All Forum Posts by: Matt Hunter

Schedule A, including charitable donations, is not a "strategy." It's the result of your additional spending. You do not increase your donations as a tax strategy, you do it if you want to contribute to a worthy cause, and tax deduction is a modest side effect of doing so. 

College funds are done in order to save for college, not to save on taxes. They do have tax benefits but not up front, you won't reduce your current year income.

There're some investments that come with tax benefits but again, they should not be done for tax purposes. One of my high-earning clients invested couple years ago in an oil business, against my warning. They received a nice $100k write-off. Last year, that investment went belly up, it is now in litigation and they will probably lose their entire investment. But they did get a tax break in the first year. Was it worth it?

Everything is case-by-case. You're looking at taxes on $2MM. This more than warrants getting your own tax advisor. 

It's great to see your proactive approach to tax planning and leveraging cost segregation to maximize your real estate investment tax benefits. Your situation involves a few complex tax matters, and it's important to consult with a tax professional who is knowledgeable about real estate taxation to ensure you're following the rules correctly. Here are some key points to consider:

1. Bonus Depreciation: Bonus depreciation allows you to deduct a substantial portion of the cost of qualifying property in the year it's placed in service. This can provide significant tax savings, especially for real estate investors. You mentioned planning to acquire an RV/MH Park for bonus depreciation, which is a common strategy.
2. Depreciation Offset Against W-2 Earnings: Normally, real estate losses, including depreciation, are typically passive losses, and they cannot be directly offset against W-2 income. However, if you or your spouse qualify as a real estate professional, you may be able to deduct real estate losses against your other income, including W-2 earnings. To qualify, more than 50% of your personal services during the year must be in real property businesses, and you must spend over 750 hours in real property businesses during the year.
3. Married Filing Jointly: If you and your wife both qualify as real estate professionals, you may be able to combine your hours and activities to meet the criteria.
4. Single-Member LLC and S-Corp: The use of a single-member LLC and an S-Corp can have tax implications. Ensure that your tax structure is optimized for your specific situation, as different structures may have varying effects on taxation.
5. Tax Professional Consultation: Given the complexity of your situation and the potential for significant tax benefits, it's crucial to work with a tax professional who is experienced in real estate taxation. They can help you assess your qualification as a real estate professional, structure your investments and businesses optimally, and maximize your tax benefits while ensuring compliance with tax laws.

The ability to offset the $2.5 million bonus depreciation against your W-2 earnings will depend on your real estate professional status and other factors in your specific situation. A knowledgeable tax professional can provide guidance tailored to your circumstances and help you make informed decisions to minimize your tax liability while staying within the bounds of tax regulations.

Remember that tax laws can change, so staying updated and seeking professional advice is essential for effective tax planning.