All Forum Posts by: Bilal A.

@Nick Danaluk Sounds like you know your market and it’s projected growth. Does the $10k SALT limit apply to land investments?

@Jon Holdman

Yes that's the plan. We have 5 doors right now and plan on at least doubling that this year. The real estate license is to take advantage of benefits like having direct access of MLS, putting in fast offers in our competitive market, having direct control of our destiny when it comes to dealing with sellers... among others mentioned on BP blogs and podcasts. We also manage and rehab our own properties so as far as the IRS is concerned, I am confident my wife can meet the requirements of being a real estate professional by the end of the year or at least, that's the plan.

@Cara Lonsdale Thanks for the vote of confidence!

@Mark Welp Solid tip! 

@Cheryl Butler definitely need to exploit that strategy in the near future. Thanks!

@Billy Smith Absolutely for myself! My wife works for free 😀

Disclaimer: I am not giving Tax advice and you should consult your tax advisor or CPA. 

In 2018, I will be doing the following in order to potentially impact my W2 tax bill. 

My wife is a stay at home mom (a huge sacrifice she made for the benefit of our kids and a mostly thankless and non-paid job). She will be getting her real estate license and are equal partners in this venture. She has already taken the classes and is scheduled to take the exams in the next month. Given that we file jointly at the end of the year, instead of having to keep deferring/carry over losses etc from real estate to the following tax year, we plan on deducting them a 100% against my W2 income. That is the the only viable way I have come up with to bypass the “real estate professional” exclusion which I am held to. 

I am hoping that this approach and acquiring more real estate will hopefully have a big impact only tax bill at the end of the year.

I am still looking for other ways that will have an immediate and sizable impact on my W2 tax bill. 

@Eric James Yes, I have given that some thought. In fact, that is exactly how I was able to finance my first four plex. Flipping will be very time consuming and potentially highly taxed income from what I understand. I have had discussions with my wife  about highly leveraging income to scale up fast and go big. It is an option but before I go down that route, I wanted to see if there are ways to reduce my W2 income tax bill right now. Decreasing W2 taxable income will generate immediate return rates that are unparalleled by most and get back hard earned money. 

@Caleb Heimsoth Great point! Haven’t thought that far in advance but another big reason to invest in real estate early and go big. 

@Mike Landry Working less doesn't seem to be in my blood, well not at this point in my life. I guess most of us are programmed as such 😀. I have done the 401k option, self directed Roth IRA, backdoor Roth contributions. As I begin my real estate investing journey to be able to generate passive income for the day that i want to slow down/step back, I realize the same thing that you mentioned about having to pay tax on real estate income at ordinary rates right now if I don't show with enough "stuff" to offset that income. There are plenty of ways to offset rental income and capital gains but I am frustrated at the lack of options available that make an immediate and large impact on W2 income.

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!