Andreea's wealth plan: a $770,000 severance year and a $118,500 to $339,760 target

Disclaimer: This is education, not tax, legal or financial advice. Every figure below is a target written into Andreea's plan, not a result. Talk to a qualified professional before you act on any of it.

Who this plan is for

Andreea's plan was written in October 2025. That year, the household's income came to $770,000 because of a severance payout. It was a one-time spike. Income after the severance was expected to be lower.

At that income, the top federal tax rate is 37%, and state tax comes on top. The plan figures each $1 of deduction saves about 45 to 50 cents in tax. That makes every deduction in this one year worth more than usual.

The plan had two jobs. Lower the tax on the severance year, and turn part of the severance into something that keeps paying after it runs out. It also had a hard clock. Written in October, the plan had only 60 to 90 days left in 2025 to act.

What the plan targets in year one

The low end assumes a $400,000 rental bought in late November. The high end assumes an $800,000 rental bought in early October, plus $50,000 of equipment. Both figures add the tax the deductions could save to an estimate of the rental's cash flow value. They are what the plan models, not money Andreea saved.

The plan, step by step

1. Pick Path A: a rental, not only equipment

The plan weighs two ways to create large deductions fast. Path A buys a short-term rental and runs a cost segregation study on it. Path B buys business equipment and writes it off right away. The plan picks Path A, because a rental can keep earning after the severance is gone and it builds equity.

2. Buy the rental and have it ready by December 1

The plan looks for a 3 to 4 bedroom single-family home priced at $400,000 to $800,000. It points to states that welcome short-term rentals, such as Tennessee, Arizona, Florida and Texas. The target is a signed purchase agreement by November 15 and the home ready for its first guest by December 1. To pay for it, the plan lists a HELOC for the down payment and furniture, a portfolio loan, or a cash-out refinance on Andreea's own home if there is equity.

3. Order a cost segregation study right after closing

A cost segregation study splits a property into parts, like appliances, furniture and fixtures, that can be written off much faster than the building. With 100% bonus depreciation for property bought after January 19, 2025, those parts can be written off in the first year. In the plan's example, a $500,000 home has $150,000 of these faster parts. Studies take 2 to 4 weeks and cost about $4,000 to $10,000, so the plan lines one up right away.

To use the rental's losses against the severance income, Andreea has to take an active part in running it and log the hours. The STR loophole qualifier shows how that test works.

4. Add equipment as a supplement

Equipment still has a role, but as part of Path A. Furniture, appliances, smart locks, linens and a laptop for the business add up to $24,800 to $41,300 in the plan. These can be written off right away under Section 179.

5. Set up an LLC with an accountable plan

The plan forms an LLC in Wyoming or another chosen state, gets a tax ID number and opens a business bank account. It then adds a written accountable plan. Andreea pays business costs, the LLC pays Andreea back tax-free, and the LLC deducts the cost. A simple expense policy covers small items, like welcome gifts for guests under $25.

6. Start a backdoor Roth IRA once there is earned income

Andreea's income is far above the limit for putting money straight into a Roth IRA. The plan uses a backdoor Roth IRA instead. It puts $7,000 into a traditional IRA ($8,000 at age 50 or older), converts it to a Roth and files Form 8606. Any old pre-tax IRA money should be rolled into a 401(k) first, or part of the conversion gets taxed. The plan also flags that this depends on whether the severance counts as earned income.

What has to go right

• The December 31 deadline. The rental has to be bought, set up and in service in 2025. Closings take 21 to 30 days and studies 2 to 4 weeks, so there is little room for delay. The plan keeps a backup property in mind in case the first deal falls through.
• Records. The plan calls for time logs, plus photos and guest confirmations that show the date the home went into service. The LLC's money has to stay separate from personal money.
• Cash and reserves. The plan puts $80,000 to $200,000 into one property and keeps a 6-month reserve for running costs. The rental still has to earn its keep.

What to take from this

Andreea's plan is built for one unusual year. A high one-time income makes each deduction worth more, which is why the plan moves fast. But the year-one value is a target that adds tax value to an estimate of rental cash flow. It is not money in the bank.

Deductions taken now can also come back as tax when the property is sold. See how depreciation recapture works on a short-term rental. Results depend on buying the right property in time and running it well. A CPA should review the plan before Andreea, or anyone in a similar spot, acts on it.