Could 2025 Be a Landmark Year for Real Estate Investors?

As W-2 earners, most of us feel the tax bite every time we look at our paycheck. (Helpful hint: don't do this too often!) However, real estate remains one of the few asset classes where the tax code can materially change your after-tax outcomes. So, could doctors benefit from becoming real estate investors?

I asked key resource, Dr. Elaine Stageberg who is also key principal and founder of Black Swan Real Estate with her husband, to break down how depreciation and bonus depreciation work, and why 2025 may be an unusually favorable year.

Take it from here Elaine!

Why 2025 could be a landMark year for real estate investors

If you’re like most physicians, you know the sting of W-2 income. Every extra shift, every holiday call, every raise. Nearly half can disappear to taxes before it hits your account.

Here’s the good news: not all income is taxed the same way. Understanding how the tax code treats different types of income is a core skill for physicians who want to grow and keep their wealth.

At the center of real estate’s tax efficiency is a concept that’s often misunderstood: depreciation.

Depreciation, in plain English

Buildings wear out over time. Roofs age, appliances break, carpet wears thin. The IRS acknowledges this by allowing property owners to deduct a portion of a building’s value each year to reflect “wear and tear.”

For residential property, the IRS assumes a useful life of 27.5 years.
If you buy an apartment building with a building value of $2.75 million (land excluded), you can deduct $100,000 per year for 27.5 years.
This is a non-cash expense. Your taxable income drops, but your cash flow doesn’t—often it’s rising due to rent growth and debt paydown.

That’s the key: depreciation can turn fully taxable income into tax-efficient income by recognizing paper losses while real dollars continue to show up in your bank account.

Bonus depreciation and cost segregation

Normally, you spread depreciation evenly over 27.5 years. With cost segregation, an engineering study “disaggregates” a property into components with shorter lives:

Structure: ~27.5 years
Flooring, cabinets, appliances: ~5–7 years
Parking lots and landscaping: ~15 years

Bonus depreciation allows you to deduct qualifying short-life components more quickly. When 100% bonus depreciation is available, the qualifying portion can be expensed in year one instead of over 5–15 years.

Quick example

You purchase a property worth $10,000,000 (land excluded).

Without cost segregation: roughly $10,000,000 ÷ 27.5 ≈ $364,000 in annual depreciation.
With cost segregation: assume $3,000,000 is identified as 5-, 7-, or 15-year property.
With 100% bonus depreciation in effect, that $3,000,000 can be deducted in year one.

For high-income professionals, this timing difference can be powerful: you may see large paper losses on your K-1 immediately, even as the asset produces cash flow.

Reality check: Availability and percentage of bonus depreciation are set by law and can change. Confirm current rules with your CPA.

The Tax Cuts and Jobs Act (2017) introduced 100% bonus depreciation, but that provision has been phasing down in recent years, to 80% in 2023, 60% in 2024. Good news is that in 2025, it’s back in full force: 100% bonus depreciation.

Why physicians should care

Compare the after-tax journey of a dollar:

W-2 income: Earn $1.00 → Pay ~$0.40–$0.50 in taxes → Keep ~$0.50–$0.60.
Real estate income with depreciation: Earn $1.00 → Apply depreciation deductions → Taxable income may fall substantially, sometimes to zero. Your after-tax dollar kept can be much closer to $1.00, subject to passive-loss rules.

The point isn’t that depreciation makes losses “real.” These are paper losses. The property can generate cash distributions while your taxable income is reduced or eliminated for the year.

A physician-sized illustration

Invest $100,000 in a diversified real estate fund. During the year, you receive $10,000 in distributions. Because of cost segregation and bonus depreciation, your K-1 might show a $30,000 paper loss. You received real cash, yet you report a loss. That loss can often offset other passive income now or carry forward to future years.

Important caveats (read this part)

Passive activity rules: For most busy clinicians, real estate losses are passive and generally offset passive income, not W-2 income. Losses carry forward until they can be used or until sale.
Real Estate Professional Status (REPS): If you or your spouse qualifies and materially participates, different rules may apply. Most practicing physicians do not qualify, but some spouses (like Selenid) do.
Basis and recapture: Depreciation reduces your tax basis. On sale, some or all may be subject to depreciation recapture. Plan for this with your CPA when modeling returns.
State taxes vary: Not all states conform to federal depreciation rules.
Numbers here are illustrative, not advice. Always verify with a licensed tax professional.

“I don’t want another job.”

Most doctors aren't looking to be on 24/7/365 call for a building.

The good news: passive investing via syndications or funds can pass through the same depreciation to you on a K-1, without being a landlord.

You won’t be fielding tenant calls or chasing contractors. Your capital works while you’re in clinic, on vacation, or sleeping.

A sponsor note for context

Black Swan Real Estate—founded and led by Dr. Elaine Stageberg—offers the Secure Freedom Fund, a passive vehicle with a stated fixed return and a minimum investment. The fund uses cost segregation and bonus depreciation across a pipeline of acquisitions, with K-1s reflecting those items for investors. Enrollment periods can be limited; review details and risks directly and perform your own due diligence at securefreedomfund.com.

They are also hosting an informational webinar October 15 at 12 pm CT; you can attend live or get the replay here.

Bottom line

With 100% bonus depreciation available in 2025, it’s an unusually favorable window to improve after-tax outcomes from real estate.

Depreciation doesn’t make a bad deal good, but it can make a good deal more effective.

For physicians who feel squeezed by taxes, learning how depreciation works, and how it shows up on your K-1, belongs in your financial toolbox.

I love tools that help doctors keep more of what we earn.

Depreciation and, when available, bonus depreciation do exactly that, without adding another job to your plate when combined with solid passive real estate investments.

If you’re exploring passive real estate, start with education, model the tax impact with your CPA, and scrutinize operators the way you’d vet a new clinical vendor. If you want an operator’s perspective, Elaine’s webinar is a great place to listen and take notes!

You can also learn more about our personal journey as real estate investors with these posts:

What do you think? Will 2025 be a good year for real estate investors? What impact does depreciation have on that? Do you invest actively or passively in real estate? Do doctors make good real estate investors? Why or why not? Let me know in the comments below!