Equity partners, contingency-fee litigators, and firm owners see income arrive in lumps. A tenanted Michigan rental portfolio closed in the right year delivers steady rent and a first-year depreciation deduction sized to the year that needs it. You will want the fine print; we lead with it.
Partnership distributions from a law firm are non-passive, the same as salary. A rental loss is passive. The loss reaches your firm income only through an exception, and for most practicing attorneys that exception is a spouse who qualifies as a real estate professional on a joint return. Without it, the loss is suspended, shelters the portfolio's own rent, offsets other passive income, and releases on sale.
Office building interests, fund investments, prior rentals, and limited partner positions are common on a partner's return. A cost-segregated portfolio offsets that income immediately, no status election required.
Bonus depreciation is taken in full in the year the property is placed in service, with no proration. A portfolio that closes December 20 produces the same bonus deduction as one that closes in January, in the earlier year. If a large fee or distribution is landing this year, the closing date is a planning tool.
Depreciation lowers basis. On a taxable sale, the reclassified components are recaptured at ordinary rates and the structure's depreciation at up to 25%. The strategy is deferral and timing, best paired with long holds or 1031 exchanges, not a permanent exclusion.
Composite example. Not a client, not a projection.
Partner with $650,000 in ordinary firm income plus a $900,000 contingency fee recognized in the same year. Spouse, formerly in commercial property management, qualifies as a real estate professional and the couple groups the rentals as one activity.
No syndication, no fund, no promote, no lockup. Title in your entity, your lender if you want one, your manager. You can sell, refinance, or exchange on your own timeline.
Leases, estoppels where obtainable, rent ledgers, title commitments, inspection notes, and our underwriting. Shared under NDA before you commit.
We close to LLCs, trusts, and tenancy-in-common structures routinely and coordinate with qualified intermediaries on exchange timelines.
We buy portfolios every month. When you want out, we are a ready bid, or we help you trade up into a larger portfolio through an exchange.
If we already hold the portfolio or have it under contract, yes: 30 to 45 days is normal for a cash purchase. Financed purchases need 45 to 60 days. Sourcing a new portfolio to spec takes longer, so if year-end matters, start the conversation by early fall.
Generally, the property is placed in service when it is ready and available for its intended use. A tenanted house you own at closing is in service on the closing date. Your CPA confirms the date for your return; we provide the closing documentation.
Without a real estate professional in the household, the loss is passive. It still shelters the portfolio's rent and any other passive income you have, and it releases on sale. Many dual-professional households buy on those terms because the portfolio stands on its own; the deferral is a bonus rather than the thesis.
Yes, and we prefer it. We share the underwriting package with your advisors, join calls, and adjust structure (entity, closing date, allocation of price between land and improvements where supportable) to what they recommend.
We'll show you what can close before December 31, and we'll be candid about what cannot.
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