Any High W2 earners out there?

[Bilal A.]

To the High W2 earning BP members out there, what strategies have you used to decrease your W2 taxable income? Depending on what state you earn your wages, income tax rates of 40-50% are unreasonable. Most of you likely don’t qualify as real estate professionals and won’t unless you quit or dramatically reduce your regular work hours so what tax planning strategies (particular to real estate investing) have you used besides taking depreciation and mortgage interest deductions? I realize that with enough properties, you can eventually replace your W2 with passive income and deduct losses against it. Do you massively leverage your high income to get loans and build your portfolio fast? Paying multiple three figures in taxes plus FICA is simply ridiculous. Thanks in advance!

[Jon Holdman]

@Cara Lonsdale and @Bilal A. getting a real estate licenses is irrelevant for being a real estate professional for income tax purposes and will not, by itself, make someone qualify as a RE pro.  Bilal, you say:

So, that sounds like you're expecting her to qualify as a "real estate professional".  In order to do that she must spend 750 hours a year doing real estate related work AND more hours doing RE work than anything else.  If she actually works as an agent, and puts in 750 hours a year (about 15 hours a week), then she will qualify as a RE pro for taxes.  Just having the license doesn't mean she's a pro.  And she can put in the 750 hours without a license and still qualify for the IRS.