete, timely operational records.
Settlement Statements (HUD-1 / ALTA Statements)
Complete closing statements for all property acquisitions, refinances, and sales.
Detailed Fixed Asset & Capital Improvement Invoices
Itemized records, architectural plans, and contractor receipts for all renovations, tenant improvements, and structural work.
Qualified Intermediary (QI) Agreements
Formal exchange documentation if executing a Section 1031 transaction.
Contemporaneous Activity Logs
Time tracking records detailing dates, hours, and specific management tasks for REPS or Short-Term Rental material participation claims.
The Engagement Process.
A disciplined, four-stage progression from preliminary mutual-fit review to finalized blueprint delivery.
Mutual Fit Consultation (Text or Email)
Contact Alan directly via text or email at 641.233.1036 or alan@alanbalmerpc.com. Consultations are complimentary and scheduled at Alan's discretion following an initial direct review to confirm mutual fit.
Portfolio & Cost Basis Diagnostic
We review your current depreciation schedules, rental profit & loss statements, and entity structures to identify trapped deductions and recapture liabilities.
Strategic Strategy Blueprint
We model your 1031 exchange replacement criteria, cost segregation potential, or REPS qualifications, delivering an actionable roadmap.
Execution Directives & Filing Coordination
Alan delivers comprehensive transaction reporting schedules (Form 8824, Form 8582, depreciation schedules) and tax return integration directives for your tax preparers to execute flawlessly.
Fee Structure & Models
- ✓ Engagement Models: Real estate tax advisory is engaged on either a flat project fee (for Section 1031 exchange architecture, cost segregation review, or REPS audit defense framework) or a fixed annual or quarterly advisory retainer for active portfolio advisory.
- ✓ High ROI Multiplier: Securing a successful 1031 exchange or executing a cost segregation study frequently delivers tens of thousands—or hundreds of thousands—of dollars in immediate tax savings, far exceeding the advisory fee.
- ✓ Finalized After Free Consultation: The exact fee structure and fixed investment are finalized after a free, no-cost, no-obligation consultation with Alan Balmer, CPA.
Proof, Precedent & Experience
✦ 25+ Years of Real Estate Experience
Over 25+ years of practice, Alan has advised real estate developers, multi-family syndicators, land operators, and private family portfolios through every phase of property cycles.
✦ Audit-Tested Depreciation Defense
Having begun his career at Laventhol & Horwath—an international firm renowned for real estate and hospitality auditing—Alan builds depreciation schedules that withstand rigid IRS examination.
✦ Direct Senior CPA Oversight
Your 1031 exchange calculations, cost segregation review, and depreciation schedules are never handed off to junior data-entry clerks; Alan Balmer oversees and calculates every position personally.
Frequently Asked Questions.
Clear, definitive answers to common strategic questions regarding this practice area.
What are the strict deadlines for a Section 1031 exchange?
Can I touch the money during a 1031 exchange?
How does a cost segregation study save taxes?
What is the "Short-Term Rental Loophole"?
How does depreciation recapture work when I sell?
All advisory modeling, election filings, and structural recommendations in this practice area adhere strictly to the Internal Revenue Code, Treasury Regulations, and relevant state statutory codes:
- § Internal Revenue Code § 1031 (Exchange of Real Property Held for Productive Use or Investment)
- § Treasury Regulation § 1.1031(k)-1 (Treatment of Deferred Exchanges)
- § Internal Revenue Code § 469 (Passive Activity Losses and Credits Limited)
- § Internal Revenue Code § 469(c)(7) (Special Rules for Real Estate Professionals)
- § Internal Revenue Code § 168(k) (Special Allowance for Certain Property - Bonus Depreciation)
- § IRS Audit Technique Guide: Real Estate Property Trades or Businesses
Ready to Discuss Your Tax Strategy?
Consultations are complimentary and scheduled directly with Alan Balmer, CPA following an initial direct review to confirm mutual fit.