tax forms on a desk with checkbook and calculator

(Quick disclaimer before we dive in: I’m a realtor and interior designer, not a CPA or financial advisor. This is friendly educational info to get you thinking, but always consult your tax professional for advice specific to your situation!)

Okay y’all, can we talk about something that’s probably not on your holiday to-do list but absolutely should be? Year-end tax planning for your Asheville real estate.

I know, I know - you’re thinking about Christmas shopping and New Year’s resolutions, not tax strategies. But here’s the thing: if you own property in Asheville (your home, a rental, that mountain cabin you Airbnb), December isn’t just about holiday lights. It’s your last chance to make moves that could seriously impact your tax bill.

And in a market like ours where property values keep climbing and rental demand stays strong, those tax decisions can mean real money in your pocket - or real money left on the table.

So grab your coffee, and let’s talk about the year-end moves that smart Asheville property owners are making right now.

The December Deadline Reality Check

Here’s what I’ve learned working with property owners in this market: the most successful ones - whether they own one home or a whole portfolio - don’t wait until tax season to think about taxes. They’re planning in December, not panicking in April.

Why? Because so many tax strategies have deadlines. Miss December 31st, and you’ve missed your chance for this tax year. And in real estate, where we’re talking about potentially large sums of money, those missed opportunities can be expensive.

If You Sold Property This Year (Or Are Thinking About It)

Let’s start with the big one: property sales. If you sold a house in Asheville this year, or you’re on the fence about selling before year-end, this section is for you.

For Your Primary Home:

The IRS has this amazing thing called the home sale exclusion. If your Asheville home was your primary residence for at least 2 of the last 5 years, you might be able to exclude up to $250,000 in profit if you’re single, or $500,000 if you’re married filing jointly.

That’s not a deduction - that’s profit you might not have to pay taxes on at all.

For Investment Properties:

Selling a rental or vacation property? Those profits are subject to capital gains tax, but there are strategies like 1031 exchanges that might help you defer those taxes if you’re reinvesting in another property.

The key here: If you’re thinking about selling, talk to your CPA now, not in January. These decisions need to be made before the calendar flips.

I had a client last year who was considering selling her rental property in West Asheville. We ran the numbers in November, talked to her CPA, and realized that waiting until January would save her thousands in taxes. That December conversation was worth way more than my commission.

Rental Property Owners, This One’s for You

Whether you’ve got a cozy Airbnb in the River Arts District or a long-term rental near UNCA, rental properties come with some serious deduction opportunities. But only if you’re tracking them properly.

Expenses you might be able to deduct:

Property management fees (if you use a company)
Utilities you pay for
Repairs and maintenance (that leaky faucet, the HVAC tune-up)
Cleaning services
Landscaping and yard work
Insurance premiums
Marketing costs for your listings
Even that new smart lock or ring doorbell

Pro tip from the field: If you’ve been putting off some repairs or maintenance, and it makes sense for your tax situation, consider grouping them before year-end. Just make sure you’re keeping good records - receipts, invoices, the whole paper trail.

The Improvement vs. Repair Game

This is where things get interesting (and where you definitely want to talk to your CPA). In real estate, there’s a big difference between repairs and improvements for tax purposes.

Repairs (fixing what’s broken) can usually be deducted in full the year you do them.

Improvements (upgrades that add value or extend the property’s life) typically get depreciated over time, which can be beneficial in the long run.

Examples of improvements:

Kitchen renovation in your rental
New roof
Adding a deck or patio
HVAC system replacement

For short-term rentals, even furniture and appliances might qualify for accelerated depreciation schedules. The key? Getting them “in service” before December 31st to start the depreciation clock this year.

The Prepayment Strategy (But Be Careful)

Sometimes it makes sense to pay certain expenses early to increase your deductions for this tax year.

Possible prepayment opportunities:

Property taxes (if your county allows it and it benefits your specific situation)
Insurance premiums
Property management contracts

Important caveat: Prepaying doesn’t help everyone. Depending on your income, other deductions, and tax situation, it might not make sense. This is definitely a “talk to your CPA first” situation.

Don’t Forget Your Selling Costs

If you sold a property this year, remember that selling expenses can reduce your taxable gain. We’re talking about:

Home staging costs (yes, that beautiful furniture rental counts!)
Professional photography
Real estate commissions
Marketing and advertising expenses
Even smaller improvements you made specifically to help the house sell

I always tell my selling clients to keep every receipt related to the sale. That $200 you spent on new light fixtures for better showing photos? That counts.

Energy Efficiency Can Pay Off

Asheville buyers love eco-friendly features, and the government rewards them too. If you made energy-efficient upgrades this year, you might qualify for federal tax credits.

Possible qualifying improvements:

Solar panels (big one here in sunny NC)
Energy-efficient windows and doors
High-efficiency HVAC systems
Insulation upgrades

These are credits, not just deductions - meaning they reduce your taxes dollar-for-dollar. Even better.

The Passive Activity Puzzle

Okay, this one gets a little technical, but it’s important for rental property owners. The IRS has these “passive activity loss rules” that can limit how much rental loss you can deduct in a given year.

Here’s the basic idea:

If you’re actively involved in managing your rental (screening tenants, making management decisions), you might be able to deduct more losses
If you’re more hands-off, different rules apply
The amount of time you spend and the type of decisions you make matter

This is definitely CPA territory, especially if your rentals showed a loss this year.

Short-Term Rental Owners: Special Considerations

If you’ve got an Airbnb or VRBO in Asheville, you know the regulations here are no joke. The tax side is equally important.

Before year-end, make sure you’re current on:

Occupancy tax filings with Buncombe County or the City of Asheville
Proper reporting of your STR income (it might go on a different tax schedule than long-term rental income)
Your permit status and renewal dates

The last thing you want is to deal with compliance issues during tax season.

Why December Meetings with Your CPA Matter

Here’s something I’ve learned from my most successful real estate investor clients: they don’t wait until March to think about taxes. They’re meeting with their CPAs in December, while there’s still time to make strategic moves.

What to bring to that meeting:

Income and expense reports for each property
Closing statements for any sales or purchases this year
All those receipts you’ve been saving (hopefully!)
Details about any major changes - refinancing, new investments, etc.

That December conversation could literally save you thousands.

The Asheville Market Reality Check

Let’s talk about what’s happening in our specific market, because it affects your tax planning:

Property values keep climbing: Great for your net worth, but higher gains mean potentially higher capital gains taxes when you sell.

Rental demand stays strong: Both short-term and long-term rentals are performing well, but regulatory changes mean you need to stay on top of compliance.

Renovation ROI is real: Buyers are still paying premiums for updated, energy-efficient homes, making strategic improvements both a market advantage and a potential tax benefit.

My Real-World Observations

After years of helping Asheville property owners buy, sell, and optimize their investments, here’s what I’ve noticed:

The owners who do best aren’t necessarily the ones with the most properties or the biggest budgets. They’re the ones who plan ahead, keep good records, and understand that real estate success isn’t just about market timing - it’s about smart financial management.

The common thread among my most successful clients? They treat their real estate like a business, even if it’s just their primary home. They track expenses, plan for taxes, and make strategic decisions based on both market conditions and tax implications.

Your December Action Plan

Week 1: Gather all your real estate-related paperwork from this year. Yes, all of it.

Week 2: Schedule a meeting with your CPA or tax professional. Don’t wait until they’re swamped in tax season.

Week 3: Review any potential year-end moves - prepayments, repairs, or strategic purchases.

Week 4: Execute any decisions that need to happen before December 31st.

The Bottom Line

Look, I’m not going to pretend that tax planning is as fun as decorating your mountain cabin or finding the perfect investment property. But in Asheville’s strong real estate market, smart tax planning can be the difference between a good year and a great year.

Whether you own one home or a dozen properties, taking time in December to understand your options and plan strategically can pay off big when tax season rolls around.

Important Reminder

I can’t stress this enough: I’m sharing this information to get you thinking, but every situation is different. Always, always consult with a qualified tax professional before making decisions that affect your taxes. What works for your neighbor might not work for you.

Ready to Make Smart Real Estate Moves?

As a licensed broker with Asheville Realty Group and the founder of Sukkha Interior Design, I help property owners throughout the Asheville area buy, sell, and optimize their real estate investments. From market analysis to staging for maximum sale price, I understand both the design and business sides of real estate.

Ready to talk about your property goals for next year? Let’s chat about how to position your Asheville real estate for success - both in the market and at tax time.