How the Rich Avoid Taxes by Investing in Real Estate

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!
00:00 Intro
10:00 Doing What the Rich Do
12:02 Finding Real Estate-Friendly Advisors
14:09 Start Planning NOW!
17:32 How to Legally Owe Less
23:44 The Tax Teeter Totter
26:20 Tax Deductions Explained
37:46 Tracking Expenses and Real Estate Professional Status
43:17 Getting the Right Tax Advisor
45:32 Do You Need an LLC?
52:34 Rookie Request Line
57:21 Rookie Exam
01:01:27 Rookie Rockstar
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Sign Up for BiggerPockets Pro (It's a Write-Off!):
www.biggerpockets.com/members...
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Join the Real Estate Rookie Facebook Group:
/ realestaterookie
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Find an Investor-Friendly Agent in Your Area:
www.biggerpockets.com/agent/m...
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Grab Ashley’s New Book!
store.biggerpockets.com/produ...
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Pick Up Amanda’s Books on Tax Strategies and Use Code “Ashley” or “Tony” at Checkout:
Tax Strategies: store.biggerpockets.com/produ...
Advanced Tax Strategies: store.biggerpockets.com/produ...
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Grab The Classic, “Rich Dad Poor Dad”:
store.biggerpockets.com/produ...
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Connect with Amanda:
BiggerPockets: www.biggerpockets.com/users/k...
Instagram: @amanda_han_cpa or / amanda_han_cpa
Keystone CPA: www.keystonecpa.com/
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Tools Mentioned in Today’s Episode:
Quickbooks: quickbooks.intuit.com/
Google Sheets: www.google.com/sheets/
MileIQ: mileiq.com/
REPS Tracker: repstracker.com/
Stessa: www.stessa.com/
Zapier: zapier.com/
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Connect with Ashley and Tony on BiggerPockets:
Ashley: www.biggerpockets.com/users/e...
Tony: www.biggerpockets.com/users/t...
Episode 255
Show notes at: www.biggerpockets.com/blog/ro...
#biggerpockets #realestaterookie #rookie255

[@amafid]

10:01 You are welcome

[@jwcmnbox]

I always love when Ashley says the # of Episode....🥰

[@deesplash7087]

All of Y’all are so goated 🙌🏽🐐

[@jessealfonzo6032]

Phenomenal!!!!!!! This content is 🔥 THANK YOU BP TEAM!!

[@amandahancpa]

happy to help!

[@pvaulter85]

She rocks great guests!

[@KKislitsyna]

Any suggestions on taxes when you are high earner ? We make way over 200k in our w-2 jobs. We invest in 401k, pension funds, 401 Texassaver to get our income down. Any more suggestions to get it down to 150k to use losses on long term rentals ?

[@MicAntoJo]

Similar question…. Is the $150k for married couples filing jointly? Or per individual?

[@lawrencebriggs]

Amanda Han is absolutely the best! ❤

[@amandahancpa]

Thanks Lawrence!

[@lawrencebriggs]

@@amandahancpa you’re welcome!

[@WooHooLaLa]

👀

[@MultiTrades]

Great episode Amanda 👏 alot of educational and helpful information. Thank you Ashley and Tony for all the contributions to the Real estate investors' community 🙌.

[@nimitaw1167]

I’d like to know if some of the stuff she said we could get tax deductions on, like meeting up with other investors, is it only for RE professionals? Or someone who is renting their basement unit or a condo can use these for deductions?

[@amandahancpa]

Everyone can take tax deductions. RE professional simply means a possible different in terms of "when" you may see the tax benefit. This is a common area of confusion.

[@MicAntoJo]

In regards to writing off passive income… if my spouse and I both make $130k a year, can we file married filing single to take advantage of passive losses?

[@accrualworld318]

Does tax credits include solar lights? I added solar lights to the outdoor area of my rental property 😊

[@amandahancpa]

Typically for solar tax credit those are referring to solar roof =)

[@karimkarachiwalla7073]

Really great episode. So informative!! Thank you Amanda.

[@amandahancpa]

Glad to help!

[@IWBVS]

If I build an Adu, do I get a new number to depreciate? Who comes up with the value i get to depreciate

[@amandahancpa]

Yup...your construction costs are your starting point =)

[@legacyopp9318]

I once heard a tax professional say a home office is a quick route to being audited.

[@ianbrathwaite9198]

Watch fresh n fits latest episode with their Accountant Steve. Unless that’s where you got that info from 💀

[@amandahancpa]

If you have a legitimate home office, I would definitely consider claiming it. In my experience, home office by itself is not a big audit flag. But do consult with your own advisor for sure.

[@MultiTrades]

I think the misconception comes from some or many people claiming home office and not having a home office. If you do have a legitimate office I don't see a problem even if you do get audit. I would say the key is, actually having or doing the things you are claiming.

[@amandahancpa]

@@MultiTrades 100%!! With all things in taxes...burden of proof is with the taxpayer so only claim home office and other expense when they are true expenses.

[@JoseTorres-xk2zk]

Loved this episode and started following Amanda! I’m going to start investing soon and also renting out my primary as I’m moving to another one so I want to soak up as much as I can before I get started and this was just a great start to the road I’m going to follow with all the tax books and other content as well. Thank you

[@amandahancpa]

So excited for you Jose!

[@abq5525]

By becoming a Realstate professional changes your income from passive to regular earn income? In other words, will this affect somebody that retired and is limited to a certain amount of earned income? Thanks in advance.

[@amandahancpa]

No...REP just allows you to use tax losses without some of the income limitations. It does not turn it into "earned income"

[@pilowgems]

I need an accountant with her knowledge, contact info please