Case Study: How a High-Income Earner Used $335K of Home Equity to Acquire a $1.475M Airbnb and Create a $400K Tax Write-Off

For high-income earners, the challenge is rarely making money.
It’s keeping more of it.

This case study breaks down how we helped a client strategically use home equity, DSCR lending, and short-term rental real estate to acquire a high-performing Airbnb while positioning himself for a substantial tax offset in 2025.

Important: This case study is for educational purposes only. All tax strategies were reviewed with a CPA. Results vary based on individual circumstances, tax status, and market conditions.

Client Snapshot (Anonymized)

• Primary Residence: Hollywood Hills, Los Angeles
• Estimated Home Value: $1,600,000
• Existing Mortgage Balance: $925,000
• Income Profile: High W-2 / professional income / business income (high six figures)
• Primary Goal: Reduce projected tax burden while acquiring a real estate asset
• Constraint: Did not want to sell assets or refinance an existing low-rate primary mortgage
  

Like many high earners, this client had significant equity but limited usable tax strategies left on the table.

The Problem: High Income, High Taxes, Limited Traditional Options

Despite strong earnings, the client faced:

• A large projected 2025 tax bill
• Limited benefit from standard deductions
• No desire to sell appreciated assets
• DTI constraints that made traditional investment loans inefficient
  

The solution wasn’t finding “a deal” — it was structuring the capital intelligently.

Step 1: Unlocking Home Equity with a HELOAN

Rather than refinancing his primary residence, the client accessed his equity through a Home Equity Loan (HELOAN).

HELOAN Details:

• Loan Amount: $335,000
• Interest Rate: 7.875%
• Post-Loan Combined LTV: Just under 80%
• Property Value: ~$1.6M
• Total Debt After HELOAN: ~$1.26M
  
  
  

Why a HELOAN?

• Preserved the existing first mortgage
• Fixed-rate structure (vs. variable HELOC)
• No asset liquidation
• Provided clean, predictable capital for investment use
  

This step converted idle equity into deployable capital without disrupting the client’s broader financial picture.

Step 2: Acquiring a $1.475M Airbnb Using a DSCR Loan

The HELOAN proceeds were used as the 20% down payment on a short-term rental property.

Purchase Breakdown:

• Purchase Price: $1,475,000
• Down Payment: ~$295,000 (from HELOAN proceeds)
• Loan Type: DSCR (Debt Service Coverage Ratio) Loan
• DSCR Loan Amount: ~$1,180,000
  
  

Why DSCR Lending Worked Here

• No personal income or DTI qualification
• Approval based primarily on property cash flow
• Ideal for high-income borrowers with complex tax profiles
• Scalable structure for future investments

The property qualified based on its income potential — not the borrower’s W-2 income.

Step 3: Short-Term Rental (Airbnb) Income Strategy

The property was intentionally selected and underwritten as a short-term rental.

Projected Performance:

• Estimated Annual Gross Revenue: ~$147,000
• Data Source: AirDNA market projections
  
  

Short-term rentals, when structured correctly and in compliant markets, can provide:

• Higher revenue potential than long-term leases
• Greater flexibility in use
• Different tax treatment opportunities compared to traditional rentals
  

Market selection, conservative underwriting, and local regulation compliance were critical to this step.

Step 4: Cost Segregation & Bonus Depreciation Planning

With CPA coordination, the client planned a cost segregation study on the property.

Estimated Outcome:

• Projected Paper Loss: ~$400,000
  

Cost segregation allows certain components of the property to be depreciated on an accelerated schedule rather than over 27.5 years. When paired with available bonus depreciation (subject to current tax law), this can create significant first-year depreciation.

For qualifying taxpayers, these paper losses may be used to offset active income — depending on material participation, tax status, and CPA guidance.

Why This Strategy Can Work for High Earners

This wasn’t about gaming the system.
It was about intentional coordination.

This type of strategy tends to work best for individuals who:

• Earn high W-2 or professional income
• Have substantial home equity
• Want real estate exposure without traditional DTI constraints
• Are comfortable with leverage when used strategically
• Are willing to coordinate between lender, CPA, and investment advisors
  

The outcome is not just a tax play — it’s the acquisition of a real asset with income potential, appreciation upside, and long-term optionality.

Important Disclaimers & Considerations

This strategy is not universal.

Key factors to evaluate:

• CPA approval is essential
• Short-term rental regulations vary by city and county
• Bonus depreciation rules change over time
• Leverage increases both upside and risk
• Material participation rules must be understood
  

Execution matters. Market matters. Individual tax profiles matter.

Final Takeaway

High-income earners don’t lack opportunity — they often lack structure.

This case study shows how:

• Home equity can be used without refinancing
• DSCR loans can bypass traditional income constraints
• Short-term rentals can serve both income and tax planning goals
• Proper coordination can unlock strategies many high earners never see
  

The power isn’t in any single tool — it’s in how they work together.
 

Want to See If a Similar Strategy Could Apply to You?

If you’re a high-income earner with home equity and are exploring strategic real estate acquisition — not just another loan — a private strategy conversation may be the right next step.

 Book a confidential strategy call to explore whether this approach makes sense for your situation.

Educational only. Always consult qualified tax and legal professionals.

Want to Learn More or Get Personalized Guidance?

If you’re serious about learning more about funding or real estate opportunities in Los Angeles, email us at vinay@chinnirealty.com or call/text (323) 996-3746 to schedule a conversation.

Recommended Reads
To deepen your knowledge, explore these related guides on our site:

• Why Starting with a 2–4 Unit Property Can Set You Up for Long-Term Success
• House Hacking 101: Living in One Unit and Renting the Others to Offset Your Mortgage
• When It Makes Sense to Transition from Residential to Commercial Investments
  

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