Real Estate Tax Strategies for W-2 Earners

In this episode of How to Lower Your Tax Bill, host Terrence Hutchins explains how W-2 earners can use real estate to reduce their tax burden. As a financial and tax advisor in the Dallas-Fort Worth area, Terrence breaks down three key strategies that allow employees to offset income with real estate losses and maximize tax savings.

What You’ll Learn:

• Real Estate Loss Deductions: How W-2 earners making less than $150,000 can deduct up to $25,000 in rental losses.
• Short-Term Rental Strategy: How properties rented for an average of seven days or less can bypass passive loss limitations and offset W-2 income.
• Real Estate Professional Status (REPS): How you or your spouse can qualify as a real estate professional to unlock additional tax-saving opportunities.

Key Tax Considerations:

• Material Participation Rules: Understanding how to meet the IRS's participation thresholds to deduct real estate losses.
• Grouping Elections: How combining multiple rental properties for tax purposes can impact deductions and future tax liability.
• Audit Risks and Compliance: Lessons from tax court cases where taxpayers failed to properly document their real estate hours and losses.

Featured Tax Story:

A look at past IRS cases where taxpayers attempted to claim real estate professional status or passive losses without meeting the necessary requirements—and what you should do differently to stay compliant.

For more actionable tax tips, subscribe to How to Lower Your Tax Bill on Spotify or Apple Podcasts. The key to effective tax planning isn’t just reducing your bill—it’s keeping more of what you earn.