Everyone wants to know how the rich avoid taxes. You hear about it on the news, “billionaire pays zero dollars in taxes this year,” or “this real estate tycoon made millions but gets a tax refund!” This can seem like blatant tax abuse for those not in the investing game. Why do some people get to pay no taxes while others are stuck with a sky-high return just for working their W2 job? The answer lies in the assets you invest in.

Real estate investing is one of the most tax-advantaged assets around. As a real estate investor, you can almost automatically count on lower income taxes while making more money. Don’t believe us? We brought Amanda Han, CPA to top investors, on the show to explain how investors avoid taxes while still striking it rich in real estate. Amanda understands the ins and outs of the tax code, and as a real estate investor, she benefits from knowing real estate write-offs and deductions better than the rest!

On today’s show, Amanda will walk through the top real estate tax deductions and how rookie real estate investors can start paying less in taxes. She’ll also explain real estate professional status (REPS) and using it to lower your taxable income and how to find the perfect tax advisor for you and your properties. If you want to start using the same strategies that the wealthy use to avoid taxes, this is the episode to tune into!

Click here to listen on Apple Podcasts.

Listen to the Podcast Here

Read the Transcript Here

Ashley:
This is Real Estate Rookie Episode 255.

Amanda:
So there is a point where we are looking at, am I doing house hacking, am I doing short-term, or long-term, or a mobile home park? Those different investments have different tax consequences, and therefore different tax strategies. So before meeting with your tax person for the first time, you do want to have a fairly decent idea of what it is you want to do? What is my investment goals, how many rentals, what states do I want to be investing in? Because those kind of things play a very important factor for the starting point of what your plan is going to be on how to save on taxes.

Ashley:
My name is Ashley Kehr, and I’m here with my co-host Tony Robinson.

Tony:
And welcome to the Real Estate Rookie Podcast, where every week, twice a week we bring you the inspiration, motivation and stories you need to hear to kickstart your investing journey. And I want to start today’s episode by shouting out someone by the username of Relatos, and this person left us a five-star review on Apple Podcasts with the title of, “Best Boring Banter Ever!” With an exclamation mark. This person says, “I love listening to you guys, you definitely cater to the rookie investor, making it easy to digest what you teach, asking your guests great questions for both the novice and the pro. Keep up the boring banter and Ashley’s laugh.” So Ashley, you’re getting some love from the Rookie audience about that wonderful laugh of yours. How’s that make you feel?

Ashley:
I feel like somebody I knew wrote that, because they’re so used to crying from all the hurtful comments.

Tony:
People love it, people love it, there you go. And the boring banter.

Ashley:
Well, thank you so much. We appreciate that you guys, so much.

Tony:
And if you guys haven’t yet, please do leave us an honest written review on Apple Podcasts. We’ve gotten so many coming in over the last couple of weeks here, it’s been fantastic. But the more reviews we get, the more folks we can help, and helping folks is always the goal of the Real Estate Rookie Podcast. I know this episode comes out at the end of January, but this is actually the first episode that we’ve recorded of 2023. So, 2022 is officially in the rear view, we’re now in 2023. And I’m excited for this year, I’m excited for some changes in our business and how things are going to grow. What about you? How are you feeling for 2023?

Ashley:
Good, excited. I mean, it’s definitely going to be different than the last two years, just with the market changing, interest rates going up. Everybody’s pivoting, changing their strategy. So there’s some that are super-excited about what’s going to be coming this year, and then I feel like there’s others that are sweating bullets and actually really nervous what’s going to be happening this year. So I think a lot of people are taking advantage of how to change, adjust and pivot their investing strategy right now to kind of take advantage of the situation and not be somebody that’s going to be struggling during the next year with however the market goes.

Tony:
You know what might be a cool show, Ash? And for our producers that are listening, is if we got, me and you, Dave Myer, and maybe like a panel of people who specialize in different asset classes. So maybe we’ll bring on like A. J. Osborne to talk about stuff, to talk about self-storage, James Ander to talk about flipping, obviously I can talk about like short-term rentals, and even the long-term rental side. And maybe we just kind of, from the data that Dave’s got like, “Which one of these asset classes is going to do worse or better as we go through this X market cycle?” That could be a cool show to talk about.

Ashley:
Yeah, yeah, that would be really cool. Almost kind of like a debate, where we’re each advocating for how our strategy can work. But not even just at a debate, but showing how we’re pivoting our current strategies to adjust to the market. So if somebody wants to change to pivot to that strategy, or stay focused on that, some of the things that we’re each doing based on that asset class. Yeah, that would be really cool. And I’m pretty sure our producers don’t listen to the show, so we’ll have to tell them after. So, how was your New Year’s, Tony? I saw that you were in New York City. We’ve got to do a little boring banter.

Tony:
Yeah, yeah, no. New Year’s was cool, yeah. We spent New Year’s Eve and New Year’s Day in New York City. Sarah and I went back in 2012, and we did the whole Time Square thing where we camped out all day, waiting for her to see the ball drop. Didn’t want to do that this time around, plus we had our son with us, so we were just like at a cool little arcade in Time Square for New Year’s Eve. So it was cool, super-busy, but still I love New York City. But I think three days there is probably the most that I can handle, just with all the people, and the noise, and the honking, and the sirens, and all the other stuff. But, it was good. We saw all the big sites, Central Park, we did the 9/11 Memorial…
The Memorial Museum for 9/11 is probably one of the coolest things I’ve been to, and I’ve been to it twice now. And I was in, I don’t know, junior high, elementary school when 9/11 happened, so I didn’t really understand the weight of that whole experience. But going to that museum, and hearing the stories, and seeing the… They have voicemails that people were recording when they were on the plane about to crash, and just everything in that museum was super-touching, and I was glad my son got to see it as well to kind of understand the impact of that moment. So, lots of great things in New York City.

Ashley:
Yeah, I’ve only been to the Monument, I’ve never been to the actual museum. But yeah, I’ll have to definitely check it out.

Tony:
Yeah, I highly recommend it, yeah.

Ashley:
Yeah. I did the New Year’s Eve thing when I was in college, and the same thing. You were packed, and you were cattle, and these-

Tony:
This little block, yeah.

Ashley:
… crowds were sectioned off. You can buy a $50 pizza, you can’t go to the bathroom. And then as soon as the ball drops everybody just runs, and it’s just garbage everywhere. And I just remember we were like, “There’s an Applebee’s. Okay everybody, we’re going to book it there. We’ll meet you there,” and everybody just took off and ran just to eat something. But yeah, for me it’s like one of those things, like you do it once and never do it again, yeah.

Tony:
Everyone, yeah.

Ashley:
Yeah. So this year we took the kids and we went to a ski resort, and so we did… That they had the fireworks, we went snowboarding, they do like a torch parade with the skiers down the hill before midnight. They had like a family party where they had a DJ and they had a dance contest, so we were so proud of the kids because they each did the dance contest, and they were telling us how nervous they were and everything, going up to do it. And they were well-deserved to be nervous, because there was like six and seven-year-old girls doing back flips and all these things. And we were like, “Our boys are still going to go out there and do a dance?” And there’s these girls doing acrobats out there. But we were just so proud of them for getting over those nerves, and going in there, and trying it out. But yeah, it was a lot of fun.

Tony:
Where was that at, where’d you guys go? Was it in New York?

Ashley:
Yeah, yeah, it’s Holiday Valley, so it’s the second-closest ski resort to us, yeah.

Tony:
Oh, cool.

Ashley:
It’s in a really nice town, [inaudible 00:06:48], which has a actually really nice short-term rental market, they actually-

Tony:
I remember you talking about that place.

Ashley:
Yeah, they stopped doing short-term rentals directly in the village of it now, just because there was so many that the actual occupancy of people who lived there full-time was so low, so they actually stopped doing short-term rentals right in the village. So it’s only in the town that you can actually have them, and so it’s definitely been like a changing market there for short-term rentals.

Tony:
Yeah, and we’re seeing that all across the board in a lot of different cities as well, where regulations are starting to tighten up a little bit. Which isn’t a bad thing, but part of the process.

Ashley:
Yeah. One of the projects I’m working on this year is a property I bought that’s about 10 minutes outside of this town, [inaudible 00:07:33]. And when they stopped doing the short-term rentals in the village it just added to our property value because we can still do it where we are, and we’re on the outskirts enough but still so close. We actually had somebody that stayed in one of my other short-term rentals, and this one’s 20 minutes away from this town, and they were staying just to go skiing at this resort, so…

Tony:
Well, we’ve got a good episode for you today right? We have the world-famous, none other than Amanda Han. If you guys don’t know Amanda Han, she is like the Obi-Wan Kenobi, or I don’t know, who else is like… She’s like the, I don’t know, who’s someone that’s like super knowledgeable? I don’t know, I’m struggling with my metaphors.

Ashley:
First of all, she is the nicest and most friendliest person you will ever meet. You are just like automatically attracted to her just because she’s so nice, and bubbly, and yeah. So that’s like the first thing, like-

Tony:
But she’s like, wicked smart.

Ashley:
Yes, full of knowledge.

Tony:
Yeah, she’s like a savant when it comes to everything related to tax strategy. So she’s written not one, but two books for Bigger Pockets on tax strategy, the first one is Tax Strategies for the Savvy Real Estate Investor, and the second one is The Advanced Tax Strategies for Real Estate Investors. And both of those books are really good kind of foundational building blocks if you want to learn about ways that real estate can help you from a tax perspective. But we brought Amanda on today to talk about a whole slew of topics, ranging from when should you start looking for a tax planner, tax strategist for your business, the difference between someone doing tax prep and tax strategy, and so many other things. I don’t know, what was your favorite part of the conversation Ash?

Ashley:
Well first of all, those books that you mentioned, highly recommend. I have them both, I’ve read them both, I give them out to a ton of people. But we do actually give a discount code out, so if you guys are interested make sure you listen to the episode for that discount code too. I think my favorite thing was talking about actually setting up your LLCs too, because you may not think that would be something you’d talk to your CPA about. Maybe that’s something more you talk to an attorney about. But she’ll go through reasons why you should consult your CPA, and I think there’s a joint offer there between an attorney and a CPA as to how you should set up that legal structure for your entity. So, that was kind of my favorite part of the episode.

Tony:
Yeah, I enjoyed that. I think my favorite part was when she ranked the different investment strategies from like best tax treatment, versus worst tax treatment. So if you’re on the fence about which way you want to go, listen to that part of the episode, it might help you decide the strategy that’s right for you.

Ashley:
Amanda, thank you so much for joining us, and welcome back to the show. We always love having you on. Can you start off with telling us a little bit about yourself and why you’re on the show today?

Amanda:
Yeah, yeah, I’m so excited to be here, to be back on the Rookie Podcast. So my name’s Amanda Han, I am a CPA and real estate investor myself. So not unlike a lot of the Rookie investors I still have a daytime job, my daytime job happens to be working at my firm, Keystone CPA, where we help investors nationwide on how to use tax planning to save on taxes. And by night I’m a real estate investor, again. I like a lot of you guys, wait until the kids fall asleep so I can sneak in some time to work on my real estate stuff.

Ashley:
Amanda, before we even get into the CPA part, and your daytime job, and all of the tax benefits of real estate investing, can you tell us just a little bit about your own real estate investing journey and maybe some of the strategies you have used?

Amanda:
Yeah, yeah. Well, I started investing in real estate in kind of like my mid-20s, and not unlike a lot of people my impetus to doing it was I read Robert Kiyosaki’s Rich Dad book. And at the time what was interesting was I was actually a CPA working with investors, but I just never thought I could do it. It was almost just like something that other people did, people who had a lot of money and experience and all that. But really seeing the tax benefits of what a lot of my clients that were making a ton of money, but not paying a lot in taxes was when my husband Matt and I decided we were going to get into real estate investing. And I just remember it was very horrific for me to sign the paperwork to buy my first rental property, again, which was this thing of like, why would I be able to do it?
Is it something that I can’t do? But I think for me that was like the hardest investment. Thereafter, every investment thereafter that has been just easier and easier, so never looked back.

Ashley:
So it seems that you definitely have some experience as an investor. What is your take on how beneficial that can be when you are looking for a CPA?

Amanda:
Gosh, well I think it’s very important when you’re working with not just a CPA, any kind of advisor right? So CPA is your attorney, your real estate agent, right? So your team, you just want them to invest personally in real estate. Because as real estate investors, we have kind of a different lingo that we use when we talk about stuff. Especially for bigger pockets people, the Burr strategy, or subject twos. And you just don’t want to be the person to be teaching your tax advisor what is going on in the real estate, you want them to understand the transactions in real estate because that’s the baseline for them being able to know what you’re doing, and then be able to help you with the planning and the strategy surrounding those transactions. So yeah, I think it’s very important.

Tony:
And Amanda, I don’t know if you know this, but you’re actually the reason, or at least a big part of the reason why I invest in short-term rentals. So our mutual friend Alex Savio was a client of yours, and you encouraged him for some of the tax benefit to come along with short-term rentals, to look at that asset class. He took your advice, bought a cabin in the Smoky Mountains. And then after he got his contract under a cabin he came to me and said, “Tony, you should buy a short-term rental.” And I said, “All right, cool. If you’re doing it, I guess I’m going to do it too.” So had it not been for your advice, I would have no short-term rentals at this point. I don’t know if I’ve ever shared that with you before.

Amanda:
Yeah, you know, it’s funny, but no, I didn’t know that. Until recently, when I was at your short-term rental summit, and I think everybody was there together, I heard that story. And I love it, it’s such an amazing story, to know that I was a tiny bit in kind of helping to help you guys build your portfolio. And that’s why I really love being on like podcasts like this, just, you never know who’s listening, and you never know who’s going to take action and implement like that tiny, tiny little golden nugget, and then grow their wealth and grow their friends’ wealth.

Ashley:
Amanda, before we get too far into the show, I want to make sure that we’re capturing our full audience. So this is the Rookie show, and maybe people are listening that don’t have a deal yet. And I don’t want them to tune out. What are some of the reasons they should listen to this episode? How important is it for you to know about these things, this tax strategy before you even start investing, or as you’re starting out, even if you have one, two, three properties?

Amanda:
You know, actually I think when it comes to tax planning, the best time to do planning is actually before you buy rental properties, or before you buy a lot of rental properties. And I’m sure we’ll talk a little bit about legal entity in a minute later today, but… And the reason for that is, as with anything, when you’re putting together the plan for a rookie investor, what am I going to be doing? Is it short-term rentals, is it long-term, is it house hacking? The different types of investments have different strategies. And so as soon as you know, “What’s my plan? What am I going to invest in, how many properties this year, or next year?” Then that’s a good time to educate yourself in terms of, “What are the possible ways I can use my investments to save on taxes?”
If you start planning too late, let’s say after I have five, six, seven rental properties, unfortunately I see this way too often, where people end up in the wrong entity structure, or just the wrong way to do things. And sometimes if you make a mistake earlier on, it could be very costly and sometimes even impossible to fix some of those issues. So yeah, the earlier you understand some of these benefits, the better it is.

Tony:
Yeah, and I can speak from firsthand experience the challenges that come along with waiting too long to get some of that professional help. So Amanda, one thing I want to circle back to because you mentioned this, is that you focus on tax strategy and tax planning. Can you just define for us the difference? What is the difference between what you do as someone who focuses on tax strategy, versus tax preparation, and how do those two different kind of people play into when folks start looking at those different aspects of tax?

Amanda:
Yeah. Well, I think one of the most common mistakes that investors make, and that’s not just rookies, that’s even very experienced people, is not understanding that there’s even a difference between tax planning and tax return filing. So tax return filing, I think that’s what a lot of people are thinking right now when they’re listening to our podcast. So tax return filing is when you’re taking your paperwork, a recap of what already happened last year, and you’re having a tax person put the right numbers on the right forms. That’s really it, they’re reporting what did or didn’t happen, and they’re going to tell you how much you owe in taxes, that’s really it. But tax planning is when you’re doing the right things throughout the year, so that by next April you can pay the least amount of tax, or get the biggest refund.
And so again, even though a lot of people right now are thinking, “Oh, I’m going to get my tax return file from last year,” what you’re doing is really just reporting what happened last year. But really what you should be doing is taking a look ahead at this upcoming year and saying, “Okay, what are some of the things I should be doing so that I can not just make more money, but save more money?” You know, or save more of the money that I just made. So I think that’s a huge difference in the two.

Ashley:
Well, let’s get into it. How are some of the ways a rookie investor can save money by purchasing their first investment property? And I’m not sure the best way that you want to kind of go through this, but do we want to go… You know, some of the top reasons for each strategy, or just things overall in general? But just, let’s start there as to, how can investing in real estate kind of benefit anybody? What are some of those tax strategies?

Amanda:
Yeah, it’s a really good question, because I think… I mean, we all know like wealthy individuals make a ton of money and don’t pay a lot in taxes. And so you read about those people, Elon Musk, Donald Trump. But I think for a lot of investors, especially for rookie investors starting out, it’s kind of like, “Wow, that’s great for them. But how does that relate to me?” And what I love about real estate is that that’s an asset class that encompasses a lot of the strategies that these super-wealthy people use. So if we go over some examples, so how do wealthy people make a lot of money but pay no taxes? Because they build businesses, or they buy things that go up in value, but they don’t have to pay taxes on that.
So that’s the same thing for real estate, if you buy a property for $100,000 and a couple years from now it’s worth $150,000, we’re not paying taxes on that appreciation. Versus comparing that to like a W2 income, if you make $50,000 of income [inaudible 00:19:03] you’re paying a good amount of taxes on that. And so that’s one of the reasons that real estate is really beneficial, because it allows you to grow your wealth without having to pay a ton in taxes.

Tony:
So yeah, there’s obviously a ton of benefits that come along with investing in real estate. But every strategy kind of has its own I guess ability to help you reduce your taxable income, like some strategies are better for taxes, others are not so great. So if you think about like the big buckets of investing in real estate, you have long-term rentals, short-term rentals, flipping, wholesaling, maybe at a higher level like commercial real estate in terms of syndications and stuff like that. If you had to kind of rank from maybe least tax preference to like highest tax preference, how would those strategies stack up?

Amanda:
Well I mean, I think the preference will differ from investor to investor, because every person has a different profile. Someone might be still working full-time, someone else might already be doing real estate full-time. But we’ll just take a kind of… The scenario of someone who is still working full-time at a job, because a rookie investor just starting out in real estate may be one property this year. From that perspective I would say for me personally, I heavily lean towards short-term rentals. A little bit about what you brought up earlier Tony. And the reason for that is for short-term rental properties, if you create a tax loss, and tax loss meaning that we’re maximizing write-offs or doing clever things with depreciation, not actually losing money.
So we strategically create losses, it’s a lot easier for us to use that, not just offset income from the rental property itself, but also offsetting income from our W2 job as well. And so the short-term rental, out of all the different ones that you named, that’s kind of the lowest-hanging fruit where it’s very possible for people to have a high W2 job but still be able to utilize a lot of those tax benefits by doing real estate on the side. For long-term rentals I think that’s probably next, and by long-term rentals we also combine single family, multi-family, commercial property, those are all typically long-term rental properties. That’s generally the second bucket, because we can still use all those depreciation and expensing and all that to offset the income.
But if you’re someone with higher income you just might not be able to use it to offset W2 taxes. I mean, it’s obviously possible to do with planning, but again, not as easy as the short-term. And then the third bucket is kind of what you mentioned, more the active real estate, so flipping, wholesaling, maybe getting real estate commissions. That’s kind of the third, or least preferred bucket, because when you’re doing those kind of transactions typically you pay higher taxes on that earned income. And especially for flippers and wholesalers, we don’t really get the benefit of rental real estate in terms of depreciation. Because after we’re done with the rehab, we’re just selling it immediately, so we’re not really getting depreciation like we would with rental real estate.

Ashley:
And Amanda, let’s talk about how this is all legal, these tax benefits. You hear sometimes in the news about, “Oh, this person or this corporation, they didn’t pay any taxes, they did this awful thing by cheating on their taxes somehow.” But these are all legal tax benefits, and if somebody else is taking advantage of them why aren’t you guys? Go ahead, this is at your disposal, this is for anybody to take advantage of these tax benefits to reduce your taxable income.

Amanda:
Yeah, and I think not only is it legal, it’s actually encouraged. And the reason the government gives us a lot of these benefits is because they want to encourage certain actions. So they want for investors specifically, they want us to be providing housing, because the government doesn’t want to do all their… They don’t have time to do all that, so that’s why they give us the incentives. Right now with, write off some depreciation, we’re getting bonus depreciation. And again, that’s another one of those that came out when they were trying to stimulate the economy, they’re trying to stimulate investors and business owners to spend money, make improvements on properties, and in exchange for incentivizing you to do those things is why the government gives us these different tax breaks. So yeah, definitely all our legal strategies, we don’t want to head towards the illegal side of things right? That’s not what we’re here to do.

Tony:
So Amanda, I think there’s this balance that especially new investors have to strike between showing the… Because you talked about the benefits of showing paper losses, and how it could allow you to pay zero to little taxes. But the flip side of that is that if you’re showing all these paper losses, it also makes you less bankable when you’re trying to go out and get that next loan. So as a new investor, how do you kind of balance trying to reduce your taxable income while still showing enough to help you get approved for that next mortgage?

Amanda:
Yeah, that’s a great question. And that’s one we hear a lot from investor clients that we work with. So I think there’s two main things, one is that if you’re doing things correctly there is a way to achieve both. Meaning you’re writing off, or you’re maximizing your write-offs so that you can get the tax savings, but at the same time it’s not eliminating your ability to borrow and use leverage to grow your real estate. So one of the major benefits of being a real estate investor is we get to write off depreciation, and that’s just a paper loss… We take the building of the property, we write it off over time. If you’re working with a good mortgage broker or a lender, they’re going to be able to explain that to their underwriters.
And so that’s a perfect example of something that’s tax-deductible for you to help reduce taxes, but is not hurting you when it comes to looking at your debt-to-income ratio. A couple other things on a similar note would be like, we always encourage investor clients, if you’re using your car for your real estate or if you have a home office, to make sure you’re claiming those. Because these are personal expenses that we all have already, but we’re just shifting it into a tax-deductible bucket when we’re a real estate investor. And those are two other things that, the lender’s already factoring in your rent or your mortgage payment. And so the fact that you are now deducting it as a rental expense, they shouldn’t be double-counting that against your income.
So there’s always little, different things like that where it helps to benefit you from a tax perspective, but doesn’t hurt you. But I will have to say, I mean we work… I think the vast majority of our clients are real estate investors, and I rarely come across someone who said, “You know Amanda, I really can no longer grow my portfolio because of loan issues.” I think I definitely see it more where if you have the right deals, you can find the money right? It doesn’t have to be bank financing, lots of other ways to achieve that goal of using leverage.

Tony:
So Amanda, we talked a little bit about deductions and reducing your taxable income. So just, if we can… Two questions here, first if we can just break it down, like the basic definition, what is a tax deduction? Is it just free money that the government is giving us, or what exactly is a deduction? And then if you can, what are some of the common deductions that a new real estate investor should be looking to take as they build their portfolio?

Ashley:
Yeah, so there is like this misconception that when you write something off you don’t pay for it, that the government pays for it. But yeah, so Amanda, if you can go in and kind of talk about what a deduction is, what a write off is, and what it means, and how it actually works.

Amanda:
Yeah, yeah, I love that. And so yeah, so a deduction or a write-off is the same thing for tax purposes. It’s a business expense that you’re using to offset the income that’s generated from that specific business. So we’ll use rental properties as an example, I made $100 of rental income, but I had $20 worth of expenses, right? And so $20 is my write-off, so instead of paying taxes on $100 of rental income I get to subtract 20, so now I’m only paying taxes on $80 of rental income. But you’re right Ashley, I think people are kind of confused sometimes and say, “Okay, well if I write off $20 that means I didn’t actually use my $20 to pay for the item.” But no, you still did, you still use it to pay.
The true cash from the tax saving is going to depend on what your tax rate is going to be. So let’s say you’re an investor and you spend $100 on Bigger Pockets membership for example, and your tax rate is 50%. So you write off $100, but then you apply your tax rate of 50% against this so you’ve saved $50 in cash. So that’s the way it works in terms of tax write-offs. Now there’s also tax credits, like if you are putting in solar for your car, or certain… Solar for your investment properties, or if you’re buying a new car and there’s electric vehicle credit, tax credits are actually dollar for dollar. So if someone says, “If you buy this car, you get $7,500 in credit,” that is actually $7,500 of cash in terms of like a refund or reducing your taxes. So, there is a difference between write-offs versus credits.

Tony:
But then Amanda, there are some things, like you talked about depreciation, that are paper losses, but not necessarily money you actually have to spend. Can you elaborate on those a little bit as well?

Amanda:
Yeah, for sure. So depreciation basically is what the… The government allows us to take a write-off over time for the purchase price of our building. So for example if I bought a building for $100,000, normally I can write it off over 27 and a half years. And there’s things that could be done where we can accelerate it, where we’re writing off much faster than waiting the entire 27 and a half years. But what a lot of people kind of get confused on is, what is the starting point for my write-off? So in my example I said we bought a building for $100, now regardless of whether you bought that building all cash, or if you did 20% downpayment, or if you did a subject two deal where you put like no money down, your depreciation is going to be exactly the same in all scenarios. We’re still looking at the purchase price.
So in other words, especially for new investors, I guess all investors, the more leverage that you’re comfortable to use in investing in real estate, the higher the potential tax benefit. Because our depreciation’s always based on purchase price, irrespective of how much downpayment you’ve put on a property.

Tony:
So Amanda, just to clarify, we have like two different types of… I guess really three different types of like tax benefits here. There’s the deduction you get for spending money, but you don’t get that full value dollar realized when you’re doing your taxes. You have tax credits, which is a dollar for dollar match, but you’re still spending that money. And you have this other bucket of things like depreciation, where you’re not actually spending that money but you’re still getting a tax benefit from doing it. So those are kind of the three big buckets, if I’m understanding that correctly.

Amanda:
Yeah. I mean, so depreciation just means that, you know, you don’t have to spend the cash today, right? You’re using leverage. I think we can also think about it in terms of deductions in general. So let’s say for example that I wanted to buy Ashley’s new book that just came out, but I don’t have money, I don’t have cash to buy it. And so what I did is I’m going to buy the book, but I’m going to charge it on my credit card. I could still take a deduction for it, just, even though I didn’t pay cash for it I can still write it off, because I charged it on my card, it’s an expense that I’m committed to… At some point I’m going to pay off the credit card. So yeah, when it comes to taxes it doesn’t always have to equate to cash spent. It’s more of, once I’ve incurred this expense. So that could be charging it on a credit card.

Ashley:
Amanda, besides buying Bigger Pockets books to educate yourself, what are some common tax deductions for rookie investors? Besides the property utilities insurance, should they be tracking their mileage when they drive to the properties? Things like that.

Amanda:
Yeah. I mean, I think for investors, all people but especially rookie, this is an area that where we see the biggest missed opportunity, where people are always looking at just the property stuff. Like you said, interest, and insurance, and things like that. But really there’s all kinds of things that could be tax-deductible. I think the best practice I always tell people is that when you’re about to spend money on something that’s somewhat significant, always ask yourself, “Is this something that’s going to help me improve my real estate portfolio or my wealth building? Is this something that’s ordinary and necessary for me as a real estate investor?” So yeah, it’s more than just the books or things like that, or definitely your mileage, your home office if you’re traveling to go to conferences.
It’s the flight, it’s the hotel, it’s the dinner and the drinks when you are networking with other investors. So really, just making it a habit. I know not everyone is like me and always thinking about taxes, but just make it a good habit. When you’re spending money, just kind of ask yourself a little bit, “Is this something that potentially could be a deduction?” Because here’s why it’s important, if you don’t track those expenses when you’re not asking yourself that question, then your tax person doesn’t even know you spend it. Unlikely they know, unless if they went to the conference with you. But you’re kind of that first line of defense to be tracking those expenses, and what’s the worst that could happen?
When it’s tax time your tax person might say, “Oh, actually no, that massage that Ashley had by herself was not a tax deduction.” But that’s fine, at least you’ve tracked it, it could have been.

Ashley:
So I have to get a couple’s massage with Tony in order for it to be a tax deduction and we’ll discuss business.

Tony:
Yeah, we’ll talk business.

Amanda:
Yeah, you can do some podcasts from there. I know it was Brandon Turner always talks about how he gets his inspirations when he’s getting massages. So yeah, that could work.

Ashley:
Okay producers, I know you’re listening. The next time me and Tony are in-person we’re going to do a couple’s massage while we record. Amanda, one thing I wanted to ask you about is the home office deduction. How does that work? Like, how do you actually deduct a home office?

Amanda:
Yeah. So a home office, basically it’s the IRS allowing you to take the business use part of your home as a deduction. So normally when we have our home, if you’re renting a house, or you purchase your primary home, we can only deduct mortgage interest and property taxes. Everything else, like internet, utilities, house cleaning, securities, those are personal expenses, we don’t really get a benefit for it. But as a real estate investor, if you have a room or a part of your home where you’re using for your real estate, that could potentially be a legitimate home office. And when you have a home office, well what happened is when it’s time to do your tax returns your tax preparer will help you determine a business percentage of the home that’s tax deductible.
So if I spent $1,000 on my utilities or internet for the year, but my home, 10% of it is my business office, then you might get like $100 of tax deduction on your utilities or internet use. And so again, it’s a low-hanging fruit because we all have home expenses. So if you can set your home up where you have a legitimate office, then you could be shifting some of these personal expenses into business deductions. A misconception that people think home office is only for people who own their home, but it actually works really great for renters too. So if you’re a newbie investor, you don’t own your home yet, you’re just renting, you can deduct part of your rent expense as your home office too.

Tony:
Amanda, now, one question from me, obviously there’s so many… Actually let me ask you, maybe you know the answer to this question. The IRS tax code, do you know how many pages, ballpark, it is?

Amanda:
I don’t, I know it’s like thousands of pages. And that’s just the code, right? And then there’s the regulations and all that that explains the tax code.

Tony:
So there’s so many different pieces to getting your tax strategy right, and I think as a new investor it can feel almost overwhelming when you start thinking about like, “Oh my God, am I doing this, am I doing this, am I doing that, am I doing that?” So if I’m a rookie investor and I’m having that first conversation with my tax strategist, what kind of information should I have ready for that person so that they can educate me on the deductions that are right for my unique situation?

Amanda:
Yeah, I think this is such a great question, because the goal, or my goal is never for an investor to become a CPA, right? We can get into the nitty gritty of depreciation, and the calculating the home office and all that. But really that’s not the intent, the intent for an investor is just to really understand, what are some of the things I need to do during the year, what are the systems I put in place? What expenses should I be tracking, how should I be tracking them? And that’s pretty much it, if you know what you should be doing and then you have the right tax advisors, they’ll be able to take the data, or the information you have, and then helping you to create the ideal outcome of your tax returns.
So for newer investors, I think it’s just understanding the basics of what I need. For very rookie investors, I think one of the issues that I see as an advisor, sometimes people will come to us and say, “Oh, I’m ready to do planning,” you want to know what is your investment strategy first. So there is a point where if you’re looking at, “Am I doing house hacking, am I doing short-term, or long-term, or a mobile home park,” those different investments have different tax consequences, and therefore different tax strategy. So before meeting with your tax person for the first time, you do want to have a fairly decent idea of what it is you want to do, what is my investment goal, how many rentals, what states do I want to be investing in? Because those kind of things play a very important factor for the starting point of what your plan is going to be on how to save on taxes.

Ashley:
So Amanda, we talked about different ways to track your expenses, and you may be able to save the receipts from your Lowes purchase of the new hardware you got for the cabinets, or you’re saving the copy of your insurance policy, showing the premium. But what’s the best way to track all of these expenses? And then even the expenses where you’re not getting really receipts from like your mileage, or even if you’re taking the home deduction, is there a good way to kind of keep track of how much you’re using your home office and what percentage of your utilities, things like that. Is there any great software that you recommend for a rookie investor?

Amanda:
Yeah, I think in terms of the how to track it, the system, I’m a huge systems person. I know everyone’s really busy, and so creating a system on tracking those expenses is really key. Because if you have the right system it’s something that you’ll be using throughout the year, right? I mean for me as a tax advisor, I don’t have a preference in terms of what an investor should be using. I think it’s going to be very specific to the investor themselves, so a lot of people like to use apps to track their stuff. You know, QuickBooks has apps, Stessa is another good one. So those different software and apps are really great, they can be geared towards real estate investors where a lot of these could be automated, you don’t have to do a lot of data entry.
But we also have investors who just don’t really like technology, they don’t really want to learn how to use yet another software, memorize another login. And so for people like that, especially for rookie investors, Excel or Google Sheets, something like that is also really sufficient too, as long as it’s something that you’re comfortable with and you’re using consistently throughout the year. For car expenses I really like MileIQ, it’s one that I use, it’s pretty user-friendly. But yeah, there’s different apps out there that you can utilize. For anyone who’s tracking like the real estate hours, if they’re trying to qualify for a real estate professional, or they’re using like short-term rental loopholes, a really great app is called REPS Tracker, R-E-P-S Tracker.
It was actually created by a client of mine who was a physician, and because I was tracking that in Excel. And she told me, “You know Amanda, Excel’s not good enough. Someone needs to create an app for it.”

Tony:
Amanda, can we just really quickly, because we’ve talked about this phrase a little bit. But can you define REPS? Like, what is REPS, and how can a rookie investor utilize that strategy in their investment business?

Amanda:
Yeah. So REPS stands for real estate professional status, and it is… Real estate professional is important for people who make over $150,000 a year, and are investing in long-term rental properties. Reason being that if you’re of higher income, and you invest in long-term rentals, even if you’re able to strategically create tax losses through write-offs and depreciation, things like that, your losses can only offset taxes from other passive income. So other rental properties, or anything else that’s passive to you. In other words, it’s not being used right now to offset taxes from your W2 income. So this is the limitation that… Kind of a current limitation that investors are concerned with.
So to be a real estate professional means that you or your spouse is spending at least 750 hours in real estate, and that you spend more time in real estate than your jobs. So if you’re working full-time at 2,000 hours a year, you can’t really be a real estate professional unless you spend more than 2,000 hours a year in your real estate. So, that’s why it’s important to track hours. And you know, and this kind of goes back earlier Tony, when you were asking what is the different buckets, what’s the order of preference, and that’s when I said short-term rental is the preferred bucket. Because for short-term rental properties, we don’t have to be a real estate professional to use the losses. In other words, we don’t care how many hours you’re spending at your job, we don’t have to have 2,000 hours.
You just have to have some material participation hours for your short-term rentals. So yeah, we can talk for eight hours on the whole real estate professional stuff, but that’s kind of the gist of it. And again, why it’s important, if you’re trying to go with one of these loopholes or strategies, that you’re not just tracking expenses but you’re also tracking your hours as well.

Ashley:
So, would this work for a married couple filing jointly if maybe the wife has a high-income W2, and then the husband is the stay-at-home dad, is it beneficial for him to actually take on the workload of their real estate business? And then with them filing jointly they’ll get that tax benefit of her high income along with the real estate professional status of his?

Amanda:
Yeah, yeah, exactly. That’s exactly the profile that would make sense, you’ve got one high-income person, you’ve got someone else who’s not working full-time, and having that second person be the main person in charge of your real estate activities and your investments and things like that. So this is where when you hear stories about, “Oh, I made $500,000 last year and I paid no tax,” odds are they’re talking about some kind of profile like this. And not just the same person making 500,000 and doing real estate full-time, right.

Tony:
So Amanda, with all of this information out there, and it’s mind-boggling to me how many different things you have to keep track of as a CPA. So I have the upmost respect for you and your ability to kind of keep tabs on all that. But if I’m a new investor, what steps can I take to I guess protect myself from getting the wrong information.

Amanda:
Gosh. You know, it’s interesting, especially with social media now right? There’s so much information and content out there, and I put out content myself too on social media. But I always try to tell people like, “Hey, content is content, but you want to make sure you’re talking to your own tax advisor to see if this strategy or this idea actually applies to your specific scenario.” So a strategy that works for Tony may or may not work for Ashley, right? And so it’s just making sure that you are speaking with someone who knows about you and what you have going on. So then the next question is, how do I find that person who is well-versed in real estate, or can help me in real estate? And I think nine times out of 10 when investors are interviewing tax preparers or CPAs, the question they ask is, “Do you work with real estate investors,” right?
That’s a easy question to ask. And probably 10 out of 10 times the answer’s going to be, “Yes, I work with real estate investors,” because everybody has at least one real estate investor client. So it’s not really a powerful question, I think a more powerful question is to kind of have them talk about real estate. Earlier we talked about the real estate lingo, so you can ask them. For example, “What do you think about subject two deals? How do you treat those for tax purposes?” And let them talk. I mean, maybe you don’t really know if they have the right answer or not, but at least you know whether they even understand what is a subject two deal. Or you can ask, “What are your other rookie investor clients doing, where are they investing, what are you seeing is successful with your other investor clients?”
And just really let them talk, and I think you’ll quickly be able to see how in-depth of a real estate conversation they can get into to see if they actually are someone who works with a lot of investors.

Ashley:
So Amanda, we talked a lot about different tax strategies, things like that. And in the beginning you had mentioned putting together the actual structure of the entities. So, could you maybe talk a little bit more in-depth about that, and as rookie investors what’s the best way to start? We hear all the time, “Put it into your personal name so you get that long, 30-year, fixed low interest rate,” or, “Put it in an LLC.” Should you do a corporation, do you have a holding company? There’s all these different ways. Do you put it into a trust? All these things. So what would be your recommendation for just somebody starting out, or does it really depend on what they have going on outside of just buying their first property?

Amanda:
Yeah. I mean, I have to go with the unpopular answer of it depends, because it really does. And I think that if you’re ever talking to someone and they say… Like if you go to like a conference and someone is saying, “Everybody needs to have a Wyoming LLC with a corporation,” definitely stay away from that, because there’s never a one-size-fits-all strategy, especially when it comes to legal entities. But kind of a couple high-level points, if you’re talking about rental real estate it’s going to be in your personal name or in an LLC, okay? It’s not going to be in any kind of corporation, and the reason is because there’s a lot of downsides to owning rentals in a corporation. On the other hand, if you’re someone who’s an active investor, meaning like flipping, wholesaling, real estate commissions, property management, then those are times where it could make sense and you could save taxes by being in a corporation.
But the vast majority of rental investors, and especially rookie investors, the LCC’s going to be the way to go because you can likely maximize all of the various write-offs we talked about today, regardless of whether you own the property in your personal name or inside of an LLC, okay? So the LLC is really just there for asset protection purposes, not for tax reasons. And a lot of newbie investors come to me and say, “Oh my gosh, I heard you on the podcast talking about writing off books, and this and that, but I don’t have an entity yet.” So it’s really important to understand, you don’t have to have a legal entity to be writing off these expenses, you just have to be in the business of investing in real estate.
And that could simply mean owning a rental property in your personal name, starting out just with the simplest, buy a property in my name, renting it out. Or even like house hacking, that you are in the business of real estate. So, don’t necessarily need to have an entity.

Tony:
So Amanda, I just want to recap what you just said, because I want to make sure it doesn’t go over the heads of our listeners. But what you’re saying is, you do not need an entity, an LLC, an S-corp, any of that to take advantage of the tax benefits that come along with investing in real estate? So the property could be in Tony’s name, the mortgage could be in Tony’s name, all of the expenses could flow through an account that’s in Tony’s name, and I could still have the tax benefits that come along with investing in real estate?

Amanda:
Yeah, exactly, exactly. And I think one thing especially for rookie investors is, even if you decided to have an LLC for your first one, or two, or three rental properties, the caution is don’t go overboard with legal entities. I unfortunately meet investors who spend 10 to $30,000 in legal fees forming all these very complicated, extravagant entities. A lot of times it’s not needed, especially if you’re just starting out. And it could get very costly in terms of the annual fees, different bank accounts and bookkeeping, and tax returns. So, be careful of getting too complicated too quickly.

Tony:
Amanda, just one followup question on that. What could be the reason that an investor would need more than one entity? Like, in what scenario does it actually make sense for them to do that?

Amanda:
So if we’re talking about rental real estate specifically, it would be from an asset protection perspective. So it could be a case where your attorneys says, “Okay, well you have two rental properties. One you have a lot of equity, the other one you have very little equity but high risk.” You know, there’s a pool, there’s stairs, your tenants have babies. So, maybe you want to have them in two different entities so that you’re bifurcating kind of the different risks associated with it. But you know, the reason you’d have multiple would be because your attorney feels like you need that level of asset protection, and not just because Robert Kiyosaki has these crazy structures, and therefore I must have that to be successful.

Tony:
So from a tax benefit, or from a tax perspective, there typically isn’t a whole lot of reasons you should have multiple different LLCs?

Amanda:
Yeah, yeah. I mean, we do want to separate out our investments from our active income, so again, if you’re someone who’s flipping and wholesaling you have an entity for that, then you have rental real estate, you have a different set of entities just to keep them separated. But yeah, tax-wise, specifically looking at taxes there’s not a reason to have a bunch of entities holding a bunch of different properties. For me, I think with anything else in real estate or business in general, I always take a look at it from the cost/benefit perspective. What is it going to cost me to have X number of entities, and what is the benefit that I’m getting from it? Whether it’s saving on taxes, or being able to sleep at night a little bit better, to then decide how many entities do I really want to not just form, but maintain, right? People love forming entities and picking out cool names, but you have to maintain those entities and bank accounts, and it’s just a lot of stuff.

Ashley:
I think one thing too, just to add to that, it’s not really for a tax reason. But also if you have different partners, you’re going to have different LLCs too, you’re going to… That would be a major reason to open up different LLCs, is if you’re taking on different partners. Because it would be almost impossible to have one LLC, but have a property me and Tony own 50-50, and then me and Darryl own 50-50, another property within the same LLC. So that would be just another obvious reason to have a separate LLC too, outside of the liability and the tax implications too.

Amanda:
Yeah, definitely. And we do see that sometimes with rookie investors who are scaling quickly, where they’ll have different deals with different partners. And that’s also a good sign that you should be working with a tax advisor too on, are there better ways to simplify the structures, or are there better ways to scale without having like six different partners and six different entities with just six properties too? But yeah, that’s a great point.

Tony:
Cool, all right Amanda. Well Ash, should we head into our questions? Is there anything else you want to hear from Amanda first?

Ashley:
No, I think we should definitely go into… We have a Facebook question today, instead of a Rookie voicemail. So Amanda, today’s question comes from the Real Estate Rookie Facebook group. This question is, “My husband and I are new investors, but I come from a family with a past in real estate investing. My grandfather, now deceased, had many rentals and eventually set up trust funds for several apartment complexes and storage unit sites with my uncle as the trustees, and my siblings and I as the beneficiaries. None of us have really taken the dive into all of this to see how to maximize the portfolio, we’ve just been enjoying passive income for years. My question is, once a property no longer has the tax depreciation, what options do you have to continue getting the maximum tax benefits of real estate investing?
“Sell the property, use equity to invest in something with a higher price tag? I am very curious as to how we can leverage equity to purchase more deals, especially since the 27 years of tax depreciation is up. One apartment building he bought over 40 years ago.”

Amanda:
Well, first off what a lucky person to inherit such a wonderful asset. And I think for all of us as investors, that’s where we hope to be, to leave our legacy to kids and grandkids in that manner. But yeah, that’s one of the best ways… And we talked earlier about the super-wealthy people, how they get the tax benefits, and we can do the same as real estate investors. So this is a really great example, right? This property has a good amount of equity. Now you could probably sell the property, and depending on how it’s structured, how it’s in the trust, or coming out of the trust, potential ways to do a 1031 exchange to defer the taxes on the gain, and then also reinvest that money into bigger and better properties, and create new depreciation, new write-offs, which sounds like it’s their goal.
But if you didn’t want to do that, tapping into equity is one of my favorite strategies. So if there was a million dollar, or $2 million of equity in this property, you can get financing to tap into that equity. The money you take out, you don’t have to pay taxes on it. So if you took out 600,000 or $800,000, you’re not paying taxes on that currently. So you take the $600,000 as a downpayment, and then you can buy another, a million, 2 million, 3 million dollars’ worth of real estate. That’s a huge amount of new depreciation and write-off that you get, and you still continue to hold onto the original property, right? Still appreciating, and maybe a little bit less cash flow because now we have debt.
But it’s still going to be appreciating too, so I love the possibility of being able to tap into that equity tax-free, and then using the new money to grow and build your portfolio even fasteR.

Ashley:
Amanda, let me ask you, how does it work then as to who actually gets the loan on this? So the trust would actually get the loan on the property, but then would the beneficiaries, or would it be the trustee? Who would actually sign as a personal guarantor, or would they have to go and get a mortgage where they’re not personally guaranteeing anything?

Amanda:
There’s various different ways to do it. I imagine probably… It’s going to be dependent on how the structure’s set up, and also whether they want to continue holding the properties in the trust. Or at some point, maybe they want to distribute the assets out of the trust so that the beneficiaries are just owning it individually or collectively in some sort of other entity too. But yeah, in terms of who’s going to sign, who’s going to be guarantors on it, I mean, I imagine it could be everybody, but I think that’s a better question maybe for like a lender to address.

Ashley:
Yeah, I was just curious of that. I don’t have a trust or anything, but I’ve worked with another investor who does, and it’s actually become like more of a headache for him than actually beneficial, I feel like. So that was just a question I had.

Amanda:
Yeah, and we do see that a lot too. That’s why I was saying sometimes the best option is to unwind the trust, just to take it out of the trust, because there are limitations. And the word trust is very generic, we don’t really know what kind of trust. There’s so many different types of trust that exist out there, some are easier to unwind and others not as easy to do.

Ashley:
Okay, well thank you so much for answering that question.

Tony:
Yeah, that was a great response. And I feel like we could keep this conversation going forever, like there’s so many things in the world of tax prep and strategy that… Yeah, there’s so many things, but you provided so much value, Amanda. So I want to finish things out by going into our rookie exam, these are the three most important questions you will ever be asked in your life, Amanda. So are you ready for the real estate rookie exam?

Amanda:
Yes, scared but ready.

Tony:
Question number one, what’s one actionable thing rookies should do after listening to this episode?

Amanda:
One actionable thing that they should do is follow me on social media, Amanda Han CPA. I try to put out good content every day, and so yeah, I think that little snippets of information, so that it’s not too overwhelming.

Tony:
And Amanda, you’ve been blowing up on Instagram, so kudos to you. I think you were at like what, 1,000 followers a few months ago. Now you’re at like, what, 10, 11,000, somewhere around there? So you’ve been doing a great job on social. Guys, make sure you do give her a follow.

Amanda:
Oh, thank you, yeah. It’s been fun, it’s been fun to share little tidbits and tips here and there.

Ashley:
Amanda, what is one tool, software, app or system in your business that you use today?

Amanda:
I use a ton, I use a ton for taxes and things like that. But I started using Zapier, I don’t know if you spell… I don’t even know if you pronounce it Zapier or Zapier, if you guys know, but it’s an automation tool that automates like a lot of stuff in our firm. From marketing, to administrative, I don’t really use it for real estate specifically right now, but I do use it for marketing and I really like that.

Tony:
Yeah, Zapier is great, and it has so many connections to so many different things. I even want to say that it has like some kind of accounting stuff built into it as well, but don’t quote me on that. But yeah, Zapier’s a great tool. All right, last question Amanda. Where do you plan on being in five years?

Amanda:
In five years, gosh. It’s interesting, because I really love what I do, my role, our firm, Keystone CPA. It sounds so strange to say, but I hope I’m doing the same thing that I’m doing now five years from now. Investing-wise, I think I want to be more passive. I mean, I’m somewhat passive now, I have a portfolio. My husband and I, we have a portfolio of properties that we somewhat self-manage. But we are trying to grow more into the… Put more of our money in the passive side of things. I’m a huge believer in leverage, in real estate we talk about leveraging when it comes to debt, good debt. But my new thing now is leveraging the expertise of other people, so other investors who are bigger, better, smarter than me, and just having them help me grow my portfolio.

Ashley:
Amanda, thank you so much for coming onto the show with us. Besides your Instagram account, where else can people reach out to you and find out some more information about you?

Amanda:
Yeah, I think Keystone CPA is our firm name, so keystonecpa.com is our website. I think that’s the best place to find me. We have a lot of great, free downloadable resources. So we talked a little bit today about real estate professional, and the short-term rental loophole, and legal entities. So if you’re a rookie investor and some of these kind of was the first time you’re hearing about it, definitely check out our website and download our free tax savings toolkit to get more information on that.

Tony:
Amanda, you also have two amazing books under the Bigger Pockets umbrella. Would you mind dropping those for us as well?

Amanda:
Oh yes, here it is behind me. So, Tax Strategies for the Savvy Real Estate Investor, and then our second book is the book on advanced tax strategies. And so for any of you who haven’t read it, I promise you it’s not what you think when you hear about a tax savings book. It is filled with stories, success stories and also kind of nightmare stories about what happens when you do tax planning correctly, versus when you do it incorrectly. So yeah, definitely check it out.

Tony:
Yeah, and it’s a great foundational book. Like if you were intrigued by some of these strategies that we talked about on the podcast today, but you also feel kind of overwhelmed by the idea that there’s so much more for you to learn, those two books are a great first place for you guys to get started. Before we close things out, I just wanted to give a quick shout out to this week’s rookie rock star. This week’s rock star is Raleigh Anthony Salazar, and Raleigh says, “It’s done, I bought my first true rental property, and I did it out of state. Back in July I cashed out and refinanced my live-in [inaudible 01:01:48], that is currently my primary residence for now. I put about 90K into my pocket, so I started looking for opportunities to invest.
“Living in the Pacific Northwest, I wanted to find better options so I looked into the Midwest.” And Raleigh says, “It would be possible without connections I made in the Real Estate Rookie Facebook Group,” so just another plug, if you guys have not yet joined the Real Estate Rookie Facebook Group make sure you do. But to wrap it up really quickly, Raleigh said, “Bought this property for $100,000 at 25% down, three bed, one and a half bath,” and is now looking to put in a lease for about $1,100 per month. And there’ll be cash flow in just over 100 bucks every single month, so Raleigh, congrats to you for getting that first deal done, and we’re super excited to see where it goes.

Ashley:
Amanda, thank you so much for joining us onto the show, we really appreciated having you. And if anybody would like to purchase the book on tax strategies for the savvy real estate investor, you can go to the Bigger Pockets bookstore and you can use code ASHLEY or code TONY to get 10% off. So Amanda, thank you very much. I’m [email protected], and he’s [email protected], and we will be back on Saturday with a Rookie reply.

Speaker 4:
(singing)

Watch the Podcast Here

In This Episode We Cover

  • The biggest real estate tax deductions and some that many investors often miss
  • Depreciation explained and how this paper loss can help you keep your passive income
  • The best tax strategies for investors trying to minimize their taxable W2 income
  • How to find the right tax advisor and what they MUST know about real estate
  • Tracking expenses and making it easy on yourself during tax time
  • LLCs for rental properties and whether you even need one in the first place
  • And So Much More!

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