Has anyone successfully done a 1031 exchange from a rental property into something that's not traditional real estate? I heard there are DST investments (Delaware Statutory Trust) that qualify but still give you passive income without being a landlord.

Don't panic! This is actually a pretty common situation. While the depreciation recapture can't be avoided (you're correct that the IRS requires it even if you didn't claim it), there are definitely strategies to minimize your overall tax burden. First, make absolutely sure you're calculating your cost basis correctly. Start with your original purchase price, add ALL capital improvements (not just major ones - think new appliances, flooring, windows, landscaping, etc.), and add your closing costs from when you bought it. Many people forget smaller improvements that can add up significantly over 15 years. Since you lived in the house for the first couple years, you might qualify for a partial Section 121 exclusion on the gain (up to $250k single/$500k married). Even though it was later a rental, the IRS has specific rules about partial exclusions based on the time you lived there versus rented it out. Consider timing your sale strategically. If this will be a high-income year for you, maybe delay closing until January to spread the tax impact. Also, if you have any capital losses from other investments, now would be the time to realize them to offset some of the gain. Definitely work with a CPA who specializes in real estate transactions - the money you spend on professional advice will likely save you much more in taxes!

As someone who's been through this same confusion, I can confirm what others have said about categorizing these as "Office Expenses" or "Software/Subscription Services." One thing I'd add is to make sure you're keeping track of when these subscriptions renew and any price changes throughout the year. I use a simple spreadsheet with columns for service name, monthly cost, renewal date, and business purpose. This has been super helpful during tax season because I can quickly see my total annual cost for each service. Also, if you upgrade or downgrade any of these services mid-year, keep notes about why (like upgrading Dropbox for more client storage space). This documentation can be really valuable if you ever need to justify the business necessity to the IRS. The key thing is being able to show these aren't just personal conveniences - they're legitimate tools that help you run your consulting business more effectively.

Just wanted to add my experience as someone who went through this same confusion last year! I ended up calling a local CPA who explained that the IRS generally looks at these digital subscriptions as "ordinary and necessary" business expenses, which is the key test. For my freelance writing business, I categorize Gmail/Google Workspace as "Office Expenses," Dropbox as "Software," and LinkedIn Premium as "Advertising/Marketing" since I use it primarily for client acquisition. The CPA emphasized that consistency is more important than the exact category - just pick logical categories and stick with them. One tip that really helped me: I set up separate business accounts for these subscriptions when possible, or at least use a dedicated business credit card. This makes it much easier to track and proves business intent if you're ever audited. For subscriptions I use partially for personal use (like my Adobe subscription), I calculate the business percentage based on billable hours vs. personal projects and document that calculation. The peace of mind from getting this organized properly is totally worth the effort!

Curious for those who've dealt with this - is it worth paying points at all if you can't deduct them? I'm about to buy my first home and trying to decide if I should use my lender credit for points or for other closing costs that wouldn't be deductible anyway.

This is such a helpful thread! I'm dealing with a similar situation and was totally confused about the lender credit rules. What I'm still wondering about is the timing aspect - if I used some of my own cash AND some lender credit to pay for points, how do I figure out which portion is deductible? My settlement statement shows $15,000 in points total, but I had a $10,000 lender credit that covered part of it. So I effectively paid $5,000 out of pocket for points. Can I deduct that $5,000 portion, or does the fact that any lender credit was involved mean I can't deduct any of it? Also, does it matter how the lender credit is specifically allocated on the settlement statement? Like if the credit shows as covering other closing costs instead of the points directly, but the net effect is the same?

This is such a great question and I'm glad to see so many helpful responses! I went through this exact same confusion last year as a freelance graphic designer. One thing I'd add that hasn't been mentioned yet - make sure you establish your Solo 401k by December 31st of the tax year you want to contribute for, even though you have until the tax filing deadline (plus extensions) to actually make the contributions. I almost missed this deadline thinking I could set it up when I filed my taxes. Also, if you're planning to do this strategy long-term, consider working with a fee-only financial advisor who specializes in self-employed clients. The tax savings and growth potential from properly maximizing both accounts can easily justify the cost, especially as your income grows. I wish I had started this dual approach earlier - the compound growth difference is significant over time. The backdoor Roth strategy mentioned earlier is also crucial to understand if your income fluctuates. Some years I'm under the Roth limit, other years I'm over, so having that flexibility has been a game-changer for my retirement planning.

Great question about the annual savings difference! In my early 30s, I was able to save about $30K annually by maxing both accounts versus maybe $12-15K with just a SEP-IRA or traditional IRA. That extra $15-18K per year compounding over 30+ years makes a massive difference. For example, if you're saving an extra $16K annually from age 32 to 62 (30 years) at a 7% average return, that's roughly an additional $1.5 million at retirement compared to the single-account approach. Even accounting for inflation, that's life-changing money. The complexity really isn't that bad once you get into a rhythm. I use a simple spreadsheet to track my quarterly estimated taxes and contribution limits, and most of the major brokerages (Fidelity, Schwab, Vanguard) make the actual account management pretty straightforward. The key is starting early like you are - the compound growth on those higher contribution limits is where the real magic happens. Even if you can't max both accounts right away, getting the Solo 401k established and contributing what you can to both gives you that foundation to scale up as your income grows. One tip: I always prioritize getting the full Solo 401k employer match equivalent first (the 25% of net self-employment income), then max the Roth IRA, then go back to finish maxing the Solo 401k employee contribution. This ensures you're capturing the highest tax-advantaged savings rates first.

I went through something very similar last year and understand how stressful this is! A few additional things that might help: If you have your Social Security number and the exact amount you expect to owe, you can sometimes get through to the IRS automated payment system (1-888-PAY-1040) which will tell you if there's a balance due on your account. If nothing was filed, there won't be a balance showing. Also, check if your state has a separate way to verify state tax filing - sometimes this can give you clues about whether your federal return was actually submitted since many preparers file both together. One more red flag to watch for: legitimate tax preparers are required to give you a copy of your complete tax return before or at the time of filing. If they only gave you a summary or said they'd send it later, that's another bad sign. Given what you've described (no bank withdrawal, no e-file confirmation, avoiding your calls), I'd honestly assume nothing was filed and start preparing to file yourself immediately. Better to be safe and potentially file twice than miss the deadline entirely. You can always amend later if needed. Document everything about this company - their name, address, the representative you worked with, all communications. You may want to report them to your state's consumer protection agency and the IRS if they're operating fraudulently.

I'm so sorry you're dealing with this - what a nightmare! Based on everything you've described, I'm afraid it sounds very likely that your return was never actually filed. The combination of no bank withdrawal after 10+ days, no e-file confirmation, dodging your calls, and only providing a summary rather than your complete return are all major red flags. Here's what I'd recommend doing immediately: 1. **Assume nothing was filed and start preparing to file yourself** - Use IRS Free File or another reputable service. Don't wait any longer to confirm with the IRS first. 2. **Try the automated payment line trick** - Call 1-888-PAY-1040 with your SSN and expected amount owed. If no return was filed, there won't be a balance showing. 3. **Document everything about this company** - Save all communications, contracts, receipts. You'll need this if you have to request penalty relief later, and you should report them to your state consumer protection agency and the IRS (Form 14157). 4. **File ASAP** - If you do file a duplicate by mistake, the IRS will just reject the second one electronically. But if nothing was actually filed, you need to get your return submitted before missing the deadline entirely. The failure-to-file penalty is much worse than failure-to-pay, so getting something submitted is your top priority right now. You can always sort out the details later, but you can't undo missing the filing deadline. Keep your head up - you're taking the right steps to protect yourself!