Lower Your Tax Bill by Investing in Real Estate Before the Year Ends

We believe wealth isn’t owned, it’s passed on.

At RFP Homes, our mission is to help you build something that outlasts you.

As the year wraps up, most people focus on holiday plans, travel, and closing out projects. But for real estate investors, December offers something far more valuable: a strategic window to lower your tax bill while strengthening your investment portfolio. Many investors overlook this opportunity, but those who understand how year-end tax benefits work, often position themselves for better returns, smoother financial planning and substantial long-term wealth.

Investing in Dallas-Fort Worth real estate before December 31 can give you meaningful tax advantages that simply don’t exist in other months. When done correctly, a well-timed purchase, whether it’s an off-market property, a rental home, or a value-add investment, can create immediate financial benefits while setting the foundation for future growth.

At RFP Homes, we actively identify year-end opportunities for our investors because timing is one of the most important wealth-building tools in real estate.

Immediate Tax Benefits from Year-End Purchases

One of the strongest advantages of investing before year-end is the ability to take deductions in the same tax year, even if you only own the property for a short time. When you close before December 31, you become eligible to deduct closing-related expenses, loan costs, and initial operating expenses on your upcoming tax return. In many cases, a single investment property can offset thousands of dollars in taxable income, providing an immediate financial benefit long before you begin collecting rent.

Even a modest rental purchase can reduce your tax liability significantly. Investors who time their acquisitions in December often find themselves entering tax season with stronger deductions, clearer financial reporting, and a more accurate understanding of their year-end position.

This is one of the simplest strategies in real estate investing, yet one of the most consistently overlooked, especially among new investors. Our Investor Advisors help you understand which properties offer strong tax advantages and how a year-end purchase may impact your overall investment strategy.

Depreciation Starts Working for You Sooner

Depreciation is one of the most powerful wealth-building tools in real estate. It allows you to reduce your taxable income each year, even as your property potentially increases in value. By purchasing before the year closes, you begin your depreciation schedule immediately, which can increase your overall tax benefit in the next cycle. This advantage compounds over time, especially when building a portfolio of rental properties that consistently generate cash flow.

Starting depreciation early is a key reason experienced investors prioritize December acquisitions. It is also one of the clearest demonstrations of why real estate investing remains the preferred strategy for creating passive income and long-term financial security. When combined with appreciation and rental revenue, depreciation becomes part of a wealth-building system that stocks and other asset classes simply cannot replicate.

Cost Segregation and How “The Big Beautiful Bill” Enhances Tax Savings

(Please note that we are not accountants and this is in no way financial advice. We highly recommend you confirm the following with your financial advisor/CPA to ensure that this strategy will work for you.) 

Cost segregation sounds complex, but it’s actually simple: instead of writing off an entire property over 27.5 years, you break it into parts like flooring, appliances, electrical systems, and outdoor improvements, and write those parts off much faster. This gives you much bigger tax deductions upfront, which lowers your tax bill immediately and frees up cash for more investments. This typically equates to up to 30% of the total cost basis being deducted from your taxes in the year you purchased the property.

To illustrate a quick example, if you were to acquire a property for a total cost basis of $300,000, that would mean you can potentially write off $90,000 from your income in the first year. The other $210,000 would then be depreciated over a 26.5 year period. Considering the advantages of buying a distressed house, rehabbing it to rent ready condition, and refinancing into a long term loan, it is not uncommon for investors to have less than $45,000 (15% of the ARV) into a house where they can then write off $90,000 from their income in the same year. This method is a significant advantage to real estate investors that are looking to offset their income tax and create a rental portfolio.

Buying a property before year-end makes cost segregation even more valuable because you can start taking accelerated depreciation right away. Many investors use these early tax savings to reinvest, pay down debt, or grow their portfolio faster.

“The Big Beautiful Bill,” a new tax bill - focused on helping property owners and developers, is making this strategy even better. The bill expands depreciation benefits and allows investors to write off more improvements, more quickly. In simple terms: the government wants to reward people who invest in real estate!

We help investors understand exactly which properties work best with cost segregation and connect you with trusted professionals who can run the studies for you. That way, you get every tax advantage you’re entitled to, especially when you purchase before the year is over.

Clear Financial Visibility Helps You Plan Strategically

Another overlooked benefit of year-end investing is the clarity that December provides. By this point in the year, you know your total income, your expenses, and your projected tax bracket. This makes it easier to determine whether a strategic investment could reduce your tax liability, strengthen your financial position, or support your long-term wealth goals.

Investors who analyze their year-end numbers often realize that purchasing an investment property is not just an opportunity, it is a financial strategy. Acquiring a rental home or an off-market DFW property in December can help shift your tax outlook in meaningful ways, creating benefits you will not access if you wait until the new year.

Smart Use of 1031 Exchanges Before the Deadline

For investors who have sold or plan to sell a property, the end of the year is one of the most critical times to consider a 1031 exchange. Completing a 1031 exchange before December 31 allows you to defer capital gains taxes by reinvesting proceeds into another investment property. In a market like Dallas–Fort Worth, where population growth and housing demand remain strong, completing a year-end exchange can help you upgrade into a stronger, better-performing asset.

This strategy not only preserves your capital but resets your depreciation schedule, giving you another long runway of tax advantages. Investors who have used 1031 exchanges to grow their portfolios understand that timing is everything, and December often represents the final opportunity to secure a replacement property that aligns with both IRS requirements and investment goals.

December Reveals Unique Off-Market Opportunities

Beyond tax strategy, the holiday season naturally creates opportunities in the market. Many sellers face personal or financial circumstances that require a quick sale, including relocation, foreclosure timelines, or settling an estate. These situations often lead to off-market properties becoming available at strong values, giving investors access to motivated sellers and favorable terms.

RFP Homes specializes in sourcing these off-market opportunities, and we see more of them surface at the end of the year because our advisory team works directly with homeowners in these circumstances. This allows us to connect investors with properties that offer built-in equity, rental potential, or fix-and-flip upside.

Year-End Lending Can Work in Your Favor

Many lenders face year-end volume goals, which can result in more competitive interest rates, quicker approvals, and flexible financing options for investors. December is often the month when hard money lenders, DSCR lenders, and private capital groups are motivated to close out their books with strong numbers. For investors, this can translate into better loan terms and a more efficient path to expanding a rental portfolio.

Securing financing now can also set the stage for a stronger start in the coming year. When interest rates improve or market conditions shift, the investors who acted in December are often better positioned to scale quickly in the next cycle.

Reduce Taxes, Build Wealth, Strengthen Your Portfolio

Investing before the year ends is one of the most effective ways to combine tax strategy with long-term wealth creation. A single acquisition, whether it’s a rental property or an off-market DFW home, can lower your tax bill and strengthen your entire investment strategy heading into the new year.

At RFP Homes, we help investors take advantage of this window by sourcing pre-vetted off-market properties across Dallas–Fort Worth and offering personalized guidance based on your goals when you work with one of our Investment Advisors. If you’re looking to reduce your tax liability and make a strategic move before the calendar resets, now is the time to take action.

👉 Explore end-of-year investment opportunities with RFP Homes: www.rfphomes.com/marketplace