When it comes to saving money on taxes, being proactive is essential—especially in the realm of real estate tax planning. In this article, I’m revealing five powerful tax hacks to help you save more in 2025. Whether you’re a real estate investor, a business owner, or someone looking to optimize your tax strategy, these tips could put thousands of dollars back in your pocket.
Want to dive deeper into these tax hacks? Watch my full video here: 5 Tax Hacks to Save Big in 2025.
1. Real Estate: The Foundation of Tax Savings
Investing in real estate is one of the most effective tools for minimizing taxes. Real estate investors can use strategies like cost segregation and bonus depreciation to create large paper losses—even if their properties are generating positive cash flow.
These strategies fall into three key categories—active participation, real estate professional status, and short-term rentals—and each one gives you a powerful way to use paper losses to your advantage.
Real Estate Tax Strategies You Can Use:
Active Participation: If your adjusted gross income is under $150,000, you may be able to deduct up to $25,000 in passive real estate losses against other income sources like W-2 wages or self-employment income. You don’t need to be a full-time real estate investor—just actively manage the property or supervise the manager.
Real Estate Professional Status (REPS): If you or your spouse spend at least 750 hours per year—and more than half your working time—in a real estate trade or business, you may qualify for Real Estate Professional Status. By materially participating in your rental activities, you treat your losses as non-passive and use them to offset active income like wages or business profits. This makes REPS one of the most powerful strategies for full-time investors, agents, developers, and anyone working primarily in real estate. If you want to know if you can qualify for REP status, check out our IRS Guide to Real Estate Professional Status here.
Short-Term Rentals: Properties rented for an average of seven days or less are treated as businesses. If you materially participate, these losses are non-passive and can offset any type of income, including high-income W-2 wages. This makes short-term rentals one of the most powerful tax planning tools for doctors, attorneys, and high W-2 earners who don’t qualify for REPS or active participation.
Supercharge This Strategy with Bonus Depreciation
By using cost segregation studies and bonus depreciation, you can accelerate the depreciation on certain components of your property—such as appliances, fixtures, and land improvements. This results in large paper losses early on, allowing you to dramatically reduce your tax liability in the year you acquire the property.
Pro Tip: Even if you only hold the property for part of the year, you can still take full advantage of these tax breaks. Accelerate that depreciation, capture the loss, and use it to offset other income.
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2. Owning a Business: Unlock Tax Benefits
Owning a business opens the door to tax-saving opportunities not available to W-2 employees. Ever since the Tax Cuts and Jobs Act came out, we lost the benefit of deducting certain business expenses, but there are a few assets you can still use as a business to reduce your tax bill.
Business Tax Benefits Include:
Accountable Plans: An Accountable Plan lets you reimburse yourself—tax-free—for business-related expenses like home office use, internet, mileage, cell phones, and more. But here’s the key: you must be an employee of your business. That means sole proprietors can’t do this—you need an entity like an S-Corp or C-Corp.
The Augusta Rule: Rent your home to your business for up to 14 days per year and collect that income tax-free. Many investors overlook the Augusta Rule (Section 280A), even though it offers a powerful tax-saving opportunity.
Administrative Home Office Deductions: Businesses can reimburse a portion of your home expenses, like utilities and property taxes, typically around 15–20%, without triggering taxable income.
Here’s the real benefit: when your business is structured correctly, you can reimburse yourself for 100% of these business expenses—tax-free. That includes your cell phone, internet, mileage, even a percentage of your home expenses like property taxes and utilities. And you’re not playing the “business-use percentage” game like sole proprietors. You’re getting reimbursed fully and cleanly through an accountable plan.
This strategy also opens the door to the Augusta Rule, where your business can rent your home for up to 14 days per year and deduct the full amount—while you collect that income completely tax-free.
I see a lot of investors miss this. But if you’re running a family office, property management company, or any real estate-related business, these tools are easy wins.
Pro Tip: Set up a property management business or family office to manage your rental portfolio. This allows you to claim these business deductions while remaining in control of your operations.
3. Supercharge Retirement Savings with Real Estate Tax Planning
Retirement accounts are a cornerstone of tax planning. For real estate investors, adding a retirement plan to their structure can significantly reduce taxable income.
Retirement Plan Options That Cut Taxes:
Defined Contribution Plans: Includes 401(k)s and Solo 401(k)s. You can contribute as both an employee and an employer. Total contributions can exceed $70,000 per business, depending on your income and structure.
Defined Benefit Plans: These allow you to contribute well over $100,000 annually—sometimes even several hundred thousand dollars—based on your income and retirement goals. You work with an actuary to determine the contribution amount needed to meet your future payout.
Roth IRAs: Perfect for early-career investors or those in low tax brackets. Contributions aren’t deductible, but withdrawals are tax-free. Some high earners also choose to convert traditional accounts into Roth IRAs.
Here’s why I love defined benefit plans: if you’re making strong income—$200,000, $300,000 or more—you can sock away massive amounts of cash and take a giant deduction in the process. I’ve had clients putting in over a million dollars per year. Why? Because the IRS lets you contribute whatever amount an actuary calculates is necessary to fund your future retirement income.
If you want to keep your lifestyle into retirement, you’ll need serious reserves. These plans let you build them—while slashing your current tax bill. And because they’re tax-deferred, you only pay when you draw the funds later, usually at a lower tax rate.
Pro Tip: You can attach retirement plans to your real estate business entity. If you’re earning through property management or consulting, this can open the door to major tax-deferred retirement savings—without changing your investment strategy.
4. Maximize Health Savings Accounts (HSAs)
An HSA is a triple-tax-advantaged account that is available to almost everyone. If you have a high-deductible health plan—something most people already do—then you’re eligible to open and fund an HSA. The beauty of this account lies in its flexibility and tax efficiency: it offers a deduction on the way in, grows tax-free, and allows you to take money out tax-free for qualified medical expenses. Even if you’re earning a high income, you can still take full advantage of this benefit.
In 2025, you can contribute up to $4,300 as an individual or $8,550 for families. That contribution reduces your taxable income—no income limits, no phaseouts. And here’s where it gets even better: you can invest those funds, let them grow for years or decades, and reimburse yourself later for medical expenses you’re incurring now. That means your current out-of-pocket costs can become tax-free income in the future.
This makes HSAs one of the most underrated tax planning tools—especially for real estate investors, business owners, and anyone looking to stack up long-term, tax-free funds for healthcare.
Your HSA provides:
Tax-deductible contributions (up to $4,300 for an individual or $8,550 for families in 2025).
Tax-free growth on investments inside the account.
Tax-free withdrawals for qualified medical expenses.
Pro Tip: Use your HSA to reimburse yourself for out-of-pocket medical expenses—even years later. This creates a tax-free stream of income that can be used to offset medical costs during retirement or after a year with high earnings.
5. Understand and Leverage Income Types
Not all income is taxed equally. One of the most overlooked tax strategies for real estate investors and business owners is income type optimization—knowing which types of income come with lower taxes or no taxes at all.
Dividend Income: Qualified dividends from U.S. companies are considered long-term capital gains with tax rates that can be as low as 0%, depending on your income. For married couples earning under $96,000, this means you could pay zero in federal tax on dividend income.
Borrowing Against Assets: You can borrow against appreciated real estate or stocks without paying any taxes. Loan proceeds aren’t taxable—period. Wealthy individuals often use this strategy to access capital without triggering a taxable event.
Tax-Free Municipal Bonds: These investments generate income that’s often exempt from federal—and sometimes even state—income taxes.
Oil & Gas Deductions: While more advanced, investments in oil and gas can allow for significant upfront deductions. Up to 80% of your investment may be deductible if structured properly.
One of my favorite strategies is borrowing against appreciated assets. If I have a property that went from $100,000 to $500,000, I can borrow $300,000 against it and pay zero tax on those loan proceeds. I’m not selling anything. I’m just unlocking the equity—and that cash is completely tax-free.
You can do the same with your stock portfolio using a securities-backed line of credit. If there is no sale, then there is no tax. This is a major wealth-building move the wealthy use all the time.
And if you want tax-free income? Look at municipal bonds. If they’re federally and state-exempt, you’re getting income that never shows up on your tax return. Combine this with real estate and strategic borrowing, and you can create a powerful, tax-efficient income stream.
Pro Tip: Leveraging these cash flow strategies in conjunction with your real estate holdings allows you to reduce taxable income, access liquidity, and preserve more of your wealth over time.
Why Tax Planning Matters
At the end of the day, tax planning isn’t just about saving money—it’s about gaining control, building wealth, and protecting what you’ve earned. By combining real estate strategies with business ownership, retirement planning, and tax-advantaged accounts, you can significantly reduce your tax liability while securing your financial future.
Most people wait until tax season to think about their taxes. The wealthy? They plan in advance.
They use structures and strategies that allow them to pay less, grow faster, and avoid nasty surprises from the IRS. You can too!
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