Tax Time! What does your tax planning look like?

[Jeremy H.]

We all know one of the advantages of investing in real estate is the tax benefits. What does your tax strategy look like? What kind of planning do you do throughout the year to minimize your tax liability? 

I'll share for myself real quick - Mine is fairly straightforward - all long term rentals, filing single. 

Generally - the depreciation on the structure, mortgage interest, property taxes, repairs & maintenance, insurance, property manager, utilities, vehicle expenses (mileage), professional fees (reports/CPA), home office (office supplies, percentage of utilities, continuing education). All this adds up so some serious deductions. One of my goals is to go through my past tax returns, and figure the ROI my rental properties with taking into account the tax savings (I typically calculate the ROI on net cashflow at the end of the year)

I have a W2 so I generally aim to maximize my pre-tax accounts - 401k, HSA, IRA to a backdoor Roth IRA, 529

My "losses" would be passed forward since I don't qualify as a RE professional nor have active RE losses. My CPA has essentially called it a "tax asset" - where you end up w/ tens or hundreds of thousands of dollars in losses that have been passed forward so that at some point you can offset passive gains. 

I have yet to do a 1031 exchange or a cost segregation study (I'd like to see how this plays out long term when selling or doing a 1031 exchange into a different property) or expense business travel/mastermind/classes.