"Real Estate Investing for High-Income Earners: Strategies to Maximize Tax Benefits"

In this episode of How to Lower Your Tax Bill, host Terrence Hutchins explores how real estate investing can offer significant tax advantages for high-income earners. With his experience as a financial and tax advisor in the Dallas-Fort Worth area, Terrence shares actionable insights to help listeners navigate the complexities of real estate taxation.

Terrence covers:

• The Three Buckets of Income: Active, passive, and portfolio income—and how understanding these categories impacts your tax strategy.
• Real Estate as Passive Income: Why rental properties are typically considered passive activities and how this classification affects your ability to deduct losses.
• Depreciation Deductions: Key benefits of deducting property value over time, including residential and commercial property lifespans.
• Offsetting Income with Real Estate Losses: Strategies for utilizing passive losses to reduce tax liability, including income thresholds and real estate professional status.
• Tax Planning Year by Year: The importance of tracking losses and adapting strategies to maximize deductions in future tax years.

Featured Tax Story: A 1981 tax court case where Dr. Arthur Pervsner attempted to deduct his entire Beverly Hills mansion as a business expense. The court ruled he could only deduct spaces used exclusively for business, underscoring the need to justify your claims.

For more tips on reducing your tax bill, subscribe to How to Lower Your Tax Bill on Spotify or Apple Podcasts. Remember, it's not just about lowering your taxes—it's about keeping more of what you earn!