Attending physicians, surgeons, specialists, and practice-owning dentists share a problem: a large, fully taxed income and no hours left to build a real estate position house by house. We deliver tenanted Michigan portfolios in one closing, and we explain the tax side the way your CPA would.
Your clinical income is non-passive. A rental loss is passive. By default the two never meet, and anyone promising that a cost-segregated portfolio will wipe out your W-2 tax bill is skipping that sentence. Here is how it actually works for physician households.
On a joint return, if your spouse spends more than 750 hours a year and more than half of their working time in real property businesses, and the household materially participates in the rentals, the portfolio's losses become non-passive and offset your clinical income. This is the most common structure among our physician clients. It requires real, documented hours; a 10 to 20 door portfolio with hands-on oversight of management, leasing, and capital projects is a credible foundation for it.
Many physicians already receive passive income: a surgery center interest, a syndication, an existing rental. A cost-segregated portfolio's loss offsets that income dollar for dollar, and it shelters the portfolio's own rent for years. No real estate professional status required.
A full-time employed physician with a non-working spouse and no other passive income will see the loss suspended and carried forward. Still valuable, still released on sale, but not a current-year refund. We would rather tell you that on the first call than have your CPA tell you in April.
Composite example. Not a client, not a projection.
Hospitalist earning $420,000 W-2. Spouse left a corporate role and now manages the portfolio's leasing, vendors, and capital planning with a third-party manager handling day-to-day calls.
Our deal flow is owners selling 10 to 100 doors directly to us. You see portfolios after we have verified rents, walked the houses, and priced them, never a listing.
We introduce managers already operating in the same counties. Leases, deposits, and tenant communication transfer on closing day.
Bonus depreciation is not prorated, so a December closing captures the full deduction for the year. We work backward from the date you and your CPA need.
We share the underwriting package with your CPA and the cost segregation firm before you commit. If the numbers do not work for your situation, we tell you.
Practice income is still non-passive, so the same rules apply: the rental loss offsets it only through real estate professional status or another exception. Practice owners do have more flexibility in timing income and may already hold passive interests (a building leased to the practice, for example) that a portfolio can shelter. Your CPA will see the opportunities faster than a website can.
Almost never. The test requires more than half of your working hours in real estate, and a full clinical schedule makes that impossible to meet or defend. The structure that works is a spouse who meets the test on a joint return.
Then plan as if the loss will be passive and treat any real estate professional qualification as upside. The portfolio still has to make sense on cash flow and appreciation, and suspended losses are not lost: they shelter rent and release on sale. Your CPA can help design a role for your spouse that is substantive and documentable if you want to pursue it.
With third-party management, a 10 to 20 door portfolio takes a few hours a month of owner oversight: approving repairs over a threshold, reviewing monthly statements, and occasional capital decisions. If a spouse is pursuing real estate professional status, their involvement is deliberately deeper.
No. You own the real estate directly, in your own name or entity, with your own title, your own lender, and your own management. There is no sponsor, no promote, and no lockup. You can sell, refinance, or 1031 whenever you choose.
Bring your CPA if you like. We'll walk through what we have, what it would mean for your tax year, and what it would not.
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