Cost Segregation 101
How One STR Saved Dr. Burnout Over $100K in Taxes
After years of 60-hour ER weeks and massive tax bills, Dr. Burnout discovered that a single short-term rental — paired with a cost segregation strategy — could deliver real tax relief without quitting medicine.
overview
Dr. Burnout was a mid-career emergency physician earning $ 450,000 a year — and sending nearly half to the IRS. Tired of the grind and watching others build wealth through real estate, he made a strategic pivot: buying and self-managing a short-term rental. With a cost segregation study and some education, that one move eliminated over $100,000 in federal taxes — both legally and ethically.
Challenge
Despite a solid income, Dr. Burnout was burning out — physically and financially.
After maxing out his 401(k), HSA, and backdoor Roth IRA, he still owed six figures in taxes. He’d heard of real estate as a tax shelter, but didn’t know how to start, and feared losing time or money.
Solution
He bought a turnkey property in a short-term rental–friendly city and set it up on Airbnb.
Rather than hiring a full-time manager, he remained sufficiently involved to qualify for material participation under IRS rules.
He then commissioned a cost segregation study, which accelerated depreciation and generated over $130,000 in passive losses.
Because STRs don’t require Real Estate Professional Status, he was able to apply those losses directly against his active W2 income.
Result
$112,000 in taxes eliminated that year The property still cash-flowed $8,000 after all expenses Gained confidence to buy a second STR the following year Rinse-and-repeat model built a scalable, tax-efficient plan for wealth, without quitting his clinical work |
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