Could a Park City Ski Condo Write Off $535K in Year One?

What if you bought a ski condo in Park City and wrote off over half a million dollars the first year? I ran the numbers on one of my listings, and here is exactly how it works. I also cover who this does not work for, because that part matters just as much.

The condo: Sunflower #6 at 1493 Park Ave

The property is Sunflower Unit 6 at 1493 Park Ave, listed at $1,490,000. You can walk to Main Street and the lifts, and the building allows nightly rentals. That last part is the key. The whole tax strategy depends on it being a legal short-term rental.

How the tax savings work

When you buy a rental, the IRS makes you write off the building slowly, over 27.5 or 39 years. On this condo, that is only about $12,000 in the first year. Not much.

A cost segregation study changes that. A specialist firm splits the property into parts. Things like furniture, appliances, cabinets, and flooring can be written off over 5 years instead of 39. Under the 2025 tax law, 100% bonus depreciation is back, which means you can write off all of those 5-year parts in the first year instead of spreading them out.

I had a cost seg company run a preliminary estimate on this unit. About $527,000 of the condo falls into that 5-year bucket. So the first-year write-off jumps from about $12,000 to about $535,000. If you are in the top 37% bracket, that is roughly $198,000 off your tax bill in year one.

Who qualifies, and who does not

This is the most important part. Most rental losses are "passive," which means they cannot be used against your paycheck or your business income. There are two main ways around that.

Option 1: The short-term rental rule (works with a W-2 job)

This one works whether you have a W-2 job or you are self-employed. You need two things:

• Average guest stay of 7 days or less. That keeps it out of the normal rental rules.
• Material participation. In plain terms, you are the one running it. The common test is at least 100 hours a year on the rental, and more hours than anyone else, including your cleaners.

If you pass both, the loss can offset your regular income. Keep a log of your hours, because the IRS will want to see it.

Option 2: Real estate professional status (750 hours)

This path needs 750 or more hours a year in real estate, and it has to be more than half of all the time you work. That mostly fits people who already do real estate full time. If you have a full-time W-2 job, this one is very hard to get.

What about hiring a management company?

If a full-service manager runs the condo, you probably will not pass the hours test, because they will put in more time than you. So a lot of owners run it themselves the first year, qualify, and take the big write-off. Then they hire a manager starting the next year.

You have to qualify each year you want the big write-off against your regular income. But once you take the year-one write-off, it's yours. Hiring a manager the next year does not take it back. And since most of the write-off happens in year one, that is the year that counts.

What happens when you sell?

When you sell, some of that write-off gets taxed back. That is called depreciation recapture. But you are not stuck.

With a 1031 exchange, you can sell and roll your money into another investment property, like another condo, a house, or land, and put off paying that tax. The rules are strict. You have 45 days to identify what you are buying and 180 days to close, and a qualified intermediary has to hold your money in between. Also, if you use the condo a lot yourself, it might not count as an investment, so watch your personal days.

Some people who are done being landlords 1031 into a DST, a Delaware Statutory Trust. That lets you own part of a large property without managing it. Just know those are investments sold by licensed reps, not by me, and the payments are not guaranteed.

My favorite part I call "swap till you drop." If you keep doing 1031 exchanges your whole life, under current law your heirs receive the property at a stepped-up basis, set to market value. That can wipe out the deferred tax. So you might never pay it back at all. Plan all of this with your CPA before you sell.

Why it has to close before December 31

To use this on your 2026 taxes, closing is not enough. The condo has to be placed in service by December 31. That means furnished, ready, and available to rent. Closing, furnishing, and getting it listed all take time, so the window is short. If this is the year you want the deduction, moving now matters.

What can this condo actually rent for?

First, understand how Park City works. Rental yields here are lower than a lot of places, and there is a reason. A lot of buyers pay cash. According to Rick Klein's numbers from the Park City MLS, 73% of in-town homes above the median price sell for cash, and the overall market is above 50%. Many owners don't need the rent to cover a mortgage and don't need to sell, so they treat Park City as a stable long-term hold and pay more for it.

The long-term growth has been strong. Rick's data shows Greater Park City median prices have risen about 7% a year since 2001. Even if you bought at the very top in 2008, right before the crash, prices have still gone up about 6.4% a year since then. At 7%, a property roughly doubles in value about every 10 years.

This specific pocket of the market has been relatively flat for the past 3 years, so I honestly think it is a good time to be a buyer. Past growth does not promise future growth, but that is what the history shows.

Billy Farrell with Park City Vacations projects this unit at about $65,100 a year, with an average rate around $477 a night. About $52,000 of that comes December through March, which is another reason being ready by December matters.

The bottom line

So can this condo save you up to $198,000 in taxes? For the right buyer who sets it up the right way, it could. For other buyers, the savings might be smaller or come later. The strategy lives or dies on three things: the building allowing nightly rentals, you qualifying through the 100-hour rule or real estate professional status, and getting it placed in service before December 31.

Talk to your CPA first. Then give me a call. If you want a cost segregation study, I've used Maven Cost Segregation on my own rentals and I'm happy to connect you with Sean Graham there. If a referral fee is ever involved, I'll tell you.