Stop Leaving Money on the Table: Tax Strategies Every Real Estate Entrepreneur Must Know Before Year-End

This time of year, I find myself having the same conversation with real estate business owners: "Am I missing something? Is there more I can do before the year ends?" They’re not struggling with deals — their portfolios are thriving. What keeps them up at night is far less glamorous: taxes. Specifically, the fear that they’re leaving money on the table.

And let me tell you, many of them are.

It’s not because they’re reckless or uninformed. In fact, most are trying to "play it safe." But here’s the hard truth: playing it safe can be the fastest way to lose. Tax savings aren’t found in caution; they’re found in precision, in understanding the rules well enough to make them work for you.

Let’s talk about how to stop leaving money on the table.

The 1031 Exchange: Timing is Everything

Most real estate business owners have heard of the 1031 exchange, the tax-deferral strategy that allows you to reinvest proceeds from the sale of one property into another like-kind property without paying capital gains taxes. But here’s where the devil is in the details.

The average real estate investor sells a property and lets weeks tick by, only to panic when they realize they’re running out of their 45-day identification window. That’s when bad decisions get made: settling for subpar deals, overpaying, or losing out entirely because the clock ran out.

The high performers? They’re scouting replacement properties before the sale even closes. They’ve mapped out timelines and contingencies. This isn’t guesswork; it’s execution with intent. The difference is in the preparation.

Cost Segregation Studies: Accelerating Your Savings

For those holding rental properties or commercial buildings, a cost segregation study can be a game-changer. By breaking down the components of your property into shorter depreciation schedules, you can accelerate deductions and significantly reduce your taxable income.

Think about it: Why wait 27.5 years to depreciate a property when you can claim a substantial portion in just five or seven years? High performers use cost segregation to free up cash flow and reinvest in their next deal faster.

But here’s the catch: the details matter. You need a professional study to substantiate these claims. This isn’t guesswork; it’s precision. And it’s why tax savings are always in the planning.

The Augusta Rule: A Hidden Gem

Did you know you can rent out your personal residence to your business for up to 14 days per year, completely tax-free? It’s called the Augusta Rule, and it’s one of the most underutilized strategies among real estate business owners.

Here’s how it works: If you hold meetings, client events, or strategic planning sessions at your home, your business can pay you fair market rent for the use of the space. The income is tax-free, and the expense is deductible for the business.

It’s a win-win, but only if you know the details. What counts as "fair market rent"? What documentation do you need? Again, the devil is in the details.

Prepaying Expenses: An Easy Win

Looking for a simple way to reduce taxable income? Consider prepaying certain expenses before year-end. This could include:

• Insurance premiums.

• Materials.
• Accounting and Legal Fees.

• Contractor fees.

• Marketing costs for your next property.

By pulling these expenses into the current year, you can lower your taxable income and smooth out cash flow. Just make sure you’re sticking to IRS rules about deductible expenses. Planning turns this into a smart move instead of a risky gamble.

Keeping Track of Miles: Don’t Overlook the Basics

If you’re driving to scout properties, meet clients, or manage rentals, those miles add up. The IRS mileage rate for 2024 is 67 cents per mile. But here’s the thing: if you’re not tracking those miles, you’re throwing money away.

Use an app. Keep a log. MileIQ works wonders. Do whatever it takes to make sure every mile is accounted for. High performers don’t skip the small stuff because they know tax savings are in the details.

Opportunity Zones: The Clock is Ticking

Opportunity Zones are the ultimate "play it smart" move. Designed to spur investment in underserved areas, these zones offer massive tax incentives for reinvesting capital gains. But here’s the catch: timing and strategy are everything.

If you think you can waltz into an Opportunity Zone deal at the last minute, think again. To fully benefit, you need a plan for your gains, the property, and the development strategy. The window to defer taxes is tight, and the longer you wait, the fewer benefits you can lock in.

Clean Books: The Foundation of Every Strategy

You’ve heard the saying, "You can’t manage what you don’t measure." Nowhere is that truer than in real estate. High performers know there’s no better tax strategy than a clean set of books.

Imagine you’re a developer trying to make the most of a 1031 exchange or Opportunity Zone investment. You’re down to the wire, and your CPA calls with bad news: your books are a mess, and they can’t give you a clear picture of your financial position. Suddenly, your safety net is gone. Now you’re scrambling, making rushed decisions, and losing money.

Clean books aren’t just about compliance; they’re the foundation of every smart tax strategy. They’re what lets you move with precision instead of fear.

How to Stop Leaving Money on the Table

1. Know Your Deadlines: Whether it’s a 1031 exchange, Opportunity Zone, or quarterly taxes, set clear deadlines and work backwards to build your timeline.

2. Clean Your Books: Invest in professional accounting and tax advisory so you can make decisions with confidence.

3. Use Every Tool Available: From the Augusta Rule to mileage deductions, don’t overlook the strategies that add up.

4. Invest in Expertise: The best real estate investors don’t go it alone. They work with advisors who specialize in maximizing tax savings.

If you’re ready to stop wondering what you’re missing and start acting with confidence, let’s talk. At Gilmer Ferretti, we specialize in helping real estate business owners like you move with precision and purpose.

Book a free, no-obligation consultation today, and let’s make sure you’re not leaving a single dollar on the table.