A CPA’s Year-End Guide for Maximizing Real Estate Investments
1. Invest in Short-Term Rentals Before Year-End
Planning a last-minute short-term rental purchase? Now’s a great time. Keep rental periods under seven days, meet material participation, and you could unlock major tax benefits. By acting before year-end, you can secure valuable deductions.
2. Maximize Vehicle Deductions
Got a vehicle over 6,000 pounds? Use it at least 50% for business, and you may qualify for bonus depreciation. To boost your deduction, consider exclusive business use through year-end. Keeping it at 50% or higher business use over time means even more savings.
3. Qualify for Real Estate Professional Status (REPS)
Meeting REPS requirements? Place any property in service before year-end to qualify for bonus depreciation, letting you deduct more of the purchase cost. Make sure your time logs are accurate—year-end is a smart checkpoint to ensure you qualify.
4. Boost Deductions with Cost Segregation
A cost segregation study can help you accelerate property depreciation. Don’t worry about finishing by December 31—just place the property in service by year-end, and you can complete the study before tax filing.
5. Offset Capital Gains with Tax Loss Harvesting
Sell assets at a loss to offset capital gains or up to $3,000 of regular income. This works for stocks and sometimes real estate, too. If you plan to re-buy, follow the 30-day wash-sale rule to stay compliant.
6. Charitable Giving for Deductions
Charitable contributions can lower your taxable income if you itemize. For larger gifts, consider a donor-advised fund to manage your giving and maximize deductions.
7. Retirement and HSA Contributions
Make 401(k) contributions by December 31 for the current year. IRA and HSA contributions can wait until April 15, but open your HSA by December 31 to reduce taxable income for this year.
8. Prepay Expenses and Stay Bookkeeping-Ready
Prepay upcoming expenses—like tech, maintenance, or subscriptions—to secure deductions this year. If your books need updating, now’s the time to get everything in order for smooth tax filing.
9. Pay Wages to Children for Tax Savings
If you pay wages to your children, complete those payments by December 31 and issue W-2s by January.
10. Check Your Entity Structure and CTA Compliance
Review your entity structure with a tax professional to prepare for 2025, and if your entity predates 2024, submit ownership details to FinCEN under the Corporate Transparency Act.
