Reduce Taxes Through Rental Property?

[Jeremy Miller]

Hello, 

I have a family member who makes a significant amount of money a year and he hates paying taxes. He just got a very large check in which 50% is likely going to go to taxes. Would it make sense for him to start a real estate holding company to reduce taxable income? How does the tax side of property management work? Please advise if there are any strategies out there to move some tax free money into real estate investing... 

Thanks, 

Jeremy 

[Russell Brazil]

I 2nd talking to @Brandon Hall.

If your friend has a significant income though, it likely would not help him. Real estate losses can only be used to offset your income if you make $100k or less, and a partial offset from $100k-$125k, and then after that it is eliminated altogether, unless you qualify as a real estate professional. (I think)

Even so, the goal with investing is to make money...so hopefully over the long run your real estate investments are making money, thus creating a situation where you have to pay more taxes.