If you’re a physician, you probably know that sick feeling when your paycheck hits and half of it vanishes to taxes before you even touch it. Lately - we've had a fairly high proportion of medical professionals seeking luxury coastal STRs.

Many are on to a secret they were never taught in training:

Not all income is taxed the same way.

In real estate, the tax code is written in your favor — and one of its most powerful tools is something called depreciation.

🧱 Depreciation 101: How Real Estate Creates “Paper” Tax Write-Offs

Every building wears down over time — roofs leak, carpets fade, appliances break.

The IRS knows this, so it lets property owners take a depreciation deduction each year to reflect that natural “wear and tear.”

For residential real estate, this typically happens over 27.5 years.

Example:

If you buy a $2.75 million apartment building (excluding the land), you can deduct $100,000 per year for 27.5 years.

That’s $100,000 in paper losses every year — without actually spending that money.

You’re reducing your taxable income while your cash flow stays strong.

That’s the beauty of real estate: it pays you twice — once in income, and again in tax savings.

🚀 The Game-Changer: 100% Bonus Depreciation Is Back in 2025

Normally, depreciation takes decades. But with a cost segregation study, an engineer identifies parts of a property — flooring, cabinets, appliances, parking lots, landscaping — that wear out faster and can be depreciated much sooner.

Then, bonus depreciation allows you to deduct those items all at once in the first year.

And thanks to the recently passed “Big Beautiful Bill,” 2025 brings back 100% bonus depreciation.

That means you can write off the entire value of short-life assets immediately — creating powerful “paper losses” that show up on your K-1 and offset taxable income.

Example:

Buy a $3 million property and let’s say $1.5 million qualifies as short-life assets. Instead of taking smaller depreciation per year over 27.5 years, you deduct $1.5 million in year one.

For high-income professionals like physicians, that can dramatically reduce your tax bill while your property continues to generate real cash flow.

🩺 Why This Strategy Is Perfect for Physicians

Depreciation turns ordinary income into tax-efficient wealth.

As a W-2 earner, your options are limited. Work more → pay more taxes.

But with real estate, your capital works while you’re in clinic, on call, or on vacation.

Even better, those “losses” are only on paper. You can still collect monthly distributions while showing reduced — or even zero — taxable income.

That’s how many physicians start replacing earned income with passive, tax-advantaged cash flow.

💡 The Bottom Line

If you’re a high-income professional, you don’t have to keep trading time for taxed-to-death dollars.

Understanding depreciation and bonus depreciation gives you a roadmap to keep more of what you earn — and redirect it into assets that work for you.

You already know how to work hard. Real estate just shows you how to make your money work smarter. Learn more about Oregon Coast STRs at www.oreognstrs.com or shop turn-key investment opportunities at www.sesemisheet.com

Anthony AJ Wong | Sesemi STR Brokers powered by Fathom Realty