BiggerPockets Real Estate Podcast - 162: How to Pay Less to the IRS with Amanda Han, CPA

Episode Date: February 18, 2016

No one likes paying taxes, so let’s talk about how you can pay FAR less to the IRS! On today’s show, we sit down with real estate investor and CPA Amanda Han, the author of the brand new book The Book on Tax Strategies for the Savvy Real Estate Investors. In this powerful (and fun!) interview, you’ll learn about the biggest tax mistakes investors make when setting up — and running — their real estate business. This interview could literally save you thousands of dollars! Dig in! In This Episode We Cover: The new book that will help you save money Who Amanda Han is and how she became CPA to an investor Why the Tax Code is a language on its own The importance of working with a CPA in regard to the Tax Code The big list of people who screw up their taxes Getting the right legal entity on the first deal The two things to ask your CPA Legitimate tax deductions you should know Getting deductions from equipment What you should know about the home office deduction Other neglected deductions A discussion on income shifting Why you need to make sure you keep receipts How to figure out if an activity is deductible through a CPA Important retirement strategies What you should know about self-directed investing The basics of a 401(k) The tax deferred and leverage concepts all rolled into one Tips for getting benefits from depreciation Entities and mistakes people make with them How having corporations save on tax Why you need proactive planning And SO much more! Links from the Show BP Podcast 049: Real Estate Tax Tips, Jokes, and Loopholes With Amanda Han BP Podcast 011 : The Ultimate Beginner’s Podcast For Real Estate Investors BiggerPockets Podcast SenseFinancial 4 Depreciation Tax Mistakes Investors Need to Avoid BiggerPockets Webinar BiggerPockets Store BiggerPockets Forums Books Mentioned in this Show The Book on Tax Strategies for the Savvy Real Estate Investor by Amanda Han and Matthew MacFarland Rich Dad Poor Dad by Robert Kiyosaki The 4-Hour Workweek by Timothy Ferriss Tweetable Topics: “Within the Tax Code, there are a lot of loopholes.” (Tweet This!) “As long as you can show that it is necessary for your business, it should be a tax reduction.” (Tweet This!) “Depreciation is not a choice.” (Tweet This!) Connect with Amanda Amanda’s BiggerPockets Profile Amanda’s Website Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 162. If you are given that type of one-size-fits-all advice, you really should question whether it's something that actually does make sense for you. And again, seek out even if it's a second opinion of your own tax advisor. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the hype, you're in the right place. Stay tuned and be sure to join the million.

of others who have benefited from biggerpockets.com. Your home for real estate investing online. What's going on, everybody? This is Josh Dork and host of the Bigger Pockets podcast here with my co-host, Mr. Brandon Turner. What's going on, man? Not much. And you are telling the truth.

You are literally here with Mr. Brandon Turner. I am indeed. You just landed in Denver about five minutes ago, didn't you? I did. I seriously, like, sped here in two mile an hour traffic. and by sped here, I was going like three. And I made it here just in time to record this intro, which because we need to do this for the show that comes out tomorrow.

Yes, yes. Last minute stuff here. Yeah, we're a little behind, a little behind. But anyway, hey, we got a great show today. I'm really, really excited about it. Yet another repeat guest here on the podcast. And we're definitely going to get into that shortly. But let me tie this all together.

Let's start with today's quick tip. All right, guys, today's quick tip is today we just released a brand new book under the Bigger Pockets Library. Yeah, yeah, yeah, yeah. This is the book on tax strategies for the savvy real estate investor. And I didn't write this one. Not the unsavvy. This is the savvy. Yes, I would have written for the unsavvy.

Exactly. Yeah, yeah, yeah. All right, so we've got a brand new book. This book is awesome. You can check it out at biggerpockets.com slash tax book. we're going to tell you a whole lot more about it at the end of today's show. And today's guest ties in perfectly with today's quick tip. Today's guest, Amanda Hahn is the author of this book.

And Amanda is a CPA. She's awesome. We're going to get into it in a second. But anyway, this book is fantastic. It is. I mean, like, so the author who's Amanda Hahn, she's actually my own CPA. And she writes for us on bigger pockets. She writes for some bigger pockets.

And like she's probably the smartest woman. I've ever met in my life. Outside my wife, of course. Of course. Of course. So, I mean, this book is a fantastic. I think you guys will love it. And there's a bunch of, she wrote a bunch of like other, what do you call it, like extra

e-books that come with it. So make sure you guys check that as well. But again, we talk about it at the end of the show. So make sure you listen to that. There's definitely a deadline on one of those bonuses that you have to order within the first. I think it's like nine or 10 days. So listen close to that.

Awesome. All right. So today's show, the whole purpose of today's show, yes, we are letting it coincide with the launch of the time. tax book tax season is upon us. That it is. This book is, it's going to put your mind on stuff that you need to know whether you're newer experience.

At the end of the day, here's the thing, guys. If you're a real estate investor, you have to be thinking about taxation. You have to be. If you're new, you have to think about it from the standpoint of what do I need to know as I get started? How do I set up entities, legal stuff? You know, what proactive things can I be doing in my business as I start to establish my business to make sure that I'm paying as little as possible to the IRS. That goes

with investing. So we're, you know, we're trying to do this stuff, right? From the experience standpoint, if you're not thinking about it, or if you're forgetting it, we talk in the show about this about some of Amanda's clients, experienced investors who've been doing this for a long time who don't even... Yeah, they're throwing away money. There's like, yeah, they throw away money. Like thousands and thousands of dollars. Just like really simple stuff. Yeah. Simple stuff. Yeah. So like the, yeah. I was going to say, like, this whole show almost is, like, focused on, like, stupid mistakes that people make, like, but that everybody seems to make. It's like, we could have just titled the show, like, you know, 10 stupid mistakes that Brandon has made.

Pretty much. No, but like, that list is a whole lot longer than 10. A lot longer than 10 things. One of the things we talk about is, like, there was a few years ago, I got hit with a $10,000 fine from the IRS. And, I mean, luckily, I got out of it. And so we talk about why that is and how you can not have that happen to yourself. Because it's very easy what I did could happen to you. could happen to you as well.

So make sure you guys listen for that too. Awesome. It's pretty fun. And for those of you guys who are like, oh, great, an interview with a CPA. Awesome. Let me go hang up. Yeah. No, I mean, she's not your typical CPA.

She's also a real estate investor. She's really cool. She's really fun. And come on, do you guys expect us to have a boring interview not going to happen? So, you know, she's great. She's great. And she picks on Brandon the entire time. So that makes it great.

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she's an amazing CPA focused on real estate investors. That's not a, unimportant point here. This is somebody whose business is not a general CPA business. This is somebody who lives, eats and breathes and sleeps, real estate from a tax standpoint. So stay tuned, listen up, and let's bring her on. All right, Amanda, welcome back to the show. It's great to have you. Thanks for having me, Josh. Yeah, this could be fun. We're going to talk about taxes. We're going to talk about all that fun stuff that most people find really boring, but we find that it saves us a lot of money. and so we find a little more exciting, right? We do.

We do. You know, it's funny. The last show that Amanda was on, show 49, we actually did an entire episode on Taxes, and surprisingly, it was not boring. It wasn't. Kudos to you, Amanda, for not being boring because we expected it, right? Yes. Yes.

So today, we're really excited, as we mentioned in the upfront, we've got this new book coming out that is authored by you titled The Book on Tax Strategies for Savvy Real Estate Investors, Powerful Techniques Anyone Can Use to Deduct More, Invest Smarter, and Pay Far Less to the IRS. Pretty cool title. Sounds exciting. Tell us about it. Well, I was really excited to put this book together. In fact, the idea spawned from the last time I was on the podcast with you guys. We've received a lot of phone calls from viewers and listeners for the podcast and a couple of people have asked me if I wanted to kind of put out additional information regarding some of the strategies we talked about. So the book itself was

maybe a year and a half in the making, but I'm super excited to be sharing some of the tax strategies that we work with our clients on on a day-to-day basis and hopefully be able to help the bigger pockets in the real estate community on how they can utilize these strategies and save money themselves. Yeah. I love that. I love that. Because like, I mean, so people might not know, but Amanda actually is my CPA. So she helps me with my taxes. She helps me with my strategy planning. And like the last couple years of working with her, like I've learned a ton, but still when reading that book, I learned a ton more. And so I'm excited to implement some of those. We've been having a lot of conversations. And that happened after the podcast, correct? I did. Yep.

So like I was like blown away with the podcast. I was like, I got to talk to Amanda. So that's how we started working together. And it's been awesome. Yeah, we're doing some fun stuff and I'm excited for the future. So, because I mean, I, I screwed up a lot. And that kind of goes into what we're talking about today. But when I was starting out, like, man, I made like every tax mistake you can make and probably cost me like tens of thousands of dollars and probably like, you know, months, if not years of my investing wasted because I didn't do things right at the beginning. So that's kind of our goal today is to talk about some of these things that people do wrong, including me. And I don't know, Josh, I'm sure you screwed up on something too in their past, but you know. I screw up.

I'm just coming into the show today. Yeah, there you go. All right. So before we get into the actual things that people do wrong and waste money and tips that they can do to make more money. Can you give us just a quick reminder for those who haven't heard the first podcast? Who are you? What do you do? I mean, are you in real estate? What's your story? Sure, sure. Well, I am a CPA by day and real estate investor by night. I'm actually a third generation of real estate investors from my family. My grandparents were real estate investors. So I always grew up around real estate investing. When I was really, really young, I can remember helping my grandparents to do make ready stuff for their condos in Las Vegas. And so, you know,

after being a CPA for a couple years, just by chance I happened to be in the real estate specialty group where I worked with a lot of real estate investor clients. And over time, I got to see how much money they were making. And in fact, how much more money they were making than me as their tax advisor. And so my husband and I left one of the big four firms many years ago. And we decided we were going to combine our passions, our passion in real estate investing and really our passion in tax strategies and helping clients. And that's when we formed Keystone CPA, where we can kind of, you know, help our clients with tax strategies. But the little secret is we also learn from our clients. We have very smart clients who do really creative and wonderful real estate deals.

And we get to learn from them and help us to better our investment strategies too. Sounds awesome. It does. Let me ask you this. I think this is a good question to start with. Like, why, I guess like, you are a real estate investor and a CPA. Why is it maybe not a good idea for me, just go to any CPA, like the guy that's sitting at the Walmart right now? I mean, like, what does it mean to have a somebody who knows what they're doing with real estate? Why is that different?

Sure. Well, I mean, taxes are extremely complicated. I don't know if you've tried to read the tax code. It's kind of in the language all on its own, you know, it's kind of like Shakespeare. So within the tax, you know, within the tax code. tax code, there are a lot of different loopholes, believe it or not, where the IRS wants to incentivize us to be able to utilize certain strategies to our benefit. And so it's important to work with an advisor that specializes in your particular industry because they would be

more up-to-date and knowledgeable on what those strategies are. And for those people who don't know, I mean, tax code and regulations and court cases are changing every single day. So, you know, if you're someone who's in the real estate industry, it's important that you're, you know, your advisor not only understands real estate, but also understands all the various tax changes that come out throughout the year with respect to loopholes for real estate investors. And that unfortunately is not something easy to find. Most CPA specialized in working with all types of clients. Just the other day, I got a call from someone who was in the produce business.

And I told him, you know, I can't really be your advisor. That's not my specialty. And he said, wow, no one has ever told me that. So that's the importance is, you know, someone who understands your business. Yeah, that's great. And I like how you talk about the code being written from the perspective of creating incentives for people to take action. You know, when it's politicized, it's taken as, hey, these are things that, you know, the rich of the rich, the rich can do and it's only written for them. And that's not true. It's the challenge is the rich and the rich and the rich are the only folks who typically were able to get access to that information. and our goal is to get this information out to as many people as possible.

We want people to know that these things do exist and that everyday people can actually take advantage of these opportunities because they are opportunities. You're not a bad person because you're taking advantage of a loophole because loopholes were written on purpose. Right. Exactly. At least most of them.

All right, cool. So let's get into this. Today we want to talk about the big list of stuff that people do to screw up their taxes. There's no better way to put it. So let's just jump in. What's what's the first way, first thing that people do to mess up? I think it's a good idea to kind of start from the beginning. So for someone who's maybe new to real estate investing, it's really, really important to make sure that you have your strategies in place, maybe prior to getting into your first real estate investment deal or as you get into your first real estate investment deal. Because what happens

sometimes is, you know, if you're receiving some bad advice or some, you know, some free advice that maybe was not the most applicable to your situation, you could end up holding your real estate in the wrong type of legal entity, for example. Sometimes what we've seen when that happens, it ends up costing the investor tons and tons of money in the long run. So although there are things that are easy, you know, mistakes that are easy to fix, and we'll talk about some of them later, there are mistakes that may be very, very costly to fix. So in the world of unknown, it's always better to speak with your tax advisor earlier rather than later at the start of your investing career.

Yeah, I mean, like, I'm glad you started with that one, Amanda, because this is one that, like, when I started investing in real estate, I read every book I could on, like, real estate, like, strategies for, like, buying a rental or flipping a house, but I didn't, like, care about the tax side at all. I mean, I didn't know anything about that. And so I made a lot of mistakes. I mean, for example, like, I was one of those guys that heard on, you know,

somewhere that you should have LLC. So I went and opened up a bunch of LLCs. It just started opening them LLCs because it's like, you know, a couple hundred bucks here. And then I felt like I was official, right? Like people open LLCs all the time to feel like they're doing something. They're in business. Kind of like a business card, right? But then what happened is then I had all these LLCs with no properties in them that were doing nothing but costing me hundreds of dollars a year and making my taxes really complicated. In fact, one of the things that you and I worked on, I think we talked about this last time, maybe, but like I had a,

I had this mess with the IRS where I owed like 10 grand because I hadn't filed partnership tax returns on this mess that I never even used that LLC. I mean, it was like it just, a mess because I didn't understand the basics, even the basic stuff before getting into it. And so I think, yeah, anyway, I'm just kind of a classic case of like what people do when they get started. They just have no idea.

Yeah, and don't feel bad, you know, unfortunately we would see that a lot. And that was one of the reasons that my husband and I were really excited to write this book, you know, and that's one of those stories that we share in the book about what to look out for. You know, how can you tell if you're in this situation where you might want some advice,

you might need someone to help you reposition how your properties or your entities are held. You're definitely not alone in this. Like I said, I meet investors all the time that have the same question or concern. But at the end of the day, the sooner you understand that that's a problem, whether you have a problem or not. And the sooner you fix it, the less pain it will be. Really quick, what would you say would be one of the top one or two questions that somebody who's about to get into real estate should be asking their CPA up front? I think one or two main questions, first of all, would be, do I need a legal entity and what type of legal entity should that be?

And, you know, I'm going to give the unpopular answer of it depends because they'll really depend on that particular taxpayer's investment profile, their assets and the property itself. So that's definitely a really important one because, like I said earlier, that could be something that would be hard for the investor to change down the road. Okay. Hey, and really quick, I just want to kind of warn the listeners. Please don't start trolling Amanda because she's not answering specific questions. You got to keep in mind what we've talked about in our beginners podcast and lots of other podcasts, there is not a single one path for any one individual. So, you know, if you're 65 and wealthy versus 30 and broke, I mean, you're going to have different pathways that you're going to take

and the advice that the CPA is going to give you as different. that's why she's saying that. I know it's really easy to be like, oh, she's not answering my question. Well, that's why you actually have to get your own CPA and talk to them. This is, you know, we're going to give you broad strategies and tips here,

but at the end of the day, you know, you really are going to want to have your own person that you're working with. Yeah. And in fact, what I tell people a lot of times, too, is you have to be wary of the advisor or a speaker who maybe goes on stage and says, hey, this is a one-size-fits-all.

you know, everybody must have this kind of entity. Everybody must do that. Because what that means is they're not really even taking the time to understand what your situation is, right? So if you are given that type of one-size-fits-all advice, you really should question, you know, whether it's something that actually does make sense for you. And again, seek out even if it's a second opinion of your own tax advisor before you pull the trigger. Awesome. So that was the first thing.

You said, Josh said, what are the two things you should ask? So the first one's entity. What else? I think another really good one. one for newbie investors would be just understanding what are legitimate tax deductions. I think most investors are really good at, you know, knowing to write off mortgage interest and property taxes and maybe management fees, right? Those are things that are common.

We understand it. We won't miss it. But what I see missed most often are some of these other peripheral expenses that maybe have a personal benefit associated with it, such as, you know, maybe our iPhone or iPad or our cars, right? So those are things that a lot of people forget to write off just because they feel like, well, you know, maybe I'm using my computer for Facebook as well. Is it really okay for me to deduct? So getting an understanding on what are legitimate tax deductions is something very important to those just getting into real estate. So can we go through those? I mean, we had come up with a list of five before the show. Why don't we start going through those things that they should be deducting? Sure, sure. So I think some of the commonly missed ones, like I said, would be equipment, appliances, cell phones, things like that. You know, as real estate investors yourselves, I'm sure you agree that you're always using these devices for work-related stuff, right? Relating to real estate, you're checking on properties and management companies. So it is okay to have some personal use of this types of devices, but as long as the majority use is business related, then those are legitimate tax deductions. Okay. A common misconception that we hear all the time.

is that people are told or they feel that they can't deduct some of these expenses unless they have a legal entity. A lot of people out there are sending a message that, hey, you have to have an LLC right away because without it, you can't deduct these expenses. And that's actually incorrect because the IRS allows investors to deduct expenses as long as it is ordinary and necessary to that investment business. So it doesn't matter. IRS doesn't care if you pay for this with your personal money or your LLC.

see money. As long as you can show that it's necessary for your real estate business, it should be a tax deduction. I love that. You know, when I was, I was in the entertainment industry before I was doing BP. And one of the things that we used to deduct, we would deduct our haircuts. Because, you know, you had to look good to go on auditions and get out there and be in front of people. So, you know, getting a haircut was part and parcel to that. So, you know, whether it was that or other things around that, we did that. Yeah, you didn't need entities. to be able to do it. Have you heard of Chesty Love?

Do you know who that is? No, but she sounds like somebody I may want to avoid. So there's actually an interesting court case. Chesty Love is a entertainer, let's say. And so she has some breast augmentation is what she had done. And her CPA tried to claim it. The IRS disallowed it. And it went all the way up to tax court.

and the tax court said that was a ordinary and necessary business expense for her as an entertainer. And so that's just a, you know, it's a great example like what you're saying, right? It depends on what your business is. One expense might be legitimate and necessary for you, but it might not be for the person sitting next to you. Right, right. Awesome. All right. So equipment appliances. What else? Another really great one, I think, for investors, whether new or seasoned, would be the home office deduction. You know, I don't know if you guys have.

heard there's always a lot of myths out there that that's an area the IRS has been auditing heavily. So, you know, if you don't want to get audited, don't claim the home office deduction. And that's really unfortunate because that was something that was true over a decade ago. You know, back when telecommuting, Skype, all that stuff wasn't so readily available. So home office is no longer this huge red flag that people used to think it was. And in fact, over the last couple years, the IRS has actually made the home office deduction a lot easier for us to claim. So, you know, before we had to have pictures and receipts to show all these the money that we're spending on our home, right? As of a couple years ago, the IRS actually

came out with the standard method of deducting home office expenses. So you no longer need receipts or pictures or any of that stuff. If you take the standard deduction, you can write off up to $1,500 of home office deductions, again, without receipts or anything. So they've actually made it easier for us, you know? Yeah. Nice. Yeah. So, yeah, because there was, I mean, I was told that myth, even by my own CPA, like before you, he said, yeah, you don't want to take that home office deduction because they'll get you for that. Like, they'll come and get you. And like, I was like, oh, okay, so I guess I won't, I won't take it. So anyway, I mean, that's cool to know that it's not really a big deal anymore. I mean, it makes sense, right? Like, so many Americans work at home.

So, yeah, I think that's great. And so many real estate investors work from home. Yes, yeah. Yes. Yeah. Is it still the same? I mean, I haven't done it in years, but when back when we were doing it, you know, we just have to calculate kind of the size of, the square footage of the home office as a percentage of the overall home. And then you can deduct things like electricity and other stuff as well, correct? Yeah, exactly. So you still can do that. You can still do the electricity and all the actual costs.

Or you can use this new method from the IRS, which is just a standard $5 per square foot. And which method is best for you will kind of depend, you know, very depending on the year. Let's say that, you know, branding, you just did a remodel for your house, right? you upgraded your office space or you just did new flooring for the entire house. Well, guess what? Even though you did flooring for the entire house, a percentage of that could be a legitimate tax deduction via the home office. You just save me like a ton of money. Because right, as we speak right now, we're getting carpet in my wife's office. And I did not even think about that. That could be a right off. So right there, this just paid for itself. All right. There you go.

There you go. Nice. All right. So we got equipment. We got home office. What other what other things can we deduct. I think along similar lines, you know, travel costs, car expenses, you know, real estate investors were known to be looking at properties all the time, right, driving to look at properties, whether new or existing, traveling to different locations, maybe you're flying to Memphis or you're flying to California to look for potentially new rental properties. All those things are potential tax deductions. The one quick tip I want to give people about travel expenses is that in order for a travel costs to be deductible. And typically we're talking about out of state travel. Okay. The

expense, the purpose of the travel, the business purpose has to be determined before you actually leave your house. So that means, you know, if we're going to Hawaii, let's say, and I'm there with my family. I happen to look at some real estate. Well, that doesn't mean my trip to Hawaii is deductible. Okay. I just happened to do some real estate while I was there. On the other hand, if before I left from my trip, I have scheduled meetings with realtors and brokers or I have a register for a bigger pocket conference beforehand. Now my travel cost there is potentially all deductible because that was the reason I went there. It's okay I have some fun. But the reason I went was for all these real estate activities. That was one section of the book on the tax

strategies for savvy real estate investors. One that really hit me was that you told the story of this couple who went down to California and did like a weekend, like it was a five day trip or something. And they did a couple days of work ahead of time, had the whole weekend free. And then, you know, had a meeting with you on Monday. back home on Tuesday, whatever. I mean, it was, like, cool, like, it showed that they were able to deduct that trip because they had schedule, the way that they planned their trip. I mean, I just was thinking, like, it really got my mind working because I travel a lot.

I love to travel. And every time I travel, like, there's always some real estate purpose for it. So anyway, I'm a lot more careful now when I, since reading that on how I can deduct more of that stuff, because I'm not very good at that stuff, like, keeping track of where I go. And I'm like, yeah, whatever. Amanda, we'll figure it out later. but if I'm not keeping track of it, then I'm not, we're not going to deduct it. Like that ultimately is my responsibility.

Yes. And that's a great lead into the, you know, another tip for real estate investors, whether new or season is to really understand that as an investor, we're responsible for tracking these expenses, right? It's kind of like when you go see a doctor, I mean, you have to take the medication. It's not just they tell you and it's all done. So, you know, I mean, my goal, whether it's through the book or the podcast, our goal is not to make everyone become a tax.

strategist. But our goal really is we want people to understand what are the common things you need to know and how do you kind of make that part of everyday living so that you know when there's an opportunity that maybe comes up where you can identify, hey, this is a good time for me to call my CPA. I might have a question about this. Yeah. That's awesome. Yeah. Keeping things at top of mind is really the most important part, right? I mean, if you're constantly reminding yourself that this is part of who you are and what you're supposed to be doing, it just makes it a lot easier to reap the benefits down the line, right? Yeah.

Awesome. There's another one that's really unusual. It was your little kinder, right? My little kinder. Kids. Children. Brandon? No, but deducting kids.

No, deducting kids. How do you deduct kids? What's that mean? Okay. Or not kids, but yeah, you know, anyway. Yeah, you had in the list, kids. We're curious about that. So one of the questions we get quite often is, you know, my kids are expensive, right?

The older they get, the more expensive they are. I remember when my son was a baby, I would buy him very small toys for 50 cents and he loved it. Now he's more into the $20 toys. And I imagine when he gets older, his toys would be cars and, you know, girlfriends. And so the question we get all the time is how can I. I like how she call it girlfriend's toys. That's funny. You might want to delete that from the podcast.

I get some hate emails. So, I mean, the reality is that's a question we get all the time. I spend so much money on my kids. How can I write off my kids? How can I deduct them? And, you know, generally, the IRS doesn't give us a whole bunch of deductions. I mean, when we have kids, we get to claim an exemption, which is a couple thousand dollars. But that doesn't come anywhere close to the money we're spending on our kids.

So as real estate investors, we have a really great opportunity to be able to legitimately take a tax deduction for the money that we're spending on them. And so determine the tax world is called income shifting, which is essentially paying your kids. So all we're saying is instead of just giving your kids money so they can pay for car expenses, why not have them help you out in your real estate business? Then when you pay them for that assistance,

you can take a tax deduction as a business-related expense. And the goal of that is to be able to take a deduction on your tax return, which the assumption is you're at a higher tax rate, and then be able to shift that money into your kids, which may be at zero tax rate or even very low income tax rates. So it's the same exact thing as giving money to your kids, except in lieu of just giving it to them, they're working for that money.

And you're not paying them a salary per se through, you know, payroll or anything. You're still, here's, you know, 50 bucks, good job working. You know, it's kind of, here's cash for your allowance, but instead of cash, here's 50 bucks for your three weeks allowance or month or whatever it is. You know, here's 50 bucks to pay for the time that you put in doing that. And I could still give it to them as cash. I just have to record it as this is payment for whatever it was. Yeah, that's a really good question.

So whether you pay them cash or credit card or check, that doesn't matter. Okay. The important thing to legitimizing the deduction is, like you said, making sure they're actually doing work for your real estate. So, you know, Josh, if you told your kids, hey, you know, every time I come home, I want to make sure I have a beer in my hand. Well, that's not really a business expense, right? But if they were helping you. It relaxes me, which allows me to be more productive in my podcasting. So maybe it is.

I'm going to take this to tax court. But on the other hand, you know, if they help you with editing the podcast and stuff like that, that's obviously a business related cost. So the first thing is make sure it's business related. Sure. And the second thing is just to make sure that there's documentation. So how much you pay your kids should be reasonable, right? I mean, we love our kids, but is it reasonable to pay them $1,000 an hour? Maybe not.

And you also want to look at what is reasonable tasks? What are the reasonable tasks that they can do for their age? So, you know, if they're 10 years old, can they help you do some editing on the computer? Probably so. If they're two years old, that might be a hard argument to make. My two-year-old's really smart. I know, aren't they all? They're all smarter than us, right? Oh, yeah.

By the way, this podcast has been edited by Joshy's two-year-old. Yes, but whether it's a 1099 or a W-2, that just really depends, you know, on the age of the child and what type of work they're doing for you. But that's something that you can easily discuss with your tax advisor. the key is just making sure that there's documentation for the work-related stuff that they're performing. Yeah. Even besides the tax thing, I think there's just some value in having your kid, not just, you know, like, I'm going to pay for your insurance. You know, you got a 16-year-old kid, I'll pay for your insurance. I'll pay for your insurance. I'll pay for your car. You know what I mean? Like put some, I don't know, it just seems like it teaches kids that they work for money. It's not just given to them and makes them a little bit more independent. How dare you? I know. Really?

This is the millennial generation. I know. They don't just be done with school and then everything comes to. Everything comes to you. Yep. There you go. Yeah, I think the working thing is good.

It's really interesting because I taught a class about income shifting a couple years ago and we had a lady in the audience who was maybe in her late 50s and she said, you know, my son just graduated college and then he moved back in with me. Is this a strategy I can use with him or is he too old? And that was a really great question. And the answer is, of course, you know, you could pay your son who graduated college. If he's not working and he's sleeping on your couch, I mean, yeah, you better put him to work. And if he can shift some income to him and take a deduction, why not?

Even better. Yeah, that's awesome. That's awesome. There you go. Cool. All right. So then we have one more on our list here for deductions. And that is a bigger pockets pro membership.

What's the deal with that? Can you deduct that? Or can I deduct that? I mean, how does that work? Yeah, sure. I mean, so that's an example of one of those items that people just rarely. think about, right? Why are you on bigger pockets? Well, you're there to further your investing career, right? And so is it ordinary and necessary to your real estate business? Of course,

whether you're a rental investor, a wholesaler, a fix and flipper, these are all legitimate tax deductions. So next time you renew your pro membership, make sure you keep a copy of that receipt and let your CPA know, hey, I've spent money on this stuff. You know, if you go out and buy, you know, any books, maybe a new tax book for real estate investors. eyes, look at you, tying in paid accounts and new books. That could be a tax deduction. So a good thing to do to practice doing is every time you're spending money on something, ask yourself, you know, can this be a tax deduction?

Or how can this be a legitimate business deduction for my real estate business? Okay. Well, one more question that wasn't on our list, but I'm just curious while we're here. Let's talk about meals. I mean, if I go and go eat dinner with a, I don't know, Okay, so I just hired two employees in my company that now work for me, a maintenance guy and a assistant. I take them out to dinner to go talk about our business and to treat them. Is this meals deductible?

How do I know if they are? How does that all work? Sure. The easiest thing to do is when you have meal expenses that involve someone besides just yourself and maybe your wife or your kids, right? If it involves other parties who are involved in your real estate activities, those are generally going to be tax deductible. you know, lenders, realtors, maintenance guys, those should all be tax deductible. The question we get more often is, you know, maybe Brandon, you and Heather go out to eat all the time. And you're always talking about real estate.

You're always talking about Josh and bigger pockets and all these things. Really? Is that what you guys talk about, romantic meals? Yep, that's kind of troubling. Yeah, we have a lot of conversations about you. Wow. Wow. Crazy.

So, yeah, so what do I do about that? I mean, can I just deduct my dinner last night? So for that, what I always tell our clients is you just want to kind of use your judgment, right? Obviously, my husband and I, we're investors. We work together in the business, too. We're always talking business or real estate. But I wouldn't necessarily deduct every single meal. If I'm going to spend $5 a subway, I probably wouldn't write it off because I don't want to show a bunch of $5 transactions.

But if we're out for a nice dinner and I show, that might be the one where I have some kind of documentation, hey, we talked to business before, during, or after that. So it's more of subjective. I would say choose your battles to deduct the ones that make the most sense. Nice. Cool. Because yeah, I mean, there's not a single meal we ever have that we're not talking about real estate,

you know, because it's just, that's what we do. That's what we love. So I think, and to branch off that, people listen to the show who might not have a lot of real estate yet, or maybe you're just getting started or they have, you know,

whatever. We always encourage people all the time is take local investors out to coffee, take them out to lunch, you know, pick their brain. Like, I'm assuming on that same line, then that could be tax deductible because they're, they're furthering their investing.

Sure, sure. Cool. All right. Next, so the next thing we had were retirement strategies. So, you know, people not missing out on their retirement strategies. What does that mean? Well, one of the things we look at every year when we file tax returns is to figure out, is there a better way for me to use my money?

Meaning, rather than paying it towards the IRS, are there other ways for me to reinvest that towards my retirement. For example, real estate or stocks or bonds. So one of the most powerful tools that the IRS gives us is actually with respect to retirement strategies. Most of you are probably familiar with, you know, IRAs and Roth IRAs and SEP IRAs where you could put money away into retirement, you know, potentially get a tax deduction, and then either get tax deferred or tax-free growth.

One of the biggest hurdles we've had in the past, because most of our clients are real estate investors is that people prefer, you know, they like the benefit of getting a deduction by putting money in retirement account, but they would rather use that money for real estate investment. People don't want it trapped in the stock market. And so one of the ways around that and get the best of both worlds is to use self-directed investing. That in essence allows an investor to take a deduction and turn around and use that money back into real estate deals and grow either tax-free or tax-deferred. That's cool.

Yeah. So that's what we worked on. You and I worked on this a few months ago. We kind of set the thing up. And then I did a call with you last week where we recorded the whole thing about 401K, self-directed 401K investing, right? That's the same thing we're talking about now, right? Yeah.

I mean, there's different types of retirement strategies. But, yes, the 401K is one of my favorites. That's the one that I have personally. Okay. So, yeah. So I just, I mean, just for people know, like, I set one up. We set it up before the December 31st.

I think I went through a sense financial to do it. And we set this thing up and then I'm going to fund it here when we pay our taxes. I'll fund that account. And now I can use that account in a number of different ways. And we don't have to go real in depth than that. But to be honest, I didn't even understand what I was doing entirely when I opened it. I just trusted Amanda a lot. But then we sat down last week or was it two weeks ago.

And I just picked her brain for an hour on exactly how this worked. Josh? I got my hand up. Yeah. What the hell are you talking about? 401k. I explain that. You're making assumptions that people know.

A lot of people may not know. Sure. So what's a 401K? What's a 401K? What's a self-directed 401K? I'll have to answer to that. And just really quickly, what's the advantage? Why would they do this?

Sure, sure. So we're all familiar with an IRA. You go to a local bank or a custodian. You open up an IRA. You put $5,000, into it. And then over time, you hope it accumulates, and accumulates that you have enough money to finally go out and maybe buy a piece of property or

invest in a note. 401k or the individual 401k, it's known by all sorts of different names, but that's one that is eligible for small business owners or people who are doing active real estate, for example, syndications, wholesalers, fix and flippers. It's a way for, it's a type of account that they may be able to open up where they could put a significantly larger amount in every year and then be able to redirect that by investing it in real estate deals. So as an example, if you're someone who does fix and flip and you had a really, really great ear, and your CPA says, oh my gosh, you owe this much in taxes, it's possible for you to open up a self-directed 401K, put money into it,

reduce your tax liability, and then turn around and put that money into another real estate deal. Yeah. This is why I love it. That sounds great. Yeah, I love the idea because, like, you know, the more income I make every year. Like every year my income goes up a little higher from both real estate and from bigger pocket stuff and, you know, writing books and everything. The more income that I make, the more taxes I'm always paying. And I'm trying to find ways to defer that more and more.

And like, I never understood how people would talk about, yeah, I have a Roth IRA and I'm investing out of that. And I'm like, that sounds good. And they're like, you can put $5,000 a year in it. I'm like, great. In 20 years, I can use my Roth IRA. Great. Awesome. Right. Like, it never made sense to me how people do that until I realized the 401K, the self-directed of 401k, the self-directed of I can put, what is it, $50 some thousand dollars or whatever in there in a year? And then my wife could do the same. Exactly. All of a sudden now that becomes like, I can actually invest with retirement savings now.

Like right now I could do it. And that just blew me away when I learned that. That was cool. Yeah. You know, real estate investors, we love the concept of leverage, right? And that's another great part about the 401k or the individual K is that the retirement account can actually go out and borrow money. So if I have 50,000 in my retirement account, I can probably. probably buy $100,000 worth of real estate with leverage.

And because there are lenders who lend specifically to retirement accounts. And the best part about that is your money and the leverage money both go back into your retirement account, either tax deferred or tax free. Right. So it's the tax deferred and the leverage concept all rolled up into one. Yeah. That's amazing. I think that's awesome.

So is it $50,000 on that self-directed 401K? Yes. For this year, it $53,000. and then if you're over 50 years old, it's 59,000. So, Josh, you can easily get 59,000. I don't have one. Why wouldn't, no, but why wouldn't people, I don't even know what he said, he just talks and talks and talks and talks. He's telling you old.

He's calling you old. Whatever. I didn't hear you with my old assy. So why aren't more people opening these self-directed 401 days? Is it just the knowledge that we don't know about it? Well, that's a really good question. So not everyone is eligible for 401Ks. Okay.

So let's say you're someone retired. All you have is rental income. Generally, you can't open a 401K because rental income is considered investment income. So for someone to have a 401K, they have to have some sort of earned income outside of their W2 job. And so that's where, you know, if you're a realtor and you get 1099 commissions income, or if you're someone doing wholesale, you get wholesale fees or those who do fix and flip. Those are examples of people who might be eligible for a 401K. Okay.

So you can't necessarily, if I was working at some accounting firm making, you know, $150,000 a year, I couldn't just take 50 of that $50,000 and just throw it into a self-directed 401K. Correct. You couldn't do that unless if you were maybe also moonlighting at another accounting firm and they were paying you some 1099 consulting income. Gotcha. And this is where I think it's helpful. Once you know these things, then you can set up your life to actually make that make sense.

You know, like you can say, okay, well, I have my job here. I'm going to fix and flip this many houses a year and take all that money and put it into this, you know, solo 401k, which then I'm going to use to lend private money out to somebody else later and make a good 10, 12% return on my money. Like once you get that strategy, it's much easier to form, yeah, form your life around that, which is, I think, powerful stuff. I mean, that's what they talk about, like the rich just keep getting richer. It's because the rich figured this stuff out.

and everyone else watches Dancing with the Stars. And that's like, I think that's just what people do. So anyway, if people obviously, like, and we'll probably talk about this later. But so when we're launching this book here, officially today it comes out. If they're listening to here on launch day that this comes out. Anyway, if they buy in the first 10 days,

we're going to actually include that hour-long interview that I did with Amanda, all about self-directed 401K. So if you guys want to learn more about that, make sure you buy the book in the first week on bigger pockets itself, not on Amazon, but you can buy it on Amazon too, but you just don't get that cool 401. 1K thing. Nice.

There you go. Awesome. All right. What else is on the list? We got depreciation, right? Depreciation. Yeah. I mean, that's one of, you know, in the tax world, it's one of the best benefits when it

comes to real estate investors. Simply put, it's essentially the IRS's incentive. They allow you to write off the purchase price of your building over time as a tax deduction. And what we love about that is you're allowed to write off that purchase price over time, regardless of whether or not the property is going up in value or if it's going down in value. And so typically what happens with investors is we have a rental property that's going up in value over time. But in that same time frame, we're taking huge tax deductions by claiming depreciation expense. Now, you know, for those listeners who maybe are savvy investors or who've been investing for several, several years,

this might seem like a no-brainer or a common strategy. but I do have to say that every single year, there are handfuls of tax returns that we see that come across our table where investors have missed out on depreciation altogether. A story that's really interesting is I wrote an article on Bigger Pockets about depreciation. And one of the closing statements I made was, hey, if you don't know if you're claiming it or if you're doing it correctly, pull open your tax return from last year. There's a line that says depreciation. take a look to see if there's any numbers there. And I actually had a gentleman call me and said, Amanda, I just listened to your podcast and my depreciation line and says zero,

but I own six properties. So now that guys are client, I'm just so happy, you know, someone actually, well, first off, someone reads my blog. But that, you know, that it's actually really easy for you to figure out. You know, don't trust that you're already doing it. Just take a few moments to check and make sure. I actually have a friend who just like three days ago, he tells me, he's like, I did my taxes for the year.

I'm like, great. And he's got one rental property. And I'm like, great. And I was like, how did I go? He's like, oh, it was really, really easy. And I was like, well, and you got, and I said something like, you made sure you got the deduction, or it's a good thing you got the deduction for your house, the rental house this year.

And he goes, oh, no, I didn't worry about that. And I'm like, you didn't worry about that. He's like, yeah, I just couldn't figure it out with the tax off for. So I just left it blank. Like, I probably worry about that. Because when you go, because right, like, correct me if I'm wrong. But when you go to sell, the IRS is going to basically charge you for that anyway. I mean, they're going to assume you paid it anyway.

So it's like you're just missing out on free deduction no matter what, right? Exactly. And I do come across people who maybe get bad advice where their CPA says, oh, don't take depreciation. You're going to have to pay taxes later on it. You might as well save it for later. And that's absolutely incorrect because depreciation is not a choice. You're required to take. And if you don't take it, then the IRS assumes it's taken.

So there's absolutely no reason not to take depreciation. Okay. Yeah, good. I got to bug my friend again. I'll make him listen to this show or something. And what's funny is like sometimes people will do stuff like that. Well, like, he wanted to avoid having to go to a CPA or having to go to anywhere to do his taxes. He wanted to do it with some software online, right?

So he saved himself maybe a couple hundred bucks, but he probably missed out. In all reality, he probably missed out on a lot more because he didn't go to a professional. And that's just, I think that's very, very common. And I was afraid to use a CPA for years because I thought they were just way too expensive. But in that case, at least in most people's cases, they probably save more. Yeah. And I don't think that everybody needs a CPA. It really is up to each particular person what they have going on.

And so there are times when we talk to prospective clients and they tell us, oh, you know, I'm thinking of doing this, but I really won't pull the trigger for, you know, a year or so. So that might be an example of someone who maybe could still get away with TurboTax. But yeah, I mean, I think it's time to different. look for a CPA if like your friend's scenario, he admits it's too complicated. I'm just going to leave something off. You know, that could lead to some big problems down the road. Yeah, yeah. So in the example of your friend, Brandon, you know, if he's admitting that it was too hard for him or too complicated for him, that might be a good sign that, hey, it's time for you to seek

outside advice. Yep. I think that's exactly it. Cool. All right. Next one. And this is the big one. So I do webinars every week. I'm BiggerPockets. BiggerPockets.com slash webinar. People should come and join me live. It's pretty fun. And the number one question I get more than everything else in the world when I do the open Q&A at the end is, Brandon, do I need an LLC? Do I need a S corp?

Do I need a little bit? Everyone asks that question every webinar. And so, I mean, that's a big deal, entities. So I'm assuming that's kind of next on our list, entities. And we talked a little bit about earlier, but what do you have to say about that, the mistakes people make with that? Oh gosh. Well, I think the mistake would just be being in the wrong type of legal entity. I mean, believe it or not, it's better to not be in an entity than to be in the wrong type of entity in case. But in an ideal world, you like to start out in the right type of entity. But really, there's two aspects when it comes to entity structuring for real estate investors. First, there's the asset protection benefit. And since I'm not an attorney, I won't comment on what that means or what I think that means. The second part of entity structuring is really the tax savings side of things. So two really important tips that I think would be really great to share with our listeners is that one,

if you're someone who is doing rental real estate, and that's just straight, you know, buy, long-term hold, sell it in the future, maybe do a 1031, who knows. Whether you have an entity or not, it really makes no. no difference in the tax world. And what I mean by that is you take the same tax deductions that you would, whether the property is owned in an LLC or in your personal name. Now, on the other hand, if you're someone who's doing active real estate, which would be wholesale, fix and flip, syndicator, something that you're actively involved in, then an entity

could mean the difference of upwards of 15% or more every year in tax savings. Okay. And is that because of the self-employment tax? Is that that where that comes into play? Yes, correct. So when we own rental real estate, we never have to pay self-employment tax, right? Because it's an investment income. On the other hand, when we're actively involved in real estate, it's the same as any other kind of income like real estate commissions or if you're an actor or consulting income. So we have to pay income taxes as well as self-employment tax. So from that perspective, we generally will recommend for our client, to be in some sort of a corporation and using that corporation to minimize that 15% self-employment tax. Okay. And how does that, I mean, how does that exactly work? So let's say I have a, let's say I'm flipping houses. I'm doing one house a month and I'm making, I don't know, we'll say $20,000 a piece.

And so over the course of a year, I'm making $240,000 in income on this thing. Why does having a corporation then help me save taxes? I mean, explain that to me. It's really just a loophole in how the IRS has set up the tax code. So basically they say, okay, if you're flipping in your personal name, every dollar of net profit you make, you're going to pay income tax and payroll tax. On the other hand, if you're flipping in a corporation, you only have to pay self-employment or payroll taxes on any compensation or W-2 you take out. If you take anything out as dividend or distributions, it's exempt from self-employment tax. So there's no real rhyme or reason.

It's just one of those loopholes that back in the day, some lobbyists got passed through. Okay. So like theoretically, let's just say I were to, you know, like I said, make that 240 a year from flipping and then maybe pay myself a reasonable salary of, let's say, 40,000 a year. On that 40,000 now, I have to pay myself employment tax and all the regular stuff. But the rest of the money I could distribute to myself as a dividend or whatever. That's the gist, right? Exactly, exactly. So the more money you make and the more you take out as distributions or dividends, the more taxes that you're saving. Okay. That's awesome. I love that. And that's, again, another one of those like tax savings that the rich people are using all the time and that the rest of the world doesn't really use. I think that's awesome. So cool. Okay. Well, last question. Yeah, last one. We've got proactive planning. Yeah, proactive planning. That was the last thing you had on kind of our list here is this idea of proactive planning. What was that?

You know, I know we talked about a lot of different strategies today. And the heart of all these strategies is actually proactive planning. And what that really means is simply keeping a line of communication open with your tax advisor. It doesn't have to be anything complicated where you're learning the rules or spending a ton of money. It's really just keeping your tax advisor up to date. Hey, I'm thinking of selling a property. I'm thinking of buying a property. Or it could be even as simple as life changes like I'm getting married or I'm having a child.

because it's in this type of communication where your advisor could be able to identify some proactive planning ideas or strategies for you. I love it. Smart. Speaking of that. I'm buying a house.

I want to get a new car. Should I buy or lease it? You know, all these fun things. Speaking of that, I'm going to be contacting you soon, Amanda. We need to have a proactive planning talk and figure out what I'm going to do with the future. Now I got like employees and I got more flipping going on. I got all this stuff.

Baby. I got a baby coming into the picture. Yeah, I got all the stuff. So anyway, I think this is valuable, just to have those conversations with your CPA, talk about it, strategize a little bit. And just like the very first tip you give, kind of wrap it all up. Like, the more that you understand going forward, like, the more that you set it up correctly in the beginning, the better the whole entire thing is going to be.

The more money you'll save, you know, rob the IRS out of more of their money and keep more of it for yourself legally. And that's what I think we're trying to do here today. First world problems. First world problems. I love it. All right. So why don't we shift gears here and move over to the.

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So first question, it's kind of all a little bit more related to now. Like if you're like here we are a few months before tax seasons, you know, really, really, you know, like deadlines hitting and then we have extensions after that and all that. But anyway, these will help people right now, I think, where they're at. So number one, what should people be doing right now to get ready to meet with their CPA? To get ready to meet your CPA, we say the first and foremost is making sure you've captured and summarized all of your expenses. After you listen to the podcast, we talked about a lot of the common stuff that are missed. So make sure you summarize and get it organized. It's also a good idea maybe to have a list of questions for your CPA.

You know, I just did XYZ. Can I deduct it? Those are things you want to be prepared for. And also, of course, let your CPA know of any significant changes. bought a property, sold the property, moved around, that kind of stuff. Right on. Great. Cool.

Is it too late to set up an entity? So, you know, you're presuming, hey, it's February, March, April, and tax time is coming up. I haven't set up an entity. I bought some properties. Is it too late? I'm just going on assumptions here. Is it too late for me to set something up?

It depends on what year you're talking about. Is it too late to set one up for the prior return that you'll be filing? Yes, it's too late. But for this current year, this is the perfect time to set up entities for this year because the year is just starting. If you're someone who already had an entity, but it might have been the wrong type of entity, then definitely speak with your tax advisor because in a lot of entity types, there are ways that we can retroactively change the type of entity it is. For example, turning an LLC into a corporation or vice versa.

Cool. Fancy. All right. Nice question. Let's see. Is there anything I should do before April 15th specifically? Like HSA, IRA, extension payments. What should I do before April 15th specifically?

Yes. Yeah, a couple. I mean, you mentioned some of those main ones. If you're someone who wants to fund retirement accounts, definitely think about funding in IRA or a Roth IRA. Health savings account is one that we love because you get a tax deduction for the money going in. The money grows tax-free.

And you also pull that money out. tax-free as long as the money is used for medical expenses. And what I also love about the HSA is that it can't be self-directed as well. So it could be utilized for real estate deals. It doesn't have to be limited to the stock market. Okay. Cool. Interesting.

Interesting. All right. Last question of the fire round. Are there any new tax changes that apply specifically to 2015 tax year that people listening need to know about? Presumably they're proactive and actually listening to the show when I comes out and we're talking about sometime before April 15th unless they filed an extension. Yeah, there's so many. A lot of caveats. There's so many. In fact, the good thing is that a lot of

these new changes came about that are good for 2015, 16, and some even permanent benefits as well. So it could be beneficial regardless of when you're listening to this. But some of the great ones is bonus depreciation came back around again. So for those of you who are real estate investors, fix and flippers, if you bought brand new assets, equipment, furniture, and appliances in your real estate business, as long as they're brand new, then there is a bonus depreciation where you can write off up to 50% immediately on your 2015 income tax return. Another good one is it's a little bit lesser known. It's called the de minimis deduction. So before this came out, an investor would have to wait to deduct a large

expense item maybe over five or seven years, so writing it off over time. The latest rule that came out as of Thanksgiving of 2015 is that now they've put in a caveat that if you have an expense, up to $2,500 can be immediately deducted in the year you spend that money. So if you're a landlord and you bought 10 air conditioning units, I mean, I don't know why you would do that, but let's say you bought 10 air conditioning units for all your properties, and it's $2,000 each, you can write off the entire purchase price of all 10 units immediately in 2015. Wow, that's cool. I did not know that.

So good to know. Good to know. All right, cool. Well, that's the end of the so-called fire round, which was changed a little bit today. And let's move over real quickly to the, actually, before we do the famous four and hit those up again, why don't we just talk? Give people one more time, remind them what the book is called that you wrote because I really, really, really, really, really want people to read this book. And not just because, you know, Bigger Pockets published it, but like, it's really, really good. I mean, it's really good.

Like, there's a quote I have at the top of the book on the cover. And it says, had I read this book earlier in my real estate investing career, I easily would have saved myself thousands in taxes and my net worth would be significantly higher. And I totally mean that. Like when I read that, that was the first thing that popped in mind is, dang, I should have read this when I first started my investing career. So shame on you, Amanda, for not writing this 10 years ago. But, you know, you know, can only do we do. So anyway, let's talk about the book real quickly and tell us a little bit. First of all, what's it called again? Yeah, it's called tax strategies for the savvy real estate investor. And my husband Matt actually worked alongside with me in writing the book. And we're just really excited to be releasing this book. I mean, it's been a long time dream of ours to be able to do that. And what we really try to do is, you know, a lot of the tax strategy books we've read were really geared towards CPAs. A lot of very technical talk, things that, you know, for lack of better word, are quite boring.

And so what we really wanted to do was to come out with a book that has a lot of stories. real life stories and examples where it's easy enough for the reader to hopefully be able to understand what some of the concepts are and be able to implement that for their own situation. Got it. Got it. Cool. All right. Well, awesome. I mean, that was one thing also that stood out for me with this book was that it was written very much like, I mean, like, I like to think of myself as a fairly smart guy, but when it comes to taxes, I'm a complete moron. I mean, I really am. Like, I have no idea what I'm doing. But like, I understood everything. It's not just. Okay, I'm a more on in a lot of ways.

But, like, really, honestly, like, I understood things when I read that because I think you're really good at that. That's why we like you as a blogger because you explained things well. I thought you and Matt did a fantastic job. So, anyway, love it. It was awesome. Yeah, I love it. So in addition, just to let people know that in addition to just the book, which is currently just a digital book. So we're releasing this right now is just a digital book in the future.

Maybe we'll have a physical copy of it, but right now it's just digital. And to get that, in addition to just a digital book, we got three other bonuses to throw out there when people buy it. They get a PDF, kind of an e-book we put together called, and you can correct me if I'm wrong here, Amanda, because you don't have made this stuff. But what records to keep why and for how long? What is that? Yes. I mean, we get questions all the time. People hate receipts. People hate bank statements. How long do I have to keep it? Can I burn it and never look at it again? So that document will put together so that investors and taxpayers will know how long you have to keep for each type of record. Perfect. Second PDF is a e-book called types of self-directed retirement accounts. What is that? Well, over the years, what I've learned is that our clients, who are real estate investors,

love to use retirement money in real estate. And so that article we kind of put together just to give people a general idea of what are the different types of retirement accounts and who they might be ideal for. Okay. All right. And the third one here, it's when to call your CPA, right? What's that? Yes. You know, we talked a little bit earlier about being proactive, right?

And so we wanted to put something together for the readers so they can understand what are some examples of when you would want to call your CPA and why you would want to call them. So why did we title it when to call your CPA? I don't know. All right. And then of course. Very apropos. There you go. As I mentioned earlier as well as kind of an additional bonus for people who do buy the digital book here in the first 10 days.

We're also giving away that the 401k video, which me and Amanda just sit down and really. really hash out. What is the self-directed 401k? How does it work? Why do I have one? What am I going to do with it? How am I going to do it? It's pretty awesome. So I mean, I learned a ton in that and people will love it. So to get all that stuff, of course, people can go to biggerpock.com. T-A-X-B-O-O-K. And pick it up there, BiggerPockets.com slash tax book. You can also go to the BiggerPocket store at BiggerPock's. All right. Nice. With that, let's wrap this thing up. Let's do this famous for as quickly as we can. So here is famous for. All right, number one, what is your favorite?

And this may be different than last time or maybe it's the same. What is your favorite real estate book? Besides your own now. Oh, darn. I really like Rich Dad Poor Dad. Like that's the last time, that's one that got me interested in doing my own real estate. Nice. How about Business book?

Business book, I really love the four-hour work week because I think it really helps me to understand ways to systematize both my CPA business as well as my real estate business. Awesome, awesome. And what do you and that husband of yours do for fun? Oh my gosh. Well, we have a four-year-old. So for fun, it's, you know, Disneyland, the zoo, those kinds of things. Nice. What do you actually do for fun? What do I do for fun? Well, I'm a big foodie. So I love eating all sorts of food, food trucks. You name it, I'll eat it. Nice. I don't have any food trucks in my entire town, I don't think. Everyone always talks about, cool. they are, but I don't have them. Maybe I'll put one up in my next life. All right.

I'm not a food track guy. Something weird about it. I don't know. All right. Cooking food on four wheels, I don't understand. When I was a kid. All right. Number four.

Amanda, what do you believe sets apart successful real estate investors from those who give up, fail, or never get started in the first place? Oh my gosh. I would have to say implementation, you know, not just learning, but to actually pull the trigger and implement or, you know, do what you say you're going to do. I think that's the biggest, uh, biggest item. Yeah, that's great. That's great. I love that. It's perfect. I fully agree. Take an action. That's what matters. All right, Amanda, before we let you go, where can people find out more about you? Uh, well, my company website is keystone CPA.com. So www.com.

Nice. And you're also active in the bigger pockets realm, correct? Yes. Yeah, you blog, blog weekly and people can find you all over there. And we'll have links to you at the show notes as well at biggerpockets.com slash show 162. They have links to your profile, to your website and to where they can pick up the book. Nice. Nice. All right. Before we let you go, this is a presidential election year.

There's a guy who's running for office that has talked about raising taxes on real estate. Oh, we're done. Sorry, I got to go. Can't ask the question. Just kidding. All right. I'm not going to actually ask the question. but, you know, it's an election year.

And, you know, as real estate investors, financials actually do come into play. So, you know, I'm not actually going to put you on the spot and make you talk about it. Who are you voting for, Amanda's game? No. We're not going there. We're not going there. It's been a pleasure. Thank you so much for coming on.

We really, really do appreciate it. And if you're listening, get out there and pick up a copy of Amanda's book. It's awesome. Pick it up at biggerpockets.com slash tax book. Amanda, thanks for coming on the show again. Thank you, guys. Thank you. Take care.

All right, guys, that was Amanda Hahn, author of the new Bigger Pockets book, titled Tax Strategies for the Savvy Real Estate Investor. Actually, it's titled The Book On. The Book On. Tax Strategies for the Savvy Real Estate Investor. And as we talked about, you know, the book's fantastic. You can pick it up at biggerpockets.com slash tax book. Hopefully you enjoyed the interview.

hopefully you don't burn $10,000 like Brandon did. Amanda saved my butt on that. She actually went to help me fight the IRS on that. She went to bat, huh? She went to a bat for me and it was awesome. Nice, nice. But it's a great show, lots of fun and obviously extremely informative. And otherwise, I know we were going to just talk really quickly about the package of the book and this release that we've got.

Yeah. So basically, as we guys talked about in the show, as we talked about the new book, the book on tax strategies for the heavy real estate investor. I'm not even kidding. I promise you will love this book. I don't know. Can I guarantee they love this book? They're going to love this book. It's a good, but it's not boring. That's not boring. That's what I love about this book. It was full of stories and it's fun to read. And it's very, it's like it's not a 200,000 word legal jargon book. It's just a fun book to read and you learn a ton. So anyway, you'll learn all sorts of cool stuff in there, like, including how to like write off vacations and your kids and all sorts of cool stuff. So check that.

out. In addition, with the book, because bigger pockets, we like to provide, you know, over-provide value. Amanda prepared a bunch, Amanda and Matt prepared a bunch of extra stuff with it. So, that includes an e-book called retirement accounts that can be self-directed into real estate deals. Another one called a e-book called when to call your CPA. Another one called what records to keep and why. These are all just reports to help you make sure you're getting the most of the book and saving the most money possible. And one of my favorite parts is this e-book that she put together called the CPA fire round. It's very similar to our fire round on the podcast.

And what she basically did is we went to the forums together. And we found the top 20, like, biggest tax-related questions that people had recently. Like actual Bigger Pocket members on the forums have been asking these questions. And she just fires off answers to all of them. So you guys are going to love that as well because these are questions that you guys are asking.

And then lastly, but I think maybe most importantly, is that we mentioned to this show, there's that hour-long video interview I did. And MP3 is you can listen to it. but you can also read the transcription of it of how to use a self-directed 401K to fund your real estate deals. And that's that bonus that you have to buy this within the first 10 days of launch to get that.

So make sure you guys jump in right now and get that. And they've got to buy directly from BP. They can't buy from Amazon. Correct. All those bonuses come only with BP. And so I think you have until I believe it's the 27th or 28th of this month. I'll have to check with that. It's something like that.

But anyway, it's one of those due days. So hurry up and buy it. now, make sure you get those bonuses. Yeah, and the information on that deadline will be on the landing page. BiggerPockets.com slash tax book, T-A-X-B-O-O-K. And I would be remiss to, it's a good work, right? It's a good word. It's a good word.

I would be remiss to not give a massive, massive thanks to our new head of publishing here, Bigger Pockets, Kimberly. Without Kim, who has been with us for less than, than a month now. Yeah. This book would not have come out in time for tax season. She has done an amazing job getting this thing together, working with Amanda on making sure it all came together.

So I just want to give kudos to Kim for doing such a fantastic job. Thank you. Thank you so much, Kim. Yep. Thank you, Kim. You rock Kim. Yeah, yeah. Rock Kim.

Eric B. All right. Old school wrap, that. All right, guys. Anyway, check it out. Thank you for listening. We definitely appreciate it. And otherwise, if you are not already engaged on Bigger Pockets, get reading the blog post.

I mean, Amanda writes for us, I think it's every week or every two weeks. She's writing amazing tax articles. We've got tons and tons, dozens of other writers who are writing for us regularly. Get on the forums, participate, introduce yourself. By the way, today, well, as we record this, we just released, we just launched our brand new forum upgrade, completely new user experience over on the forums. BiggerPockets.com slash forums. check it out. There's some amazing updates and it's way easier to use and more, more obvious,

I think, to find a lot of the stuff on there. So definitely check that out. It's pretty too. So check it out. Jump on Bigger Pockets. And yeah, thanks for listening, guys. Thank you. Yeah. All right. I'm Josh Dorkin. And I'm Brandon Turner. Sign it off. You're listening to Bigger Pockets Radio. real estate for investors large and small. If you're here looking to learn about real estate investing, without all the hype, you're in the right place. Be sure to join the millions of others who have

benefited from biggerpockets.com. Your home for real estate investing online. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K. Copywriting is by Calicoe content. And editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.com. The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included involves risk. So use

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