For physicians and dentists
The highest tax bracket, and three ways real estate lowers it.
Physicians are the profile this strategy was built for: high, reliable income, no room left in the usual shelters, and often a household with time to run property. Here are the three situations where it works, and a realistic year one for a working doctor.
Updated October 2026. Not tax advice; bring it to your CPA.
Why the fit is unusually good
- ›Income that's high every year, so a large year-one deduction is worth its full value at the top bracket.
- ›Many practices own, or can own, their building: a cost segregation candidate most people never think about.
- ›A spouse who isn't on a full-time W-2 can qualify as a real estate professional, which turns every rental loss non-passive.
- ›Predictable schedules. A short-term rental's year-one hours can be planned around a call calendar.
Three situations
Which one is you?
You own, or could own, the building your practice is in
Medical and dental buildings are among the best cost segregation candidates there are: specialized plumbing and electrical, casework, lead-lined walls, dedicated HVAC, sterilization rooms, patient-area finishes. A large share qualifies as 5-year property. If the building is held in an entity you control and leased to the practice, the depreciation flows through to you.
Get a free estimate on the building →You want a deduction against salary, and your spouse has time
The real estate professional route fits a physician household unusually well. If your spouse spends 750+ hours a year on the rentals and more time there than in any job, and materially participates, rental losses become non-passive against your income. Long-term rentals qualify. Cost segregation studies on each property make the losses large.
Talk it through →You want a deduction against salary, and it's just you
The short-term rental route doesn't need a license or a career change: a property where short-term rentals are permitted, 100+ hours in year one and more than anyone else, personal use under the cap, and a study. A weekend a month plus evenings on guest messages is a realistic year-one commitment. From year two, hand it off.
How the STR strategy works →The size of it
What a study does to a year-one return.
Without a study, a $1.5 million property gives you roughly $55,000 of depreciation a year. The first year barely dents a physician’s tax bill.
With an engineering-based study and 100% bonus depreciation, the short-life property comes off in year one. On a furnished short-term rental that’s commonly $450,000 to $650,000 of deduction. On a medical office building, typically 25–35% of the basis.
At a combined federal and California rate in the mid-40s, every $100,000 of usable loss is worth roughly $45,000 in tax. Whether the loss is “usable” against your salary is the whole point of choosing the right route above.
Two of our studies, with the estimate next to the final result, are on the cost segregation page.
A realistic year one
For a working physician on the short-term rental route.
Before you buy
Confirm the permit, run the numbers on real nightly rates, and decide which route you're on. Bring your CPA in now, not in April.
At close
Commission the cost segregation study. On a furnished short-term rental, 30–45% of the price typically moves to 5- and 15-year property. With 100% bonus depreciation, that's the year-one deduction.
Months one to twelve
Run it. Listings, pricing, guest messages, restocking, coordinating cleaners, the occasional repair. Log the hours as you go; a contemporaneous record is what counts. We keep the log with you.
Filing
The loss is non-passive and offsets your W-2 and practice income on that year's return. Your CPA needs the study, the booking data and the hour log.
Year two on
The property should show taxable income sheltered by remaining depreciation. Your involvement can drop to nearly zero under full management.
Year one is co-managed by design: you do the decision and guest work and log it; our team handles turnovers and maintenance under your direction. That keeps the hours yours. It’s how Realm Management structures the first year.
Questions physicians ask
I'm a W-2 hospitalist. Does any of this apply, or is it only for practice owners?
All of it except the practice building. The two routes to offsetting salary, the short-term rental strategy and the spouse real estate professional route, don't care where the salary comes from. The practice building is simply an extra opportunity for owners.
My practice already deducts the equipment. Isn't the building just the building?
Equipment is expensed or depreciated separately, yes. Cost segregation is about the building itself: the components the standard 39-year schedule treats as structure but the tax code allows as 5- or 15-year property. In a medical building that's often 25–35% of the cost. A look-back study catches up prior years without amending.
I honestly don't have 100 hours a year for a rental.
Then the short-term rental route isn't for you this year, and we'll say so on the call. The practice building and the spouse route need no hours from you. If neither applies, a passive rental still builds equity and carries its losses forward; it just doesn't touch this year's salary.
I moonlight on a 1099. Does that change anything?
The real estate deductions offset ordinary income in any form. Separately, 1099 income opens entity and retirement options a W-2 doesn't; that's a CPA conversation, and we keep a short list of tax professionals who work with physicians.
What does the study cost and how long does it take?
The estimate is free and back within 48 hours: it shows the projected deduction next to the study fee, so you decide with the numbers in front of you. The study itself takes about two months from engagement to report, with a site survey in between.
Is a cost segregation study an audit risk for a high earner?
An engineering-based study is the documentation the IRS expects for accelerated depreciation; it's the opposite of a red flag. Our partner, Veritax Advisors, performs every study and stands behind it.
Thirty minutes to know which of the three applies to you.
Five questions, then a call that fits between clinic days. If none of it applies, you’ll hear that too.