Tax Considerations for Real Estate Investors in 2022


When determining whether you should purchase or sell real estate investments in 2022, it is crucial to consider tax-related realties. Potential tax benefits or drawbacks associated with a real estate decision may tip your investment strategy one way or another.

The skilled team at Ferguson Timar can clarify the potential tax consequences of any particular purchase or sale. Depending upon the unique nature of the investment in question, we may take deferment of capital gains, depreciation, and tax deduction scenarios into account. Once you’ve received our objective analysis of your real estate taxation considerations, you’ll be able to make whatever informed decisions are best for your investment goals overall.

Capital Gains: To Defer or Not to Defer?

Generally speaking, the U.S. tax code encourages real estate investors to hold onto a property for a minimum of one year. Turning an investment around more quickly than that can lead to short-term capital gain challenges. By contrast, holding onto an investment for an extended period may allow you to benefit from capital gains rates that are lower than the earned income tax rates that may apply to you as an individual investor.

Depending upon the nature of your unique investment circumstances, you may be able to defer capital gains taxation in one of three ways:

  • Utilization of a Delaware Statutory Trust
  • Completion of a Section 1031 Like-Kind Exchange
  • Completion of a 721 Exchange

These options are each nuanced. Discussing the unique IRS rules that apply to each option will help you to make an informed decision about deferring any investment-related capital gains taxation in 2022.

Additionally, you may be able to avoid capital gains taxes when selling an investment property this year if that property is your primary residence. Unmarried filers may be eligible to exclude up to $250,000 in capital gains taxes in the sale of their primary residence if the filer in question has lived on this property for a minimum of two of the last five years. This exclusion amount doubles for married couples who are filing jointly. Taxable gains are calculated using the cost basis of the residence in question.

Finally, keep in mind that deferring capital gains on your real estate investments may or may not make sense in 2022, based on the profits you make in other investments in your portfolio and your overall income from all sources. It can be tempting to focus on tax-related obligations in pieces but a sound tax strategy takes your total financial picture under advisement.


Commercial investment properties and residential investment properties, other than one’s primary residence, are subjected to different rules than primary residences are. Typically, you’ll owe capital gains on the net profits from these sales and any cumulative depreciation benefits while owning the property in question. If you stand to gain financially from the sale of your property, you may need to navigate a tax obligation known as depreciation recapture.

Note that if you have not yet claimed depreciation on an investment property, you’re generally entitled to recover the cost of your tangible property over its “useful life.” Practically speaking, residential properties benefit from depreciation costs over 27.5 years, whereas commercial properties depreciate for 39 years. It is also possible to benefit from the depreciation of land improvements and the internal contents of a building space over specific periods.

Your Expenses May Be Deductible

Throughout the year, you’ll want to keep in mind that many of your real estate investment expenses are tax-deductible. Keep track of your expenses and document them carefully so that you can claim the maximum deduction amounts for each, from property taxes to travel expenses incurred as you manage your properties.

Proactive Approaches Are Key

By speaking with the dedicated team at Ferguson Timar early in 2022, you can empower yourself to make informed decisions about your investment strategies all year long. As taxation concerns can significantly impact your investment strategies, it may benefit you greatly to be as proactive as possible in this regard.

We look forward to assisting you with your tax-related needs at this time and moving forward.