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BiggerPockets Real Estate Podcast

How to (Legally) Pay the Least Amount in Taxes as a Real Estate Investor

36 min episode · 2 min read
·
Amanda Hahn

Episode

36 min

Read time

2 min

Topics

Personal Finance, Relationships, Investing

AI-Generated Summary

Key Takeaways

  • Expense Capture Errors: Forty percent of investor tax returns fail to optimize deductions by missing property insurance, home office deductions, travel costs for property visits, conference attendance, educational materials, and vehicle use. Send closing disclosures to accountants to capture all acquisition costs beyond purchase price, including prorated taxes and fees that increase depreciation basis.
  • 100% Bonus Depreciation Strategy: Properties purchased after January 19, 2025 qualify for accelerated depreciation through cost segregation studies, potentially creating $120,000 first-year deductions on $400,000 buildings. Use this when you have high taxable income, qualify to use rental losses against other income, or need to offset gains from property sales in your portfolio.
  • Qualified Business Income Deduction: Real estate investors can receive tax-free treatment on up to 20% of taxable rental income, flipping profits, wholesale income, property management fees, and co-hosting revenue under QBI rules extended through 2026. This deduction frequently gets missed on tax returns prepared by non-specialist accountants, so specifically request verification.
  • Short-Term Rental Loophole: W-2 employees who cannot qualify as real estate professionals can use short-term rental losses against ordinary income without quitting their jobs, provided they meet hands-on management requirements. This strategy works for side hustlers using apps for semi-remote management, bypassing passive activity loss limitations that restrict traditional rental deductions.
  • Tax Planning System: Maintain separate bank accounts exclusively for real estate transactions and track income and expenses by individual property monthly rather than annually. Meet with accountants before buying or selling properties, opening LLCs, or adding partners to eliminate year-end tax surprises and ensure deductions get captured when they occur, not reconstructed from memory.

What It Covers

CPA Amanda Hahn explains how real estate investors can legally minimize taxes using strategies from the One Big Beautiful Bill, including 100% bonus depreciation restored for 2026, qualified business income deductions up to 20%, and proper expense tracking that 40% of investors miss on their returns.

Key Questions Answered

  • Expense Capture Errors: Forty percent of investor tax returns fail to optimize deductions by missing property insurance, home office deductions, travel costs for property visits, conference attendance, educational materials, and vehicle use. Send closing disclosures to accountants to capture all acquisition costs beyond purchase price, including prorated taxes and fees that increase depreciation basis.
  • 100% Bonus Depreciation Strategy: Properties purchased after January 19, 2025 qualify for accelerated depreciation through cost segregation studies, potentially creating $120,000 first-year deductions on $400,000 buildings. Use this when you have high taxable income, qualify to use rental losses against other income, or need to offset gains from property sales in your portfolio.
  • Qualified Business Income Deduction: Real estate investors can receive tax-free treatment on up to 20% of taxable rental income, flipping profits, wholesale income, property management fees, and co-hosting revenue under QBI rules extended through 2026. This deduction frequently gets missed on tax returns prepared by non-specialist accountants, so specifically request verification.
  • Short-Term Rental Loophole: W-2 employees who cannot qualify as real estate professionals can use short-term rental losses against ordinary income without quitting their jobs, provided they meet hands-on management requirements. This strategy works for side hustlers using apps for semi-remote management, bypassing passive activity loss limitations that restrict traditional rental deductions.
  • Tax Planning System: Maintain separate bank accounts exclusively for real estate transactions and track income and expenses by individual property monthly rather than annually. Meet with accountants before buying or selling properties, opening LLCs, or adding partners to eliminate year-end tax surprises and ensure deductions get captured when they occur, not reconstructed from memory.

Notable Moment

Amanda reveals that even investors who cannot use rental losses immediately against W-2 income never lose those deductions permanently. The accumulated losses carry forward and become fully usable against all income types, including wages, when the property eventually sells, creating substantial tax benefits at exit that many overlook.

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Episode Transcript

If you skip this episode, you could be leaving thousands of dollars on the table. They say there's only two things guaranteed in life, death and taxes. And since you're alive watching this right now, today, we're gonna focus on the latter, how real estate investors can legally pay less tax. And things have changed a lot this year, big time. The big, beautiful bill tax provisions are going into effect for this April's tax deadline, and it has huge implications for real estate investors. And that's true whether you own one rental or an entire portfolio. The strategies we're sharing today, they could save you hundreds, thousands, or even tens of thousands of dollars over the lifetime of your investments. In this episode, we're also gonna share the under the radar tax strategy that 99% of investors are missing out on, and we'll have a CPA tell us what you need to do today so you're never scrambling during tax time again. Hey. What's up, everyone? I'm Dave Meyer, chief investment officer at BiggerPockets. Today's guest on the show is Amanda Hahn. If If you haven't heard Amanda before, she's been on the show a lot, but she's an expert. She's a CPA, a tax strategist, and she's a real estate investor herself. She specializes in helping investors pay the least amount of possible taxes legally. And since April 15 is coming sooner than any of us hope or think, let's bring out Amanda and learn together how to save some money this year. Amanda Hahn, welcome back to the Bigger Pockets podcast. Thanks so much for being here. Yeah. Thanks for having me, Dave. I'm super excited to be back. Well, we've had you on the show many times, but some in our audience may not know who you are yet. So can you just introduce yourself for us? Of course. Hi, everyone. My name is Amanda Hahn. And what I always tell people is that I am a CPA by day. And by nighttime, I am, like many of you, a real estate investor. My husband and I coauthored, the two Bigger Pockets tax book. So if you haven't checked those out, make sure to do so. One of my passions is really in helping to educate people on all the different things they can do to use real estate to not just build wealth, but also to save a significant amount in taxes if you do things correctly. So really excited to be here. It's that time of the year when taxes are top of mind. It is. Well, thanks for joining us today. And if you haven't read Amanda's book and you want to save money on taxes, it's the single best thing that you could do. I self admittedly, Amanda, you know this about me, am terrible at this stuff. I'm not good at tax strategy, but I've gotten better because of reading Amanda's books and getting to know her. So definitely check that …

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  • real estate investors can legally minimize taxes using strategies from the One Big Beautiful Bill, including 100% bonus depreciation restored for 2026

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