How to (Legally) Pay the Least Amount in Taxes as a Real Estate Investor

This episode alone could save you hundreds, thousands, or tens of thousands in taxes—all with 100% legal means. If you own a rental property, you could be paying significantly less in taxes. With the US tax code being favorable to real estate investors and renewed provisions in the One Big Beautiful Bill, real estate investing is one of the most tax-advantaged investments on the planet. Today, we’re showing you how to pay the least amount of taxes, before tax day 2026! Amanda Han, CPA and real estate investor, says 40% of the tax returns she reviews are not optimized for deductions. Investors are leaving thousands on the table and giving it straight to the IRS. But after this episode, you won’t have to anymore. We’re talking about how real estate investors can reduce their taxable income by up to 20%—instantly. Plus, the one renewed tax deduction that creates six-figure write-offs for investors, and what you can start doing right now to lower your taxes as much as possible starting in 2026. In This Episode We Cover How to reduce your taxable rental income by 20% instantly (many investors miss this) The biggest (six-figure) write-off that was renewed in the One Big Beautiful Bill Commonly missed real estate tax deductions that every investor can write off Are opportunity zones back? How to defer your capital gain to another year What to start doing right now to have the most tax deductions with the least stress If your CPA says this to you…consider finding a new one And So Much More! Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.biggerpockets.com/blog/real-estate-1239 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠[email protected]⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Dave Meyer?

  If you skip this episode, you could be leaving thousands of dollars on the table. They say there's only two things guaranteed in life, death and taxes. And since you're alive, watching this right now, today, we're going to focus on the latter, how real estate investors can legally pay less tax. And things have changed a lot this year, big time. The big, beautiful bill tax provisions are going into effect for this April's tax deadline, and it has huge implications for real estate investors. And that's true whether you own one rental or an entire portfolio. The strategies we're sharing today, they could save you hundreds, thousands, or even tens of thousands of dollars over the lifetime of your investments. In this episode, we're also going to share the under the radar tax strategy

• 0:44Dave Meyer?

  that 99% of investors are missing out on, and we'll have a CPA tell us what you need to do today, so you're never scrambling during tax time again.

• 0:59Dave Meyer?

  Hey, what's up, everyone? I'm Dave Meyer, Chief Investment Officer at BiggerPockets. Today's guest on the show is Amanda Han. If you haven't heard Amanda before, she's been on the show a lot, but she's an expert. She's a CPA, a tax strategist, and she's a real estate investor herself. She specializes in helping investors pay the least amount of possible taxes legally. And since April 15th is coming sooner than any of us hope or think, let's bring out Amanda and learn together how to save some money this year. Amanda Han, welcome back to the BiggerPockets Podcast. Thanks so much for being here.

• 1:34Speaker 01

  Yeah, thanks for having me, Dave. I'm super excited to be back.

• 1:37Dave Meyer?

  Well, we've had you on the show many times, but some in our audience may not know who you are yet. So can you just introduce yourself for us?

• 1:44Speaker 01

  Of course. Hi, everyone. My name is Amanda Han, and what I always tell people is that I am a CPA by day. And by nighttime, I am, like many of you, a real estate investor. My husband and I co-authored the two BiggerPockets tax books. So if you haven't checked those out, make sure to do so. One of my passions is really in helping to educate people on all the different things they can do to use real estate, to not just build wealth, but also to save a significant amount in taxes, if you do things correctly. So really excited to be here. It's that time of the year when taxes are top of mind.

• 2:21Dave Meyer?

  It is. Well, thanks for joining us today. And if you haven't read Amanda's book and you want to save money on taxes, it's the single best thing that you could do. I self admittedly, Amanda, you know this about me, I'm terrible at this stuff. I'm not good at tax strategy, but I've gotten better because of reading Amanda's books and getting to know her. So definitely check that out. But hopefully we'll give you a little taste of the kind of stuff that you can learn here in this episode. So Amanda, maybe just break it down for us, for people who might be new to investing, or for those who are just scaling their portfolio. I think a lot of us, it takes a little time to realize that you should be thinking about taxes. What are sort of the big buckets of tax strategy that investors should be thinking about?

• 3:03Speaker 01

  Yeah, well, I will start at the basics, which is that it's important to understand when you invest in real estate, you are actually a business owner in the eyes of the IRS. And so, you know, we hear people talk a lot about how tax law favors business owners when it comes to write offs, deductions, depreciation. And so it's really important to understand that as a real estate investor, I am now able to take advantage of a lot of those same tax benefits and deductions that the traditional business owner has access to. And this is true regardless of whether we own our rentals in our individual name, or in our trust, or in an LLC.

• 3:46Dave Meyer?

  We call it real estate investing, but it really is just entrepreneurship. You're starting a small business to own real estate, just like any other service business or business that you create. And that is good. That's a good thing for real estate investing. That's why you get better tax benefits than if you were to go out and buy stock or cryptocurrency or anything like that. That's why real estate has so many advantages. So what are the big things that people should be thinking about as they enter tax season right now?

• 4:15Speaker 01

  You know, what's really interesting is when we work with investors all over the US on proactive tax planning, about forty percent of tax returns that we review from previous years are not optimized for tax savings. And I can share some of the most common mistakes I see, and I think these are kind of the things that we should all keep in mind.

• 4:33Dave Meyer?

  Yeah.

• 4:33Speaker 01

  As we get ready for tax season, right? And we'll start with just capturing expenses. As real estate investors, I think we're all really good at making sure we write off our mortgage interest and property taxes and management fees, but some of those common mis deductions, even insurance, property insurance is one that we see missed pretty frequently.

• 4:52Dave Meyer?

  Really?

• 4:53Speaker 01

  And it's really strange because we all have property insurance. But just some of the overhead things, home office, most real estate investors manage their rentals from their home. Very few people actually go out and rent an office space. So if you have an eligible office, make sure you are claiming it because it does help you to save on taxes either today or sometime in the future, depending on your your facts and circumstances. But just overhead expenses, going to BiggerPockets Conference, your BiggerPockets membership, buying a tax book, for example. Using your car for business, right?

• 5:27Dave Meyer?

  Yeah, absolutely, for sure. I always wonder about like travel, is that something that you can deduct? Like I invest out of state and so sometimes I'm going to visit the Midwest and I'm staying at hotels. That's something I can deduct, right?

• 5:40Speaker 01

  Yeah, for sure. And you actually, it's not a requirement that you own rental properties in a state in order to take a tax deduction. What is required is that you're able to demonstrate the main reason for that travel is related to real estate activities. So for example, if I didn't own any properties in Orlando, but I'm going to Orlando for a BiggerPockets conference, that travel itself should be tax deductible, right? The flights, the hotels, the food when I'm there. And same thing if I'm just, I happen to have a trip planned to go to Ohio to look for rental properties. Even though I don't end up buying any properties, my travel costs could be deductible.

• 6:19Speaker 01

  As long as I can show I went there for the purpose of looking for real estate, touring properties and things like that.

• 6:26Dave Meyer?

  So I want everyone to listen to that because this is something that comes out up a lot. When we talk about out of state investing, people don't go and visit markets that they're considering investing in. And I always encourage people to do it. It's a big expense, I understand that, but it is tax deductible in most situations. So that does take the sting out of it a little bit. It is a business expense and encourage you to think about it. So that's one big thing people should be thinking about in their returns, right? Expenses, what else is there?

• 6:53Speaker 01

  Well, along this kind of a similar line, oftentimes when we review tax returns, obviously, one of the big things we look at is depreciation, right? Our ability to take a paper loss on the purchase price of the rental building we purchased. And very frequently, we'll see the depreciation as a very round number. So $500,000 for Main Street or $200,000 for Fremont Street. And that usually jumps out to me as not really capturing all of our costs associated with the acquisition of a property. Because we all know when we buy a property, we're not just paying the purchase price of it. We are also paying closing costs.

• 7:35Speaker 01

  And there is different allocated or prorated property taxes and insurance and all those. So one thing we can do for any of you who've purchased a property during the year, sold the property, refinanced on a property, make sure you send your closing disclosure to your accountant as you get ready to meet them. Because then they can take the closing disclosure and pull out all of those associated expenses beyond just you telling them what the purchase price is.

• 8:02Dave Meyer?

  Okay, that's a very good tip. And how big of a difference does it make? Like if you have an average rental property, it's $400,000, you know, you're making some cash flow off of it. How big of a difference in your tax is it when you prepare the tax right? And when you do it sort of just haphazardly?

• 8:21Speaker 01

  Oh, you know, the answer really depends from person to person, right? Because one question is going to be, what is your tax rate? If you're someone who is in a high tax bracket because you make a lot of income from other sources, then even a thousand dollars of a deduction could save you five hundred dollars in actual cash.

• 8:40Dave Meyer?

  Yep.

• 8:40Speaker 01

  And for some people, that's a, you know, it's a decent amount. I think for anyone, I would, you know, I would never throw away five hundred dollars for no good reason.

• 8:48Dave Meyer?

  No.

• 8:48Speaker 01

  But if you have a good system to track your expenses, those items add up over time.

• 8:54Dave Meyer?

  Mm hmm.

• 8:55Speaker 01

  So if you're able to utilize it this year to offset your taxes, great. If you can't because of passive activity limitations in the tax world, I always encourage clients, still track them, send it to your accountant, because you want to make sure it's reported. Because even the expenses that you cannot utilize today, you never lose them. You get to utilize them some point in the future.

• 9:17Dave Meyer?

  Yeah, in an era of real estate investing where it's super hard to find cash flow. This is cash flow. We often treat taxes as this separate income source or something different to think about in real estate.

• 9:30Speaker 01

  Mm hmm.

• 9:30Dave Meyer?

  But as Amanda just said, she used a modest example of if you can, you know, save five hundred bucks, that's reasonable. If you could save twelve hundred bucks and that's a hundred dollars a month in cash flow, that could change your cash on cash return from three percent to six percent in a given year if you're actually just doing this right. And it's one of the ways I think you could just keep more money in your pocket. And that really has measurable differences in, in your actual overall return profile.

• 9:58Speaker 01

  Yeah, I mean, I used a very small example, but if, you know, if we go to the other extreme and say, well, how impactful could that be in real life?

• 10:08Dave Meyer?

  Yeah.

• 10:08Speaker 01

  If we're talking about somebody who invested in a rental property where the building was four hundred thousand dollars. You know, with the current law where we have a hundred percent bonus depreciation, that could be what a hundred and twenty thousand dollars of a deduction just in the first year. If you're in a, you know, fifty percent tax bracket, that could be sixty thousand dollars in tax saving. So, you know, we're saying, okay, save five hundred or save sixty thousand. I love both of those, you know?

• 10:38Dave Meyer?

  Yeah, sign me up 100%. All right. So those are some great basics that everyone, whether you're just starting or have a big portfolio should be listening to. Of course, this year, we have some exciting tax stuff, I think, from a real estate investing perspective, where many of the provisions that were passed last year in the one big, beautiful bill act are starting to go in effect. So I want to pick your brain on that a little bit, Amanda. We do have to take one quick break. We'll be right back. Summer bookings sound great until someone slips by the pool, gets hurt on your dock, or damages your property during a long holiday weekend. A lot of short-term rental investors don't realize their standard policy may leave gaps when it comes to short-term rental

• 11:19Dave Meyer?

  activity. That's why investors use Steadily. They offer landlord insurance built for real estate investors, including short-term rentals. And if you're a BiggerPockets Pro member, you'll also get 5% off your landlord insurance premiums. Visit biggerpockets.com/landlordinsurance to learn more.

• 11:37Henry Washington?

  Here's a strategy that most W2 employees have never heard of. Normally, if you want to write off a rental property against your regular income, you need real estate professional status. That means tracking hundreds of hours a year. Rent to Retirement just launched a program that skips all of that. It's called the STR loophole tenant placement program. Here's how it works. You buy one of Rent to Retirement's Class A new construction investment properties. You set up an Airbnb listing and self-manage it for the remainder of the year. Rent to Retirement then rents the home as a short-term rental to establish it as an STR for the year, no furnishing required, making this the easy button to save five or six figures in taxes this year. And because you're the sole manager, there's no hourly

• 12:22Henry Washington?

  minimum to meet. That lets you use a cost segregation study to accelerate the depreciation and potentially write off over $100,000 against your income, even on your first rental. Add in cash back up to 13% of the home price, which exceeds $60,000 on some properties. With this massive cash back incentives, investors are seeing total returns up to 126%. New construction, A-class properties, and inventory is limited. Learn more at biggerpockets.com/retirement or text REI to 33777. Again, text REI to 33777.

• 13:00Henry Washington?

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• 13:40Henry Washington?

  Get approved for the Aven card and you'll get a $400 statement credit after spending $400 on your Aven card. Enough to cover your entire annual Pro membership. Head over to aven.com/biggerpockets to see if you qualify. Aven Financial, NMLS #2042345. Cards issued per 2020 license from Visa USA, Inc. by Coastal Community Bank. NMLS #462289. Member FDIC. Equal housing lender. Set up to approval. Terms apply. Visit aven.com for details.

• 14:04Speaker 03

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• 14:37Dave Meyer?

  Welcome back to the BiggerPockets Podcast. I'm here with Amanda Han talking about tax strategy. It's the beginning of the year. It's time that we all start thinking about this. Amanda enlightened us before the break just on how you should be thinking about capturing your expenses on a property level and how to maximize your deduction so you can keep more money in your pocket. A lot of things are changing though, Amanda. It's not just the same old, same old in tax world for real estate investors. So maybe you can give us a... High level overview of what has changed and what's in the big beautiful bill act that is relevant for real estate investors.

• 15:14Speaker 01

  Yes, well, I mean, not surprisingly, with the current administration, the one big beautiful bill included a ton of very amazing benefits for real estate investors. One that, you know, I think everybody was really excited for was the return of 100% bonus depreciation. Previous to that, we can always take depreciation on our rental properties, but under the old law, if there hasn't been changes, this year, bonus depreciation would have only been at 20%. So with the change of the law, now bonus depreciation for 2026 is at 100%, which effectively means, you know, if you bought a property after January 19th of 2025, or any time

• 15:58Speaker 01

  in 2026 and the foreseeable future, not only do we get to take depreciation on our rental properties, but that amount is supercharged, meaning we can take a very significant tax benefit upfront, rather than the traditional rule of having to wait over a significant number of years to take a tax write-off for it.

• 16:21Dave Meyer?

  And maybe you could just help us understand, what is the benefit of front-loading depreciation? And what are some instances or circumstances where you recommend that for real estate investors?

• 16:32Speaker 01

  For sure, the purpose or the benefit of accelerated depreciation, basically saying, rather than waiting over time to take a tax benefit on the purchase price of my rental building, I'm going to do what's called a cost segregation study. And what that does is it allows me to then take faster depreciation this year and maybe the next few years, rather than having to wait. So effectively, we're looking at the time value of money, of savings. In other words, I know I have to pay taxes to the IRS, I can either pay it now, or I can pay it slowly over the next 27 or 39 years. And if I choose to pay my taxes later, that means I'm able to keep my cash longer with

• 17:13Speaker 01

  me today and reinvest and grow that money today, rather than just give me it to the IRS. So that's where the concept of it. Now, I will, I will say, it is not for everyone, so don't run out and start taking accelerated depreciation just because you hear it here. The ideal profile of when you want to take accelerated depreciation are in years when you can actually benefit from it. So that would be years where you have high taxable income and or years where you can actually utilize rental losses to offset that different set of income that you're generating, whether it's from a W two or a business that you operate. And so conversely, who should not do a cost segregation? Well, you should not accelerate depreciation if you're not able to utilize it this year.

• 17:58Dave Meyer?

  For someone like me, or maybe for someone else who has a W two job, is bonus depreciation and doing the cost egg even worth it?

• 18:06Speaker 01

  Another great time to do cost segregation is if you have a gain. So let's say I have a portfolio, but I sold one rental for a huge gain and I didn't want to ten thirty one exchange or use other strategies. I could also consider doing a cost segregation on one of the properties of my existing portfolio and try to offset one with the other.

• 18:25Dave Meyer?

  So you can actually take the depreciation from one portfolio property and apply it to another one, even if you're not a real estate professional?

• 18:34Speaker 01

  Yep, exactly, exactly. And I will say one other thing, since we're on the topic of of someone who is not a real estate professional. You may have been told by your accountant that there is no tax benefit to you investing in real estate because either you work full time or you make too much money. And when you hear that from an accountant, they're doing what I called tunnel visioning because all they're saying is, for example, Dave, you're not going to see a huge benefit this year in owning rental real estate because you're still going to pay taxes on your W two income. But what they're not factoring in are the different benefits, which is I generated rental cash flow that I'm not paying taxes on.

• 19:14Dave Meyer?

  Right.

• 19:14Speaker 01

  And also in the future, when I generate future cash flow, I may not have to pay taxes on. And also the most important part, which is at the end of my investment with this specific property, if I were to sell it, at that point, I can actually use all of the accumulated losses from that property to reduce not just the capital gains from the sale, but also W two and all other income as well. So there's absolutely benefit to being a real estate investor. It's just a timing of when somebody actually sees that.

• 19:46Dave Meyer?

  One of the things I struggled with early in my investing career is you look at these things, you say, oh, I'm going to pay this tax eventually if I just defer it. And at least for me, I didn't really appreciate the time value of money element. Like, I can keep more principal in my pocket and use that to go buy other investment properties, to make renovations on my properties. And in addition to just delaying that, this is getting nerdy about it, but you also wind up paying your taxes in inflated devalued dollars over time, too. So your purchasing power, part of the idea of the time value is money, is your money is worth today more than it's worth in the future. And so if

• 20:26Dave Meyer?

  you can hold on to it and use it to build your portfolio currently, then it's better, you know, to invest $100 today than it is $100 several years from now. And so that's one of the main things about tax strategy that real estate allows you to do. And that's kind of the same idea behind like a 1031, too, right? Like, you eventually, in theory at least, have to pay that tax. But like, if you can defer that and go out and save the 20% on capital gains and just go buy another property, it means you just have more purchasing power, which is so powerful, especially early in your investing career. So, anyway, long conversation here about bonus depreciation, depreciation in general. Anything else from the One Big Beautiful Bill Act that our audience should know about?

• 21:07Speaker 01

  Yeah, well, beyond bonus depreciation, one of the good things about the One Big Beautiful Bill is that we were able to retain the tax benefit that's called Qualified Business Income Deduction, QBI for short. So that was something that was available that was then, you know, extended as part of the One Big Beautiful Bill. And basically, the reason we care about that as real estate investors is QBI basically allows certain types of business income to have tax-free treatment up to 20%. So an example could be if, you know, I've owned my rentals for many years, and even after using depreciation and cost

• 21:48Speaker 01

  segregation, I just, I have to pay taxes. There's taxable income. Well, under QBI, if I had $100 worth of taxable income, I may only have to pay taxes on eighty dollars of it, which means twenty dollars of my taxable rental income could be completely tax free. And this doesn't just apply to rental income. It applies to all different types of income, specifically in real estate as well. So for those of you who are flipping properties, doing wholesale, or if you're a property manager, co-hosting, you know, all of the different types, up to twenty percent of that taxable income could potentially be tax free under QBI deduction.

• 22:29Speaker 01

  And that is something we enjoy for twenty twenty five as well as twenty twenty six.

• 22:34Dave Meyer?

  Amazing. Finally, a tax win for flippers at wholesalers. Like, honestly, you know, as you're, as you're listening to Amanda, most of the benefits for real estate investors come with buy and hold styles of investing. It doesn't need to be rentals. A lot of them still apply for short term rentals or midterm rentals, but it's kind of a buy and hold. The transactional kind of real estate doesn't always get the same treatment. But QBI is a great example.

• 23:00Speaker 01

  Although I will say that for some reason, a lot of tax returns we review that are prepared by other firms are often missing that QBI deduction. So one of the things as you're getting ready to meet with your accountant to file last year's taxes, that's another question you can add to the list, is just to have them double check. You know, make sure I'm getting my qualified business income deduction. And it very well could be that, hey, it doesn't apply to you because you have rental losses, right? So when we have losses, it doesn't apply because it's already, we're already not paying taxes on it. But to the extent you have taxable income from real estate or even a non-real estate business, it's super, super significant when it comes to savings. And we see this mostly with our clients who do fix and flips

• 23:42Speaker 01

  and our clients who are on the active real estate side, you know, brokers, realtors, has, you know, been a very significant tax saving in the past couple of years.

• 23:53Dave Meyer?

  All right, well, everyone, make sure that you have QBI, or at least think about QBI and see if you qualify for this QBI deduction this year. Sounds like that could be a huge savings. All right, we got to take a quick break, but when we come back, we're going to talk to Amanda about how to set yourself up for a stress-free and hopefully very profitable tax prep season this year. Stay with us, we'll be right back. For my wife's birthday, I wanted to make her a new website for her landscape design business. So I researched a lot of different options. I tried out a couple, but honestly, it was really overwhelming. It was pretty time consuming and still the site wasn't coming out the way I wanted it to. Then I tried Hostinger and everything was super simple.

• 24:38Dave Meyer?

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• 25:22Dave Meyer?

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• 28:12Dave Meyer?

  Welcome back to the Biggle Pockets Podcast. I'm Dave Meyer here with Amanda Hahn talking tax prep and tax strategy for 2026. We've talked about what things you should be looking for in your tax prep this year. Talked about the new changes in the one big beautiful bill act that investors should be paying attention to. But Amanda, I just want to talk about the stress that comes with tax prep. Like, it's not fun for most people. So how do you systematically recommend people go about doing this so that they can capture the most benefit, but that's not driving them crazy?

• 28:44Speaker 01

  You know, I'll tell you what I feel are the two main reasons people hate tax season. I mean, outside of just the fact that, you know, they have to pay taxes, right? I think one is record keeping. Okay, if you're someone who has not done good record keeping last year, this is sort of the end of the road where you're like, man, you know, now I gotta go through my bank statements and my receipts and try to categorize all the stuff that I don't remember what I did or didn't do. And you know, really, the best way to change that is just to have systems in place, right? Systems for your bookkeeping and accounting. If it's you have the budget to outsource it, great, you know, take that off of your hands. If you don't, it's really just a matter of setting time aside on a monthly

• 29:25Speaker 01

  basis to make sure you do all of that. Because if you're like me, you know, it's difficult for me to remember what I did a week ago. So for me to have to think about a year ago, that's, that's the stress of like, oh, my gosh, it's like a mountain of paperwork. And we know it's coming, right? Every year, tax time comes. So I think just taking the time, set up a system that works for you, whether it's QuickBooks, or Stessa, or an Excel spreadsheet, whatever that happens to be. But getting the system set up so you're doing it on a month-to-month basis really will help alleviate a lot of the stress at tax time. I think the second reason people don't like tax season is the surprise. So the surprise of the anxiety of like, am I getting a refund? Am I gonna owe a lot?

• 30:09Speaker 01

  The best way to alleviate or prevent that is with proactive tax planning. So for a lot of our clients, and that's why we we focus so much on the planning, because your tax bill should never be a surprise. If you're planning during the year, if you're meeting with your accountant throughout the year, before you buy properties, before you sell properties, before you open a new LLC or partner with a friend of yours, to always kind of have at least touch points on, okay, what's our income? What's our deductions? So that by the end of the year in December, we have a pretty good idea whether we owe or we're going to get a refund. But I will say you can only have effective tax planning if you have good financial records. So that also goes back to just having, you know, clean bookkeeping. So we know we can monitor year round.

• 30:55Dave Meyer?

  Well, I want to talk to you more about tax planning because I think that's a a super important thing. But when you talk about bookkeeping, are there any tools? You you mentioned QuickBooks, Stessa, both good tools. Are there any new ones? Because I've been I've been getting a lot of ads, honestly, for like AI bookkeeping. I don't know if that's just like people who want to say everything is AI right now, but it's really just the same product it's always been. But like, are there any specific things that you think people should be looking for when they're setting up a system?

• 31:20Speaker 01

  From a tax perspective, the main thing you want to look for is the ability to track income and expenses by property. That that is what's required for IRS reporting. And also just for you as a property owner, if you have multiple properties, I want to know how each property is doing, right? And I think a quick tip I would say is to have a separate bank account that you use exclusively for real estate things.

• 31:43Dave Meyer?

  A hundred percent, yes.

• 31:44Speaker 01

  If you have an LLC for your rental properties, use that account. If there's no money in there, you transfer money from your personal account into that LLC account and then pay for the expenses. That, I think, helps to cut people's bookkeeping headache by maybe eighty or ninety percent.

• 31:59Dave Meyer?

  Yes, there is a no brainer for doing that. That's a great quick tip. So let's talk a little bit about tax planning proactively because I I like this idea. So can you give us an example? Like, I'm going out to buy a new property this year. I call you and say like, how do I plan for this in the most tax optimal way? What are some of the things you're thinking about or some of the things I should be thinking about?

• 32:21Speaker 01

  Yeah, and I think, you know, again, it kind of depends a little bit on the different facts and profiles of a specific taxpayer. So if we're saying, oh, well, you know, Dave is not a real estate professional, a household with dual income, W2, nobody is really able to claim real estate professional status, then maybe a recommendation could be, you know, can we consider a rental property or the next one you buy to be a short-term rental? Why? Because short-term rentals, we can use the short-term rental loophole where you don't have to quit your job, real estate could be a side hustle, you could potentially use the short-term rental losses against W2 and, and you know, other types of income,

• 33:03Speaker 01

  provided that you meet all of the requirements that still being hands-on and all those things. And so that part of the conversation, then maybe kind of veers into where should the property be? Should it be close enough where you can be more hands-on? Or are you comfortable with using apps to be able to, you know, semi-manage or self-manage remotely as well? And then, you know, what kind of entity, who should be on it? Is it one person, both spouses? So that's the fun part, right? The, the initial question is, I want to buy more real estate this year. And then it turns into a lot of different decision makings on, well, have you considered this or that? Also to get the optimal tax benefit too.

• 33:41Dave Meyer?

  Yeah, and I would imagine, you know, we, we started this section of the show just talking about stress, that when you plan this upfront, that basically takes away, what you were saying, the stress of the unknown at the end of the year. When you add a new property, it's only incrementally making your taxes more complicated, not like, you know, doubling it if you're going from one to two properties. Now you have double the amount of work you have to do for taxes.

• 34:02Speaker 01

  For sure. And it's just having even like a system could be, I have a checklist whenever I buy new properties, here are the things I need to put in a folder, the closing disclosure, the appraisal form, right? I also probably want to make sure I have an entity set up, or at least I'm going to call my CPA, let them know these things happened. So just having that already, so you know, every time I, I'm expanding my portfolio, these are the things I'm going to keep here together. And that tax time is just a matter of sharing all those things in that folder with your accountant or with your bookkeeper, even on a monthly basis.

• 34:35Dave Meyer?

  Awesome. Well, this is great advice and I really recommend people doing this. Again, I know I keep saying this, but I just think in general, people get really excited about buying properties when they're first starting, which is right. And then like two years into your investing career, you're like, oh my God, I could have been doing this so much better from a tax perspective. But take it from me, take it from Amanda, just try and do this stuff upfront. I promise you, it will be worth your time and money. It is always worth your time and money to start doing these things upfront.

• 35:02Speaker 01

  And I will say, I unfortunately do meet people who historically are very model citizens when it comes to tax filing. If they just have a W two job, they own their home and it's like always filed on time, filed by February or March. And then, oh, I bought rental properties and then I got overwhelmed and I just basically stopped filing tax returns because I didn't know what to do. But I think it's really important to understand if I'm describing you, you know, as a listener, it's really important to understand that taxes don't go away. So you will have to file your tax return. And again, the sooner you do it, the better you're going to feel, I promise you.

• 35:36Dave Meyer?

  All right, one last question for you, Amanda, before you get out of here. You said you're also a real estate investor. What are you investing in these days?

• 35:43Speaker 01

  Oh, well, so I'm actually, I live in California, but I grew up in Las Vegas and I went to college there. So a big part of our portfolio has been in Las Vegas. So we continue to expand in Vegas. But I think my latest, our latest acquisition was in Florida. And I talk about this with clients as well. In the last couple of years, we've gotten more and more into passive investments through syndications and things like that all over the US. And for us, it's just a change in priorities and our focus. We're in a season of life where we have two young boys that require a lot of attention with sports and all the things.

• 36:27Speaker 01

  Um. So it wasn't like before. When we were starting out, it was a lot of, you know, BRRRR properties because we had the time. We didn't have the money. We had the time. And now we're in a different place where we have more, we have more of the resources, but not as much time to go after the properties ourselves. And we might change, you know, when the kids leave us and go off to college, then we might go back to being doing BRRRRs or maybe doing our own apartment buildings.

• 36:50Dave Meyer?

  A hundred percent. I I've done the same thing, done a lot more passive investing over the last couple of years, and that's the benefit, right? You get to a place where you've put in the hard work and then you get to choose. You get to choose if you want to do investing passive. You know, I moved back to the States now. I I've kind of missed doing some active investing. So I'm doing that more for fun than just not needing to. But that's, that's the goal. So congratulations on getting to that stage in your investing career.

• 37:15Speaker 01

  Yeah, thank you. And are you considering house hacking with your new home?

• 37:19Dave Meyer?

  I'm calling it a live-in flip because we're not renting out any part of it. But we bought like an under, you know, it's a 1968 build. And it feels like it's from 1968. I'll tell you that. We got popcorn ceilings. We still have those, you know, those intercoms that people used to have. Like, super old school, like, they still work. It's pretty fun to use.

• 37:42Speaker 01

  Only in expensive homes, though, when they have those, right?

• 37:45Dave Meyer?

  I think back in the day, yeah, it was nice, but it's been, it's still perfectly comfortable. But the idea is we're going to start renovating it and hopefully, you know, spend probably in somewhere in the 200, 250 grand range. But we think it will increase the value like 400,000. This is in Seattle, very expensive market. So, uh, but that's kind of the idea. But, um, I'm calling it a live-in flip, but I don't know if we'll actually sell it after two years. We're kind of, we might live in it for longer, but we'll see. But we're going to do a value add to it.

• 38:14Speaker 01

  Yeah, I love that. And I think a lot of clients or, I mean, a lot of newer investors think that primary home investment strategies are for people who are just starting out in real estate. But I think people will be shocked to know how many of. Our clients that, you know, are, are, are doing very large deals also try to optimize their primary home to the nth degree. So I love that.

• 38:36Dave Meyer?

  Yeah. The other place we were considering buying was a, was a house hack. It was like an up-down duplex and we were gonna rent out the bottom basement. Like I personally, my dream home is like a primary that has an ADU above a garage that I can rent out. Like that would be the perfect situation. But I, Henry and I actually just did a show about this yesterday. We recorded it, talking about how at every phase of your investing career, thinking about your primary residence as an investment makes sense. You don't have to for your lifestyle, but like there are always things you can do to make your primary home a moneymaker for you if you're willing to, to make what I think are pretty small sacrifices to, to get those gains.

• 39:17Speaker 01

  Yeah. And the tax benefits are just, you know, typically pretty amazing for talking about primary homes.

• 39:22Dave Meyer?

  Well, Amanda, thank you so much as always for being here. We really appreciate it.

• 39:26Speaker 01

  Yeah. Thanks for having me.

• 39:27Dave Meyer?

  And if you want to learn more from Amanda, which you should, go check out her two books that she's written. You can get them on biggerpockets.com. You can always find them on Amazon. And I'm happy to say Amanda will be back at BPCon this year, speaking and leading a tax workshop as she always does. BPCon tickets are now available. Early bird tickets are for sale. They're the cheapest they will ever be. So if you want to get in there and get some hands-on advice from Amanda and her husband, Matt, come to BPCon in Orlando this year, biggerpockets.com/conference. And if you want to hear the episode I was just talking about with Henry and I talking about primary residence, it's episode 1236. It came out on February 6th. Go check that out. Thanks again, Amanda, and thank you all

• 40:11Dave Meyer?

  so much for listening to this episode of the BiggerPockets Podcast. We'll see you next time.

• 40:30Speaker 05

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