Tax-Smart Real Estate Moves to Consider as We Head Into 2026

Every year, we have at least a handful of conversations that go something like this:

“I did great on this property… but the tax bill surprised me.”

If you own investment property, whether it’s a long-term rental, a short-term rental, or a commercial asset, taxes are one of the biggest factors that can quietly eat into your returns. As we move into 2026, there are some important strategies worth revisiting, especially with recent changes and extensions to real estate-friendly tax provisions.

This isn’t tax advice, always talk to your CPA, but it is a practical look at how many smart investors are thinking ahead this year, based on guidance from the National Association of REALTORS® and broader industry trends.

Start With the Goal: Keep More of What You Earn

Most investors don’t mind paying taxes, they just don’t want to pay more than they need to. The key is planning before a sale or purchase, not after.

One of the biggest themes heading into 2026 is front-loading deductions to improve cash flow now, while still setting yourself up well for the future.

Real example

Let’s say you purchase a small apartment building or a short-term rental property this year. Instead of depreciating everything slowly over decades, a cost segregation study can allow you to write off certain components much faster. That can mean a significantly lower tax bill in the first few years of ownership, which many investors then use to:

• Build reserves

• Make improvements

• Or buy the next property sooner

That’s not theory, it’s something investors are actively using when the numbers make sense.

Selling? How You Structure the Deal Matters

Another area we see people underestimate is how a sale is structured.

If you’re selling an investment property in 2026, there are still tools available that can help manage the tax impact:

• 1031 exchanges to defer capital gains when rolling proceeds into another property

• Installment sales, which spread income (and taxes) over time instead of one big hit

• Opportunity Zone investments, for investors already considering redevelopment or longer-term holds

Real example

We’ve worked with sellers who assumed selling meant writing a massive check to the IRS, until they explored whether a 1031 exchange aligned with their long-term goals. In some cases, that strategy allowed them to move from a high-maintenance property into something more passive without triggering immediate capital gains taxes.

Timing and structure can change the entire outcome.

Don’t Ignore the Local Side of the Equation

Federal tax strategies get most of the attention, but state and local taxes still matter, especially for investors who own multiple properties or operate across different markets.

Things like:

• Property tax deductibility

• Entity structure (LLC vs. partnership, for example)

• How income flows through to your personal return

All play a role. What works perfectly for one investor might not make sense for another, even if the properties look similar on paper.

Capital Gains Planning Is Becoming More Strategic

With tax brackets and long-term planning becoming more complex, many investors are paying closer attention to when they sell, not just what they sell.

That can mean:

• Holding a property a little longer to qualify for long-term capital gains

• Pairing gains with losses elsewhere

• Or planning sales across multiple years instead of one

The investors who feel the least stress at tax time are usually the ones who planned these moves well in advance, not the ones scrambling in April.

The Biggest Mistake We See: Waiting Too Long to Ask Questions

If there’s one consistent takeaway as we head into 2026, it’s this:

Tax planning works best when it starts early.

The strategies above aren’t last-minute fixes. They work best when your real estate decisions, financial goals, and tax strategy are aligned from the beginning. That’s why the most successful investors usually have:

• A trusted CPA

• A financial advisor

• And a real estate professional who understands the investment side of the market

Thinking Ahead to 2026? Let’s Talk

If you’re considering:

• Buying your first investment property

• Selling and reinvesting

• Shifting from active to more passive ownership

• Or simply wanting to understand how today’s market and tax environment affect your long-term goals

We’d love to help you think through your options and connect you with the right professionals to build a smart plan.

📩 Reach out anytime, even if you’re just in the “thinking about it” phase. The best conversations usually start long before a property ever hits the market.