When it comes to maximizing tax savings in real estate, cost segregation is one of the most effective strategies available, but it’s far from the only one. A truly optimized tax plan layers multiple incentives and credits that can reduce taxable income, boost cash flow, and unlock new investment opportunities.

Here’s a look at additional real estate tax strategies every property owner, developer, and investor should consider.

Employee Retention Credit (ERC)

Originally introduced through the CARES Act, the ERC rewards businesses that kept employees on payroll during the COVID-19 pandemic. Eligible businesses can still retroactively claim up to $26,000 per employee in refundable credits. For real estate companies with management or construction staff, this credit can deliver significant immediate cash benefits.

Work Opportunity Tax Credit (WOTC)

The WOTC provides tax credits to employers who hire individuals from targeted groups, such as veterans or long-term unemployed workers. Real estate developers and property management firms can often qualify for this credit when expanding staff for new projects or properties.

Historic Tax Credits (HTC)

If you’re restoring or preserving a certified historic building, the federal Historic Tax Credit allows for a credit of up to 20% of qualified rehabilitation expenses. Many states also offer their own companion programs, making this a powerful incentive for adaptive reuse and urban revitalization projects.

New Markets Tax Credit (NMTC)

The NMTC encourages private investment in low-income communities. Developers and investors who participate can receive a credit equal to 39% of their investment over seven years. Real estate projects in underserved areas, such as mixed-use developments or community facilities, often qualify.

Section 179D Energy-Efficient Commercial Building Deduction

Section 179D rewards energy-efficient building design and construction. Owners, architects, and engineers can qualify for up to $5.81 per square foot in deductions for implementing qualifying HVAC, lighting, and building envelope systems. This incentive remains available until its scheduled repeal on June 30, 2026, under the OBBBA legislation, making now the time to act.

Partial Asset Disposition (PAD)

When you renovate or replace building components, such as roofing, lighting, or HVAC systems, you may be able to write off the remaining basis of the old assets through a Partial Asset Disposition. This often pairs perfectly with cost segregation to accelerate depreciation and free up additional deductions.

Qualified Improvement Property (QIP)

Qualified Improvement Property allows interior improvements to nonresidential buildings to be depreciated over 15 years, and they’re eligible for 100% bonus depreciation. Combining QIP treatment with a cost segregation study can dramatically enhance first-year deductions.

Real Estate Professional Status (RE Pro)

For investors seeking to offset W-2 or other active income, qualifying as a Real Estate Professional under IRS rules can transform passive real estate losses into active deductions. Strategic recordkeeping and active participation are key to meeting this status.

1031 Exchanges

Section 1031 exchanges allow investors to defer capital gains taxes by reinvesting proceeds from one property sale into another “like-kind” property. This strategy helps grow portfolios tax-deferred while preserving equity for future acquisitions.

Qualified Opportunity Zones (QOZs)

Investing in Qualified Opportunity Zones allows investors to defer, reduce, or even eliminate capital gains taxes by reinvesting in designated low-income areas. QOZ funds can pair effectively with other incentives, including cost segregation, to multiply tax benefits.

Integrating It All: A Coordinated Strategy

The most effective real estate tax planning doesn’t rely on one strategy alone. By combining cost segregation with these other incentives, from credits and deductions to deferral and reinvestment strategies, investors can build a comprehensive tax playbook that maximizes cash flow, minimizes liability, and accelerates growth.

Partner With Experts Who Understand the Whole Picture

CSSI specializes in identifying and implementing the most beneficial tax strategies for real estate owners, developers, and investors. With over 55,000 engineering-based studies completed and zero audit issues, our team helps you capture every available deduction and credit, safely and efficiently.

Contact CSSI today to start building your own real estate tax playbook.