RealVest Real Estate MCP Server

export class TaxBenefitsCalculator { constructor() { this.name = 'Real Estate Tax Benefits Calculator'; this.description = 'Calculate depreciation, deductions, and tax savings for real estate investments'; } getSchema() { return { type: 'object', properties: { property_details: { type: 'object', description: 'Property information', properties: { purchase_price: { type: 'number', description: 'Total property purchase price', minimum: 0 }, land_value: { type: 'number', description: 'Land value (not depreciable)', minimum: 0 }, closing_costs: { type: 'number', description: 'Closing costs (may be depreciable)', minimum: 0, default: 0 }, property_type: { type: 'string', description: 'Type of property', enum: ['residential_rental', 'commercial', 'mixed_use'], default: 'residential_rental' }, placed_in_service_date: { type: 'string', description: 'Date property placed in service (YYYY-MM-DD)', pattern: '^\\d{4}-\\d{2}-\\d{2}$' }, cost_segregation: { type: 'boolean', description: 'Apply cost segregation study results', default: false } }, required: ['purchase_price', 'land_value'] }, income_expenses: { type: 'object', description: 'Annual income and expenses', properties: { annual_rental_income: { type: 'number', description: 'Total annual rental income', minimum: 0 }, operating_expenses: { type: 'object', description: 'Annual operating expenses', properties: { property_tax: { type: 'number', minimum: 0, default: 0 }, insurance: { type: 'number', minimum: 0, default: 0 }, repairs_maintenance: { type: 'number', minimum: 0, default: 0 }, property_management: { type: 'number', minimum: 0, default: 0 }, utilities: { type: 'number', minimum: 0, default: 0 }, hoa_fees: { type: 'number', minimum: 0, default: 0 }, advertising: { type: 'number', minimum: 0, default: 0 }, professional_fees: { type: 'number', minimum: 0, default: 0 }, other: { type: 'number', minimum: 0, default: 0 } } } }, required: ['annual_rental_income'] }, loan_details: { type: 'object', description: 'Mortgage information', properties: { loan_amount: { type: 'number', description: 'Total loan amount', minimum: 0 }, interest_rate: { type: 'number', description: 'Annual interest rate (%)', minimum: 0, maximum: 20 }, loan_term_years: { type: 'number', description: 'Loan term in years', minimum: 1, maximum: 40, default: 30 }, points_paid: { type: 'number', description: 'Loan points paid', minimum: 0, default: 0 } } }, taxpayer_info: { type: 'object', description: 'Taxpayer information', properties: { filing_status: { type: 'string', description: 'Tax filing status', enum: ['single', 'married_filing_jointly', 'married_filing_separately', 'head_of_household'], default: 'single' }, other_income: { type: 'number', description: 'Other taxable income (wages, etc.)', minimum: 0 }, state: { type: 'string', description: 'State of residence (for state tax)', default: 'CA' }, real_estate_professional: { type: 'boolean', description: 'Qualifies as real estate professional', default: false }, active_participation: { type: 'boolean', description: 'Actively participates in rental activity', default: true } }, required: ['other_income'] }, cost_segregation_breakdown: { type: 'object', description: 'Cost segregation study results', properties: { personal_property_5yr: { type: 'number', description: 'Personal property (5-year)', minimum: 0, default: 0 }, land_improvements_15yr: { type: 'number', description: 'Land improvements (15-year)', minimum: 0, default: 0 }, bonus_depreciation_eligible: { type: 'boolean', description: 'Eligible for bonus depreciation', default: true } } }, analysis_options: { type: 'object', description: 'Analysis settings', properties: { projection_years: { type: 'number', description: 'Years to project', minimum: 1, maximum: 30, default: 10 }, include_state_tax: { type: 'boolean', description: 'Include state tax calculations', default: true }, bonus_depreciation_rate: { type: 'number', description: 'Bonus depreciation rate (%)', minimum: 0, maximum: 100, default: 60 } } } }, required: ['property_details', 'income_expenses', 'taxpayer_info'] }; } calculate(params) { const { property_details, income_expenses, loan_details = {}, taxpayer_info, cost_segregation_breakdown = {}, analysis_options = {} } = params; const { projection_years = 10, include_state_tax = true, bonus_depreciation_rate = 60 } = analysis_options; // Calculate depreciable basis const depreciableBasis = this.calculateDepreciableBasis(property_details, cost_segregation_breakdown); // Calculate annual depreciation const depreciationSchedule = this.createDepreciationSchedule( depreciableBasis, property_details, cost_segregation_breakdown, bonus_depreciation_rate, projection_years ); // Calculate mortgage interest const mortgageInterestSchedule = this.calculateMortgageInterest(loan_details, projection_years); // Calculate taxable income/loss for each year const taxAnalysis = []; let cumulativeTaxSavings = 0; let cumulativeDepreciation = 0; for (let year = 1; year <= projection_years; year++) { const yearAnalysis = this.analyzeYear( year, income_expenses, depreciationSchedule[year - 1], mortgageInterestSchedule[year - 1], taxpayer_info, include_state_tax ); cumulativeTaxSavings += yearAnalysis.total_tax_savings; cumulativeDepreciation += depreciationSchedule[year - 1].total_depreciation; yearAnalysis.cumulative_tax_savings = cumulativeTaxSavings; yearAnalysis.cumulative_depreciation = cumulativeDepreciation; taxAnalysis.push(yearAnalysis); } // Calculate overall metrics const summary = this.calculateSummaryMetrics( property_details, taxAnalysis, depreciationSchedule, income_expenses ); // Passive activity loss analysis const passiveLossAnalysis = this.analyzePassiveActivityLoss( taxAnalysis[0], taxpayer_info ); // Cost segregation benefit analysis const costSegAnalysis = property_details.cost_segregation ? this.analyzeCostSegregationBenefit( property_details, cost_segregation_breakdown, depreciationSchedule, taxpayer_info ) : null; // Tax planning strategies const strategies = this.generateTaxStrategies( property_details, taxpayer_info, taxAnalysis[0], passiveLossAnalysis ); return { depreciation_analysis: { depreciable_basis: depreciableBasis, depreciation_schedule: depreciationSchedule, total_depreciation: depreciationSchedule.reduce((sum, year) => sum + year.total_depreciation, 0), recapture_amount: cumulativeDepreciation }, annual_tax_analysis: taxAnalysis, summary_metrics: summary, passive_loss_analysis: passiveLossAnalysis, cost_segregation_analysis: costSegAnalysis, tax_strategies: strategies, effective_tax_rates: this.calculateEffectiveTaxRates(taxAnalysis, income_expenses), recommendations: this.generateRecommendations( summary, passiveLossAnalysis, taxpayer_info, taxAnalysis[0] ) }; } calculateDepreciableBasis(propertyDetails, costSegregation) { const { purchase_price, land_value, closing_costs = 0 } = propertyDetails; // Building value is purchase price minus land value const buildingValue = purchase_price - land_value; // Some closing costs can be added to basis const depreciableClosingCosts = closing_costs * 0.8; // Approximate 80% are depreciable const totalDepreciableBasis = buildingValue + depreciableClosingCosts; // Break down by depreciation period let breakdown; if (propertyDetails.cost_segregation && costSegregation) { breakdown = { personal_property_5yr: costSegregation.personal_property_5yr || 0, land_improvements_15yr: costSegregation.land_improvements_15yr || 0, building_27_5yr: totalDepreciableBasis - (costSegregation.personal_property_5yr || 0) - (costSegregation.land_improvements_15yr || 0) }; } else { // Standard allocation without cost segregation breakdown = { personal_property_5yr: 0, land_improvements_15yr: 0, building_27_5yr: totalDepreciableBasis }; } return { total: parseFloat(totalDepreciableBasis.toFixed(2)), breakdown: breakdown, land_value: land_value, building_percentage: parseFloat(((buildingValue / purchase_price) * 100).toFixed(2)) }; } createDepreciationSchedule(depreciableBasis, propertyDetails, costSegregation, bonusRate, years) { const schedule = []; const { property_type } = propertyDetails; const depreciationYears = property_type === 'commercial' ? 39 : 27.5; const { breakdown } = depreciableBasis; // Calculate bonus depreciation in year 1 const bonusDepreciation = propertyDetails.cost_segregation && costSegregation.bonus_depreciation_eligible ? (breakdown.personal_property_5yr + breakdown.land_improvements_15yr) * (bonusRate / 100) : 0; // Remaining amounts after bonus depreciation const remaining5yr = breakdown.personal_property_5yr * (1 - bonusRate / 100); const remaining15yr = breakdown.land_improvements_15yr * (1 - bonusRate / 100); for (let year = 1; year <= years; year++) { const yearDepreciation = { year: year, building_depreciation: parseFloat((breakdown.building_27_5yr / depreciationYears).toFixed(2)), personal_property_depreciation: year <= 5 ? parseFloat((remaining5yr / 5).toFixed(2)) : 0, land_improvements_depreciation: year <= 15 ? parseFloat((remaining15yr / 15).toFixed(2)) : 0, bonus_depreciation: year === 1 ? parseFloat(bonusDepreciation.toFixed(2)) : 0, total_depreciation: 0 }; yearDepreciation.total_depreciation = parseFloat(( yearDepreciation.building_depreciation + yearDepreciation.personal_property_depreciation + yearDepreciation.land_improvements_depreciation + yearDepreciation.bonus_depreciation ).toFixed(2)); schedule.push(yearDepreciation); } return schedule; } calculateMortgageInterest(loanDetails, years) { if (!loanDetails.loan_amount) return Array(years).fill({ interest_paid: 0 }); const { loan_amount, interest_rate = 7, loan_term_years = 30 } = loanDetails; const monthlyRate = interest_rate / 100 / 12; const numPayments = loan_term_years * 12; const monthlyPayment = loan_amount * (monthlyRate * Math.pow(1 + monthlyRate, numPayments)) / (Math.pow(1 + monthlyRate, numPayments) - 1); const schedule = []; let remainingBalance = loan_amount; for (let year = 1; year <= years; year++) { let yearlyInterest = 0; let yearlyPrincipal = 0; for (let month = 1; month <= 12; month++) { const interestPayment = remainingBalance * monthlyRate; const principalPayment = monthlyPayment - interestPayment; yearlyInterest += interestPayment; yearlyPrincipal += principalPayment; remainingBalance -= principalPayment; if (remainingBalance <= 0) break; } schedule.push({ year: year, interest_paid: parseFloat(yearlyInterest.toFixed(2)), principal_paid: parseFloat(yearlyPrincipal.toFixed(2)), remaining_balance: parseFloat(Math.max(0, remainingBalance).toFixed(2)) }); } return schedule; } analyzeYear(year, incomeExpenses, depreciation, mortgageInterest, taxpayerInfo, includeStateTax) { const { annual_rental_income, operating_expenses = {} } = incomeExpenses; // Calculate total operating expenses const totalOperatingExpenses = Object.values(operating_expenses).reduce((sum, expense) => sum + expense, 0); // Calculate net rental income before depreciation const netRentalIncomeBeforeDepreciation = annual_rental_income - totalOperatingExpenses - mortgageInterest.interest_paid; // Calculate taxable income/loss const taxableRentalIncome = netRentalIncomeBeforeDepreciation - depreciation.total_depreciation; // Apply passive activity loss rules const allowableRentalLoss = this.calculateAllowableRentalLoss( taxableRentalIncome, taxpayerInfo ); // Calculate tax impact const { other_income, filing_status, state } = taxpayerInfo; const totalTaxableIncomeWithoutRental = other_income; const totalTaxableIncomeWithRental = other_income + allowableRentalLoss; // Calculate federal tax const federalTaxWithoutRental = this.calculateFederalTax(totalTaxableIncomeWithoutRental, filing_status); const federalTaxWithRental = this.calculateFederalTax(totalTaxableIncomeWithRental, filing_status); const federalTaxSavings = federalTaxWithoutRental - federalTaxWithRental; // Calculate state tax if applicable let stateTaxSavings = 0; if (includeStateTax) { const stateTaxWithoutRental = this.calculateStateTax(totalTaxableIncomeWithoutRental, state); const stateTaxWithRental = this.calculateStateTax(totalTaxableIncomeWithRental, state); stateTaxSavings = stateTaxWithoutRental - stateTaxWithRental; } // Calculate effective tax rate on rental income const marginalTaxRate = this.getMarginalTaxRate(other_income, filing_status); return { year: year, rental_income: annual_rental_income, operating_expenses: totalOperatingExpenses, mortgage_interest: mortgageInterest.interest_paid, depreciation: depreciation.total_depreciation, net_income_before_depreciation: netRentalIncomeBeforeDepreciation, taxable_rental_income: taxableRentalIncome, allowable_rental_loss: allowableRentalLoss, suspended_passive_loss: taxableRentalIncome < 0 ? Math.abs(taxableRentalIncome) - Math.abs(allowableRentalLoss) : 0, federal_tax_savings: parseFloat(federalTaxSavings.toFixed(2)), state_tax_savings: parseFloat(stateTaxSavings.toFixed(2)), total_tax_savings: parseFloat((federalTaxSavings + stateTaxSavings).toFixed(2)), effective_tax_rate: parseFloat(marginalTaxRate.toFixed(2)), after_tax_cash_flow: parseFloat((netRentalIncomeBeforeDepreciation + federalTaxSavings + stateTaxSavings).toFixed(2)) }; } calculateAllowableRentalLoss(rentalIncome, taxpayerInfo) { if (rentalIncome >= 0) return rentalIncome; const { other_income, real_estate_professional, active_participation, filing_status } = taxpayerInfo; // Real estate professionals can deduct all losses if (real_estate_professional) { return rentalIncome; } // Active participation allows up to $25,000 loss deduction if (active_participation) { const phaseoutStart = filing_status === 'married_filing_separately' ? 50000 : 100000; const phaseoutEnd = filing_status === 'married_filing_separately' ? 75000 : 150000; if (other_income <= phaseoutStart) { return Math.max(rentalIncome, -25000); } else if (other_income >= phaseoutEnd) { return 0; // No loss allowed } else { // Partial phaseout const phaseoutPercent = (other_income - phaseoutStart) / (phaseoutEnd - phaseoutStart); const allowableLoss = 25000 * (1 - phaseoutPercent); return Math.max(rentalIncome, -allowableLoss); } } // No active participation = no current year loss deduction return 0; } calculateFederalTax(taxableIncome, filingStatus) { // 2024 tax brackets const brackets = this.getFederalTaxBrackets(filingStatus); let tax = 0; let remainingIncome = Math.max(0, taxableIncome); for (const bracket of brackets) { if (remainingIncome <= 0) break; const taxableInBracket = Math.min(remainingIncome, bracket.max - bracket.min); tax += taxableInBracket * bracket.rate; remainingIncome -= taxableInBracket; } return tax; } getFederalTaxBrackets(filingStatus) { // 2024 tax brackets const brackets = { single: [ { min: 0, max: 11600, rate: 0.10 }, { min: 11600, max: 47150, rate: 0.12 }, { min: 47150, max: 100525, rate: 0.22 }, { min: 100525, max: 191950, rate: 0.24 }, { min: 191950, max: 243725, rate: 0.32 }, { min: 243725, max: 609350, rate: 0.35 }, { min: 609350, max: Infinity, rate: 0.37 } ], married_filing_jointly: [ { min: 0, max: 23200, rate: 0.10 }, { min: 23200, max: 94300, rate: 0.12 }, { min: 94300, max: 201050, rate: 0.22 }, { min: 201050, max: 383900, rate: 0.24 }, { min: 383900, max: 487450, rate: 0.32 }, { min: 487450, max: 731200, rate: 0.35 }, { min: 731200, max: Infinity, rate: 0.37 } ] }; return brackets[filingStatus] || brackets.single; } getMarginalTaxRate(income, filingStatus) { const brackets = this.getFederalTaxBrackets(filingStatus); for (const bracket of brackets) { if (income >= bracket.min && income < bracket.max) { return bracket.rate * 100; } } return 37; // Top rate } calculateStateTax(taxableIncome, state) { // Simplified state tax rates const stateTaxRates = { CA: 0.093, // California top rate NY: 0.0882, // New York top rate TX: 0, // No state income tax FL: 0, // No state income tax WA: 0, // No state income tax // Add more states as needed }; const rate = stateTaxRates[state] || 0.05; // Default 5% return taxableIncome * rate; } calculateSummaryMetrics(propertyDetails, taxAnalysis, depreciationSchedule, incomeExpenses) { const totalYears = taxAnalysis.length; const totalTaxSavings = taxAnalysis.reduce((sum, year) => sum + year.total_tax_savings, 0); const totalDepreciation = depreciationSchedule.reduce((sum, year) => sum + year.total_depreciation, 0); const avgAnnualTaxSavings = totalTaxSavings / totalYears; const firstYearTaxSavings = taxAnalysis[0].total_tax_savings; // Calculate cash-on-cash return with tax benefits const downPayment = propertyDetails.purchase_price * 0.2; // Assume 20% down const firstYearCashFlow = taxAnalysis[0].after_tax_cash_flow; const cashOnCashWithTax = (firstYearCashFlow / downPayment) * 100; // Calculate break-even tax rate const operatingIncome = incomeExpenses.annual_rental_income - Object.values(incomeExpenses.operating_expenses || {}).reduce((sum, exp) => sum + exp, 0); const breakEvenTaxRate = operatingIncome > 0 ? (taxAnalysis[0].depreciation / operatingIncome) * 100 : 0; return { total_tax_savings: parseFloat(totalTaxSavings.toFixed(2)), average_annual_tax_savings: parseFloat(avgAnnualTaxSavings.toFixed(2)), first_year_tax_savings: parseFloat(firstYearTaxSavings.toFixed(2)), total_depreciation_taken: parseFloat(totalDepreciation.toFixed(2)), depreciation_recapture_liability: parseFloat((totalDepreciation * 0.25).toFixed(2)), // 25% recapture rate cash_on_cash_return_after_tax: parseFloat(cashOnCashWithTax.toFixed(2)), break_even_tax_rate: parseFloat(breakEvenTaxRate.toFixed(2)), tax_equivalent_yield: this.calculateTaxEquivalentYield( firstYearCashFlow, downPayment, taxAnalysis[0].effective_tax_rate ) }; } calculateTaxEquivalentYield(afterTaxCashFlow, investment, taxRate) { const afterTaxYield = (afterTaxCashFlow / investment) * 100; const taxEquivalentYield = afterTaxYield / (1 - taxRate / 100); return parseFloat(taxEquivalentYield.toFixed(2)); } analyzePassiveActivityLoss(firstYearAnalysis, taxpayerInfo) { const { taxable_rental_income, allowable_rental_loss, suspended_passive_loss } = firstYearAnalysis; const { other_income, real_estate_professional, active_participation } = taxpayerInfo; const analysis = { rental_income_classification: taxable_rental_income >= 0 ? 'Passive Income' : 'Passive Loss', total_passive_loss: Math.min(0, taxable_rental_income), allowable_current_year_loss: allowable_rental_loss < 0 ? allowable_rental_loss : 0, suspended_loss_carryforward: suspended_passive_loss, qualification_status: real_estate_professional ? 'Real Estate Professional' : active_participation ? 'Active Participant' : 'Passive Investor' }; // Calculate phase-out impact if (active_participation && !real_estate_professional && other_income > 100000) { const phaseoutAmount = Math.min(50000, other_income - 100000); const phaseoutPercent = (phaseoutAmount / 50000) * 100; analysis.phase_out_impact = { income_over_threshold: phaseoutAmount, phase_out_percentage: parseFloat(phaseoutPercent.toFixed(2)), loss_reduction: parseFloat((25000 * phaseoutPercent / 100).toFixed(2)) }; } return analysis; } analyzeCostSegregationBenefit(propertyDetails, costSegregation, depreciationSchedule, taxpayerInfo) { // Calculate standard depreciation (without cost seg) const buildingValue = propertyDetails.purchase_price - propertyDetails.land_value; const standardAnnualDepreciation = buildingValue / 27.5; const standardFirstYearTax = standardAnnualDepreciation * (taxpayerInfo.marginal_tax_rate || 0.24); // Calculate cost seg depreciation const costSegFirstYear = depreciationSchedule[0].total_depreciation; const costSegFirstYearTax = costSegFirstYear * (taxpayerInfo.marginal_tax_rate || 0.24); // NPV comparison over 10 years const discountRate = 0.08; let standardNPV = 0; let costSegNPV = 0; for (let year = 1; year <= 10; year++) { const standardTaxSaving = standardAnnualDepreciation * (taxpayerInfo.marginal_tax_rate || 0.24); const costSegTaxSaving = depreciationSchedule[year - 1] ? depreciationSchedule[year - 1].total_depreciation * (taxpayerInfo.marginal_tax_rate || 0.24) : 0; standardNPV += standardTaxSaving / Math.pow(1 + discountRate, year); costSegNPV += costSegTaxSaving / Math.pow(1 + discountRate, year); } return { first_year_additional_depreciation: parseFloat((costSegFirstYear - standardAnnualDepreciation).toFixed(2)), first_year_additional_tax_savings: parseFloat((costSegFirstYearTax - standardFirstYearTax).toFixed(2)), ten_year_npv_benefit: parseFloat((costSegNPV - standardNPV).toFixed(2)), cost_seg_roi: costSegregation.study_cost ? parseFloat(((costSegNPV - standardNPV) / costSegregation.study_cost * 100).toFixed(2)) : null, recommendation: (costSegNPV - standardNPV) > (costSegregation.study_cost || 5000) ? 'Cost segregation provides positive ROI' : 'Cost segregation may not be cost-effective' }; } generateTaxStrategies(propertyDetails, taxpayerInfo, firstYearAnalysis, passiveLossAnalysis) { const strategies = []; // Real estate professional status if (!taxpayerInfo.real_estate_professional && passiveLossAnalysis.suspended_loss_carryforward > 10000) { strategies.push({ strategy: 'Real Estate Professional Status', description: 'Qualify as a real estate professional to deduct all passive losses', requirements: '750+ hours and more than half of working time in real estate', potential_benefit: `Deduct $${passiveLossAnalysis.suspended_loss_carryforward.toLocaleString()} in suspended losses` }); } // Cost segregation if (!propertyDetails.cost_segregation && propertyDetails.purchase_price > 500000) { strategies.push({ strategy: 'Cost Segregation Study', description: 'Accelerate depreciation through component analysis', requirements: 'Professional cost segregation study ($3,000-$10,000)', potential_benefit: 'Increase first-year depreciation by 20-30%' }); } // Section 179 for qualifying property if (propertyDetails.property_type === 'commercial') { strategies.push({ strategy: 'Section 179 Deduction', description: 'Immediate expensing for qualifying improvements', requirements: 'HVAC, roofing, fire protection, security systems', potential_benefit: 'Deduct up to $1.16M in qualifying expenses immediately' }); } // Energy efficiency credits strategies.push({ strategy: 'Energy Efficiency Tax Credits', description: 'Install solar panels or energy-efficient systems', requirements: 'Qualifying renewable energy or efficiency improvements', potential_benefit: '30% federal tax credit for solar, various credits for other improvements' }); // Grouping elections if (passiveLossAnalysis.suspended_loss_carryforward > 0) { strategies.push({ strategy: 'Grouping Election', description: 'Group rental activities to optimize loss utilization', requirements: 'Multiple rental properties with varying profitability', potential_benefit: 'Offset passive income with passive losses more effectively' }); } // 1031 exchange planning strategies.push({ strategy: '1031 Exchange Planning', description: 'Defer depreciation recapture and capital gains', requirements: 'Like-kind property exchange within strict timelines', potential_benefit: `Defer $${(firstYearAnalysis.cumulative_depreciation * 0.25).toLocaleString()} in recapture tax` }); return strategies; } calculateEffectiveTaxRates(taxAnalysis, incomeExpenses) { const firstYear = taxAnalysis[0]; const { annual_rental_income } = incomeExpenses; // Effective tax rate on rental income const taxSavingsRate = (firstYear.total_tax_savings / annual_rental_income) * 100; // After-tax return const preaxReturn = firstYear.net_income_before_depreciation; const afterTaxReturn = firstYear.after_tax_cash_flow; const effectiveTaxOnCashFlow = ((preaxReturn - afterTaxReturn) / preaxReturn) * 100; return { tax_savings_as_percent_of_income: parseFloat(taxSavingsRate.toFixed(2)), effective_tax_rate_on_cash_flow: parseFloat(effectiveTaxOnCashFlow.toFixed(2)), marginal_tax_rate: firstYear.effective_tax_rate, tax_shield_value: parseFloat((firstYear.depreciation * firstYear.effective_tax_rate / 100).toFixed(2)) }; } generateRecommendations(summary, passiveLossAnalysis, taxpayerInfo, firstYearAnalysis) { const recommendations = []; // High tax savings if (summary.first_year_tax_savings > 10000) { recommendations.push({ type: 'Tax Benefit', priority: 'High', message: `Significant first-year tax savings of $${summary.first_year_tax_savings.toLocaleString()}`, action: 'Ensure proper documentation for all deductions' }); } // Suspended losses if (passiveLossAnalysis.suspended_loss_carryforward > 25000) { recommendations.push({ type: 'Passive Loss', priority: 'High', message: `Large suspended losses of $${passiveLossAnalysis.suspended_loss_carryforward.toLocaleString()}`, action: 'Consider strategies to utilize passive losses (RE professional status, grouping)' }); } // Depreciation recapture planning if (summary.depreciation_recapture_liability > 50000) { recommendations.push({ type: 'Exit Planning', priority: 'Medium', message: `Future recapture liability of $${summary.depreciation_recapture_liability.toLocaleString()}`, action: 'Plan for 1031 exchange or installment sale to defer recapture' }); } // Active participation phaseout if (passiveLossAnalysis.phase_out_impact && passiveLossAnalysis.phase_out_impact.phase_out_percentage > 50) { recommendations.push({ type: 'Income Planning', priority: 'Medium', message: 'Rental loss deduction significantly reduced due to income', action: 'Consider income deferral strategies or RE professional status' }); } // Cost segregation opportunity if (!taxpayerInfo.cost_segregation && firstYearAnalysis.depreciation < 20000) { recommendations.push({ type: 'Depreciation', priority: 'Medium', message: 'Potential to accelerate depreciation deductions', action: 'Evaluate cost segregation study ROI' }); } // Record keeping recommendations.push({ type: 'Compliance', priority: 'High', message: 'Maintain detailed records for all expenses and improvements', action: 'Use property management software or dedicated accounting system' }); return recommendations; } }