Real Estate Rookie

Avoid Paying Taxes (Legally) with THIS Rental Tax Loophole

Feb 10, 2025

Sean Graham, a Certified Public Accountant and real estate investor, shares his expertise on tax strategies for rental properties. He reveals how to leverage the short-term rental tax loophole to save thousands on taxes, even for small investors. Sean explains the benefits of cost segregation studies, allowing for accelerated depreciation and immediate tax relief. He also covers how these strategies can help offset active income, including W2 wages, demonstrating that effective tax planning is accessible to everyone.

42:34

Creator website

Episode guests

Sean Graham

AI Summary

AI Chapters

Episode notes

Podcast summary created with Snipd AI

Quick takeaways

Implementing cost segregation studies allows real estate investors to accelerate depreciation, maximizing upfront tax deductions and improving cash flow significantly.

Utilizing the short-term rental tax loophole enables property owners to offset active income like W-2 earnings, providing substantial tax savings even for novice investors.

Deep dives

Understanding Cost Segregation

Cost segregation is a tax strategy that allows real estate investors to accelerate the depreciation of their property, enabling them to reap tax benefits sooner rather than later. Typically, rental properties are depreciated over a span of 27.5 to 39 years using straight-line depreciation, which does not capitalize on the time value of money. However, a cost segregation study disaggregates the property into different components, attributing shorter depreciation life spans to certain elements, such as fixtures and land improvements. By doing this, investors can maximize upfront tax deductions, improving cash flow significantly by reducing taxable income faster compared to conventional methods.

Intro

4min

Unlocking Tax Benefits for Rookie Real Estate Investors

8min

Maximizing Tax Strategies in Real Estate

6min

Maximizing Tax Benefits Through Cost Segregation

12min

Tax Strategies and Resource Highlights

4min

Unlocking Tax Savings with Cost Segregation

8min

Most people invest in real estate for cash flow or appreciation, but there are enormous tax benefits as well. In this episode, we’re going to share the number one tax strategy you need to know about—the short-term rental tax loophole—which could save you thousands!

Welcome back to the Real Estate Rookie podcast! Today, we’re joined by Sean Graham, who is not only a certified public accountant (CPA) but also a fellow real estate investor. He’s going to show YOU how to avoid paying Uncle Sam (legally) with just a few savvy tax strategies. The best part? You don’t need to be a big-time investor with a large real estate portfolio to take advantage of these benefits. Even if you have just ONE rental, these strategies are for you!

First, Sean will share the ins and outs of the cost segregation study, which allows you to frontload depreciation rather than spreading it out over the next few decades. He’ll also get into bonus depreciation and the different line items that qualify, as well as the tax “loophole” that allows you to use tax deductions to offset active income—yes, including your W2 wages!

In This Episode We Cover:

Offsetting active income (and saving thousands) with the short-term rental loophole

How to avoid paying taxes (legally!) on your rental property

Cost segregation studies explained (and when you should get one)

How to retroactively claim depreciation through a “look-back” study

Why you can have as little as ZERO taxable income and still be lendable

And So Much More!

Links from the Show

Ashley's BiggerPockets Profile

Tony's BiggerPockets Profile

Join BiggerPockets for FREE

Real Estate Rookie Facebook Group