Accounting for Real Estate Investors & Developers
Real estate has its own rules: depreciation schedules per property, entity structures that separate liability from ownership, passive loss limits that often defer deductions, and 1031 exchanges that must follow strict timelines. Blue Sage handles the accounting and the returns for investors, developers, and property management companies.
What we handle
- Depreciation schedules tracked property by property
- Entity structure for holdings and operating companies
- 1031 exchange planning and reporting
- Passive activity loss tracking and carryforwards
- Cost segregation coordination where it makes sense
- Multi-state returns wherever property is held
Who this is for
Buy-and-hold investors, developers, landlords, and property management companies — from a first rental unit to a portfolio across several states.
Two things cost real estate owners the most. The first is depreciation that has never been properly tracked, which creates a problem at sale rather than during ownership. The second is failing to file in the state where a property sits because it lost money that year.
Deadlines and rules worth knowing
| Item | What applies |
|---|---|
| Depreciation | Residential and commercial property use different recovery periods. Land is never depreciated. |
| Depreciation recapture | On sale, depreciation taken — or that should have been taken — is recaptured. Not claiming it does not avoid it. |
| Passive losses | Rental losses are generally passive and limited, carrying forward until there is passive income or the property is sold |
| 1031 exchange | Strict identification and closing deadlines apply from the date of sale. Missing either ends the exchange. |
| Entity structure | Separate entities per property or per group are common for liability, and affect how returns are filed |
| Out-of-state property | Generally creates a filing obligation in that state even in a loss year |
How we work
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Review what exists
We read last year’s return and whatever records you have. Most of what needs fixing is visible quickly.
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Fixed quote in writing
Scope and price before anything starts, counting entities, states, and any cleanup needed.
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File and maintain
Returns prepared and filed, notices answered, and a projection before year end.
Questions
Do I have to file a state return where my rental property lost money?
Usually yes. Most states require a return wherever the property is located regardless of whether the year produced a profit. Filing also puts the loss on record in that state, which matters when it is eventually used against future income or against the gain on sale.
What are the 1031 exchange deadlines?
Two run concurrently from the date you close the sale: a window to formally identify replacement property, and a longer window to close on it. Both are strict and neither is extended for convenience. Missing either one turns the exchange into a taxable sale, so the intermediary should be engaged before the sale closes.
Last reviewed 11 September 2026 by Fahadun Nabi, Founder, Blue Sage Tax and Accounting Inc.. General information, not advice for your specific situation.
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Talk it through before the deadline, not after.
A free consultation call, no obligation, and a fixed quote if you want to go further.