949-392-1999
SHOW NOTES FOR EPISODE 033 WITH AMANDA HAN – TAX STRATEGIES FOR REAL ESTATE INVESTORS
One of the great advantages of real estate investing is the tax advantages. But if you don’t understand how to take advantage of the tax benefits, you’re missing out! In this episode, Amanda Han, a CPA, tax strategist and author of “The Book on Tax Strategies for the Savvy Real Estate Investor: Powerful techniques anyone can use to deduct more, invest smarter, and pay far less to the IRS,” shares insider tips on how to save big on your taxes.
What You Will Learn
- The most common reason investors don’t get the full tax advantages
- Why investors pay more taxes than they have to
- Biggest tax mistakes of most investors
- What is cost segregation and how it can increase your deductions
- What is real estate “professional status” and how will it help you reduce your taxes
- What an investor can do to get the maximum tax advantage
About Our Guest
Amanda Han
Amanda Han is the founder of Keystone CPA and the author of “The Book on Tax Strategies for the Savvy Real Estate Investor: Powerful techniques anyone can use to deduct more, invest smarter, and pay far less to the IRS.” She is a tax strategist with over 18 years’ experience as a CPA, with emphasis on real estate investing, who specializes in creating cutting-edge tax saving strategies for real estate investors. As a real estate investor herself, Amanda has an in-depth understanding of the various aspects of investing including taxation, self-directed investing, entity structuring, and money-raising. Amanda’s expertise has been featured in prominent publications including TIME Magazine Online, Bigger Pockets.com, Realtor Magazine, and AllBusiness.com. She is certified by the California State Board of Accountancy and is a member of the prestigious American Institute of Certified Public Accountants (AICPA), practicing in all 50 U.S. States.
More About Amanda
- Third generation real estate investor
- Used to help turn-over rentals during summers as a kid – painting, cleaning-upparents rentals
- Parents encouraged her to college, be an accountant
- Got job at a Big 4 accounting firm
- Ended up in the real estate specialist group helping larger corporations with tax strategies
- Never really wanted to be an investor
Her “Light Bulb” Moment
- Was happy at Big 4 accounting firm. Aspired to be manager or senior manager
- One day her husband read Rich Dad Poor Dad and said “let’s buy some investment real estate before the end of the year.”
- She read the book, too
- It took a few years but they actually bought their first investment property
- It was not easy for her and she said it felt like her “heart was beating out of her chest” as they waited to sign the escrow papers for their first investment rental
- Now she is happy she became an investor and is enjoying the cash flow and the tax advantages
Decided to Open Their Own Firm Specializing in Real Estate Investors
- Started attending REI meetings and real estate meet-ups and met many regular investors
- She began to see that most normal every day investors don’t understand taxes and finances
- She saw that her expertisecould address common tax probles many investors had
Most Common Real Estate Investors Tax Mistakes
- Many overpay on their taxes because they don’t understand what are legitimate tax deductions
- They miss things like personal deductions one can take as an investor like mileage, travel costs, meals
- Most understand mortgage interest deductions, depreciation and more common real estate deductions but not deductions as a real estate investor
Biggest Mistake of Her Clients
- Not knowing what deductions they are eligible to declare
- Many investors think they need an LLC or to be an official “business entity” first before claiming common deductions but that’s not true
Real Estate” Professional Status”
- A special designation that does not require a special license – not be a “realtor”. You need to spend more time with your real estate investing activities than your other W2 job and it must at least 750 hours
- You may have good cash flow but, after depreciation and other legitimate deductions, it shows on the tax return that you are taking a loss on the property
- Can you take the property loss and apply it so I can reduce my “non-real estate” income?
- If your income is over $150,000, you normally can’t take the extra deductions but with a special “real estate professional designation,” you can clain these deductions
A Client Success Story
- An attorney and his non-working wife were seeking to pay less taxes
- They were real estate investors
- Amanda was able to show how his wife spent 750 hours working on their real estate investments, which opened up more deductions and huge tax savings
What can a new investor do “tax wise” to insure that they get maximum tax advantage?
- First step: sit down with tax advisor and develop a plan
- Then, assess resources available to invest – best source of funds
- Retirement accounts
- Self-directed investing
- Can you qualify for loans? Maybe you should borrow while you are still working and buy real estate while you have W2 income
- Know where your income is coming from
- Start implementing the plan, hopefully before you retire
What’s ahead for the future of her business?
- Become more niche focused
- Train staff to better advice in all areas of real estate
- To develop staff specialists in mobile home parks, syndications and more
Tax Tip for Rental Real Estate Investors
- Do cost-segregation analysis
- For example, if you did rehab, tell accountant the breakdown of what costs were specifically for so you can deduct and appreciate by item (i.e. new toilets, A/C units, etc).
Rap-it-Up
- Favorite real estate book: Rich Dad Poor Dad by Robert Kiyosaki
- Favorite business book: The4-Hour Work Week by Tim Ferriss
- Favorite tax-related business book: The Book on Tax Strategies for the Savvy Real Estate Investor: Powerful techniques anyone can use to deduct more, invest smarter, and pay far less to the IRS by Amanda Han and Matthew MacFarland
- Most valuable websites for success Maui Mastermind and BiggerPockets.com and IRS.org
- Favorite App: QuickBooks.com and Wait Times for Disneyland
How You Can Reach Amanda
- Her website: keystonecpa.com
- Her phone: 877-975-0975
Until our next podcast, keep moving forward and God bless!
IF YOU LIKED THIS PODCAST, we would love if you would go to iTunes, Stitcher or GooglePlay and Subscribe, Rate & Review our podcast. This will greatly help in sharing this podcast with others seeking to learn real estate investing as a means to achieve a successful retirement.
Check out our other podcasts at olddawgsreinetwork.com.
Get a FREE copy of our 3-Minute Rental Property Analyzer at olddawgsreinetwork.com.
Episode Sponsor: Meno Studio – menostudio777@gmail.com
