Top 5 Tax Strategies Every Denver Real Estate Professional Should Know
If you're a real estate investor or professional operating in Colorado, taxes are one of your biggest line items AND your biggest opportunities.
Used correctly, the tax code is a powerful tool that can preserve cash, protect profits, and help you reinvest faster.
But most real estate professionals don’t get proactive.
They are rather reactive.
Which we know is not good when it comes to your finances.
You want to always be a step ahead.
Unfortunately, the reality is different.
Most companies we get to speak with - rely on year-end cleanup, last-minute deductions, or generic CPAs who don’t specialize in property investment.
That leads to overpayments, missed write-offs, and reactive planning.
In today's article, we'll explore five high-impact tax strategies we use to help Denver-based (and not only) investors keep more of what they earn.
1. Leverage Depreciation Strategically
Whether you know by now or not - depreciation is one of the most powerful tax benefits in real estate.
Every year, you're allowed to deduct a portion of your property's cost as it "wears out" on paper.
For residential properties, that’s typically over 27.5 years; for commercial, 39 years.
This non-cash expense can offset thousands in income annually.
Better yet, when paired with cost segregation (more on this - in the next section), it can dramatically front-load deductions in the early years of ownership.
2. Use Cost Segregation to Accelerate Deductions
Cost segregation breaks a property into components - like flooring, electrical, and appliances.
Those typically depreciate over 5, 7, or 15 years instead of 27.5 or 39.
This means you get larger deductions upfront, improving your current-year cash flow.
Great, right?
We recommend this for investors with properties over $500K in value.
It’s especially powerful after a major renovation or a new purchase.
So if you didn't know - now you do.
3. Optimize Entity Structure for Tax Efficiency
Are you operating under your personal name, an LLC, or an S-Corp?
Because if you didn't know - your entity type affects not just liability protection but also your tax exposure.
Real estate investors typically use LLCs for flexibility, but those running active businesses - like flipping or short-term rentals - may benefit from S-Corp structures to reduce self-employment taxes.
If you don't already have this, either speak with your current CPA - or even better - get in touch with one of our specialists to discuss this.
The right structure depends on your revenue model, liability exposure, and long-term strategy.
Most importantly, it should be set up proactively - not as an afterthought.
4. Track and Maximize Deductible Expenses
From mortgage interest and insurance to repairs, travel, and home office use, real estate offers a wide range of deductions.
But if you’re not tracking these consistently - and separating CapEx from OpEx, you’re likely missing savings.
At Cutler & Co., we build custom chart-of-account systems to capture every deductible dollar, properly categorized and ready for tax season.
5. Use 1031 Exchanges to Defer Capital Gains
When selling a property at a gain, you’d typically owe capital gains tax.
But under Section 1031 of the tax code, you can defer those taxes by reinvesting the proceeds into a similar property.
Again, for us, this is common practice - which we believe should be for all CPAs to do for their clients.
This strategy helps you scale without a heavy tax hit - preserving equity and compounding long-term returns.
But 1031 exchanges must be structured carefully and within strict timelines.
Work with a CPA team that’s handled dozens of exchanges and understands how to execute without triggering tax liability.
How Cutler & Co. Builds Tax Plans for Real Estate Investors
We don’t just file returns - we engineer real estate tax strategies that help Colorado (and not only) investors build wealth.
Our tax planning process typically includes:
Annual and quarterly tax strategy sessions
Depreciation schedules and cost segregation studies
Entity structure analysis and optimization
IRS-compliant expense tracking systems
Guidance on 1031 exchanges and reinvestment timing
Most importantly - we do it with a full understanding of your portfolio and long-term goals, not just your last year’s numbers.
Think about what you could achieve if you were having a CPA that acts like your strategic partner rather than just a numbers guy.
So if your current CPA only shows up at tax time - let’s change that.
