Preserving Real Estate Equity in San Francisco
San Francisco real estate represents some of the most valuable private equity in the world. However, unlocking or maintaining that wealth presents severe tax hurdles. Liquidating highly appreciated multi-family buildings or commercial real estate triggers massive federal capital gains taxes, California’s 13.3% state income tax, and 25% federal depreciation recapture.
At Moontree Tax, we help San Francisco investors systematically shelter real estate wealth. If you are selling an appreciated asset, we structure compliant 1031 tax-deferred exchanges to defer tax liabilities and transition capital into high-yield syndications or out-of-state assets. For active portfolios, we perform engineering-backed cost segregation studies, document Real Estate Professional Status (REPS), and navigate California Prop 19 rules to protect generational family properties.
The SF Multi-Family 1031 & Cost Segregation Play
- The Investor: A San Francisco property owner sells an appreciated 4-unit apartment building in Pacific Heights for $3,800,000 (original basis: $1,100,000).
- The Tax Threat: Selling outright would trigger over $750,000+ in combined federal capital gains, NIIT, California state tax, and depreciation recapture.
- Moontree CPA Fix:
- We coordinate a 1031 Exchange, rolling 100% of the net proceeds into a newly acquired commercial property portfolio.
- We execute a first-year cost segregation study on the newly acquired replacement assets to front-load depreciation.
- The Result: The investor defers 100% of the $750,000+ tax bill, upgrades their cash flow, and creates a massive new paper deduction to shelter incoming rental income.
Advanced Tax Shielding Micro-Services
We leverage the tax code to transform real estate into a powerful tax-reduction vehicle.
Cost Segregation Studies →
Accelerate building depreciation. We coordinate engineering-based cost segregation studies to reclassify assets and generate immediate first-year tax deductions.
1031 Exchange Advisory →
Defer capital gains and depreciation recapture. We structure 1031 property exchanges to help you transition equity into larger, higher-yielding assets nationwide.
REPS Qualification Defense →
We document and defend Real Estate Professional Status (REPS) elections, unlocking the ability to use passive rental losses to directly offset ordinary income.
California Prop 19 Planning →
Protect family legacy real estate from severe property tax reassessments upon inheritance. We design entity structures to mitigate Proposition 19 impacts.
Silicon Valley Real Estate Tax Advisory
Moontree Tax provides elite property tax strategy and wealth preservation across the Bay Area:
Frequently Asked Questions for San Francisco Real Estate Investors
How does a 1031 Exchange help defer California state taxes on San Francisco property?
California conforms to federal Section 1031 rules. When you sell a San Francisco rental property and roll 100% of the net proceeds into a replacement property via a Qualified Intermediary, you defer federal capital gains tax, federal NIIT, depreciation recapture, and California’s 13.3% state income tax. California requires FTB Form 3840 to be filed annually to track deferred gains.
Can I execute a Cost Segregation study on San Francisco multi-family properties?
Yes. Engineering-based cost segregation studies apply to both multi-family and commercial real estate. By reclassifying building components (such as interior finishes, electrical systems, and site improvements) from 27.5-year or 39-year recovery periods to 5-year, 7-year, or 15-year periods, you generate massive upfront depreciation deductions.
How does California Prop 19 affect inherited San Francisco real estate?
Under Proposition 19, parent-to-child property transfers no longer automatically preserve lower Proposition 13 tax bases for rental or commercial properties. Inherited non-primary real estate in San Francisco is reassessed to full market value upon transfer, which can increase property tax bills tenfold. We utilize legal entity planning and trusts to structure transfers cleanly.
Optimize Your San Francisco Property Portfolio
Stop leaving depreciation and capital gains benefits on the table. Schedule a consultation with Brandy Phuong, CPA to review your San Francisco property tax strategy.
Schedule Your Real Estate Tax Review →