The Book on Advanced Tax Strategies: Cracking the Code for Savvy Real Estate Investors

by Amanda Han, Matthew MacFarland

Overview

Make the easiest money of your life—and start keeping more for yourself, your family, and your real estate investments—with this “fun and easy to read” tax guide (Brandon Turner, bestselling author and longtime host of The BiggerPockets Podcast). 

Are you tired of working hard all year, just to lose a large chunk of your money to the IRS? Say hello to more of your hard-earned income with this fantastic strategy guide. After all, taxes aren’t about how much you make―instead, you’ll learn how to maximize the money you actually keep.

Believe it or not, the U.S. tax system is filled with loopholes designed specifically to benefit real estate investors just like you. In this comprehensive follow-up to The Book on Tax Strategies, bestselling authors and CPAs Amanda Han and Matthew MacFarland bring you more strategies to slash your taxes and turn your real estate portfolio into a tax-saving machine. Whether you’ve invested in one property or hundreds, start cracking the code today—and learn why this series is “a must for any investor’s bookshelf” (J Scott, co-host of The BiggerPockets Business Podcast).

Inside, learn how to:

• Legally wipe out your taxable income with rental properties
• Supercharge your real estate ROI with tax-deferral and tax-free techniques
• Grow your nest egg with self-directed investment strategies
• Take advantage of the opportunity zone tax benefits
• Take cash out of a 1031 exchange without paying taxes
• Leverage tax reform benefits in all of your real estate deals
• Avoid the common retirement-investing tax traps

Product Details

ISBN-13:	9781947200227
Publisher:	BiggerPockets Publishing
Publication date:	03/05/2020
Series:	Tax Strategies , #2
Pages:	216
Sales rank:	257,838
Product dimensions:	5.90(w) x 8.90(h) x 0.70(d)

About the Author

Amanda Han of Keystone CPA specializes in creating tax-saving strategies for real estate investors. She is certified by the CA State Board of Accountancy and is a member of the prestigious American Institute of Certified Public Accountants (AICPA) with clients across the nation. As a real estate investor of more than ten years, she combines her passion of investing with her tax expertise to help others supercharge their wealth and keep more of what they make. Her cutting-edge tax strategies—including entity structuring, self-directed investing, and income-offset opportunities—have been featured on prominent platforms including Money Magazine, Realtor.com, and “Talks at Google.” Amanda is the co-author of the Tax Strategies series, including the bestseller Tax Strategies for the Savvy Real Estate Investor, which has sold more than 50,000 copies. Amanda currently lives in Fullerton, CA.

Matt MacFarland is a CPA of more than 20 years that specializes in tax strategies for real estate, self-directed investing, and individual tax planning. He has also invested in real estate for more than 10 years with a focus on long-term hold residential and multi-family assets. As both a tax strategist and real estate investor, Matt focuses on the development of tax strategies for real estate investors across the nation—including retirement investing, entity structuring, expense maximization, and income offset strategies to help reduce the investor’s tax burden. Matt is the co-author of the Tax Strategies series, including the bestseller Tax Strategies for the Savvy Real Estate Investor, which has sold more than 50,000 copies. Matt currently lives in Fullerton, CA.

Table of Contents

Introduction: Cracking the Tax Code 10

From Lazy Assets to Tax-Saving Investments 14

Chapter 1 Tax Reform and the Savvy Real Estate Investor 20

Mortgage Interest 21

Accelerated Depreciation 23

Meals and Entertainment 24

Pass-Through Tax Deduction 25

Different Income, Different Treatment 33

What Does It All Mean? 34

Chapter 2 The Do's and Don'ts of Accelerated Depreciation 35

Common Depreciation Myths Revealed 38

What Is Cost Segregation? 40

Common Questions Regarding Cost Segregation 41

Different Person, Different Results 44

Are You Already Claiming It? 46

What Does It All Mean? 46

Chapter 3 Demystifying the Real Estate Professional Tax Benefits 48

Using Rental Losses to Offset Ordinary Income 51

Who Can Be a Real Estate Professional? 52

Material Participation 54

Benefits Comparison 55

Most Common Tax Mistakes 57

What Does It All Mean? 59

Chapter 4 How to Save on Taxes Even When You're Not a Real Estate Professional 61

Offsetting Taxes from Rental Income 62

Different Years, Different Results 64

Is Real Estate Professional Status Helpful for All Investors? 65

Income and Losses Below Threshold 66

Additional Planning Strategies 67

Common Myths About Real Estate Professional Status 69

What Happens to the Unallowed Losses? 71

What Does It All Mean? 72

Chapter 5 Squeezing the Most Tax Savings from Your Short-Term Rentals 73

Tax-Free Rental Income 75

Rental Business Versus Active Business 77

Rental Arbitrage 83

Operating a Hotel 84

What Does It All Mean? 86

Chapter 6 A Tale of Two Investors: Flip vs. BRRRR 87

From Broke to BRRRR 91

The Taxes Behind BRRRR 93

How Long Must the Property Be Kept as a Rental? 95

Same Numbers, Different Answers 97

What Does It All Mean? 97

Chapter 7 Playing Keep Away from the IRS Using 1031 Exchange 98

What Properties Are Eligible for a 1031 Exchange? 99

What Assets or Properties Are Not Eligible for a 1031 Exchange? 101

What Are the Time Requirements? 101

Time Requirements Can Be Stressful 104

What Are the Monetary Requirements? 106

What Are the Ownership or Title Requirements? 110

Which Taxpayers are Eligible for 1031 Exchange? 112

1031 Exchange Intermediary 112

Who Is It Ideal For? 114

What Does It All Mean? 114

Chapter 8 1031 Exchanges Gone Wrong 116

What Else Can Go Wrong in a 1031 Exchange? 119

When Is a 1031 Exchange Not an Ideal Choice? 123

How to "Drop and Swap" for a 1030 Exchange 126

What Does It All Mean? 128

Chapter 9 Cashing Out of a 1031 Exchange Without Paying Taxes 129

Refinancing the Property to Take Cash Out 130

Primary Home and 1031 Exchange Combination 131

Using Offset Strategies to Take Out Cash 134

What's the End Game? 135

What Does It All Mean? 138

Chapter 10 Supercharging Your Retirement with Real Estate Assets 139

Regular Retirement Account Versus Self-Directed Retirement Account 142

Who Can Have a Self-Directed Account? 143

Which Retirement Accounts Can Be Self-Directed? 144

What Can a Self-Directed Retirement Account Invest In? 144

Disqualified Persons and Prohibited Transactions 146

What Does It All Mean? 149

Chapter 11 Bigger and Better Retirement Accounts 150

Individual Retirement Account (IRA) 151

Roth IRA 152

Solo 401(k) 154

Defined Benefit Plan 159

What Does It All Mean? 160

Chapter 12 Two Retirement Investing Tax Traps and How to Avoid Them 162

What Is UBIT, and How Does it impact Real Estate Investors? 163

What Is UDFI, and How Does It Impact Real Estate Investors? 166

Why Is This Tax Missed by So Many Investors? 170

Are UBIT or UDFI Necessarily Bad? 171

What Does It All Mean? 172

Chapter 13 Use Uncle Sam to Help Raise Money for Your Real Estate Deals 173

Seller-Financing 174

Lease Option 177

The Important Tax Factors 180

Tapping into the Retirement Gold Mine 181

What Does It All Mean? 184

Chapter 14 Taking Advantage of Opportunities in the 0-Zone 185

Who Can Invest in the Opportunity Zone? 189

What Is an Opportunity Zone Property? 190

What is an Opportunity Zone Fund? 192

When Are the Deadlines for Opportunity Zone Investments? 192

The Ugly Side of the Opportunity Zone Program 193

Putting It All Together 193

Opportunity Zone Versus 1031 Exchange 195

Opportunity or Trap 196

What Does It All Mean? 197

Chapter 15 The Perfect Tax Plan 198

Take Action on Taxes 202

Whom Can You Count On? 204

Tax Planning by Design 206

Appendix A 208

Appendix B 210

Appendix C 212

Appendix D 214

Acknowledgements 216

What People are Saying About This

From the Publisher

PRAISE FOR THE SERIES

The Book on Tax Strategies for the Savvy Real Estate Investor

The Book on Advanced Tax Strategies: Cracking the Code for Savvy Real Estate Investors

“Amanda and Matt explain the tax benefits of real estate in a way that even the most novice investor can understand, and they give both new and seasoned investors alike the tools necessary to put these strategies to work to start saving money immediately. This book is a must for any investor’s bookshelf.”
—J Scott, Author of The Book on Flipping Houses and co-host of The BiggerPockets Business Podcast

"You can't even get your CPA to listen to your voicemail message for the cost of this book. Your savings begin just by purchasing and reading this before you meet with your CPA to ask questions on the clock!"
—Brian Burke, CEO of Praxis Capital and author of The Hands-Off Investor

“Matt and Amanda are top-notch professionals with whom I have been associated for many years. Their clientele demands answers to the most current changes in the tax code, and their new book gives all of us a big advantage in creating strategies that will save us money and help keep our wealth!”
—Bruce Norris, Investor, philanthropist, and host of the award-winning Norris Group Real Estate Radio Show

“The only certain things in life are death and taxes. Thankfully, Amanda and Matt have made the latter much less of a sure thing! This book has a down-to-earth yet informative style that makes it fun and easy to read, while also helping to save real estate investors BIG money.”
—Brandon Turner, Bestselling author of The Book on Rental Property Investing and co-host of The BiggerPockets Podcast

“If you want to learn how to embrace the tax code and make it work for you instead of against you, this book is a must read. With The Book on Advanced Tax Strategies, you don't have to fear tax time or feel hopeless about the checks you'll write to the government each year. This is a brilliant tool that will help you keep more of your hard-earned money!”
—Elizabeth Benton, Business owner, podcaster, and bestselling author

“Matt and Amanda knocked this one out of the park! [They] lay out a… clear understanding of the rules of self-directed investing, whether in an IRA or in a Solo(k). The book goes deep into the upside of tax-free and tax-deferred retirement savings as they illustrate the financial benefits. Want to invest your retirement funds outside of Wall Street? Read this book first!”
—Kaaren Hall, CEO of uDirect IRA Services, LLC