Hi everyone,

With year end approaching, I wanted to send out a couple of timely tax strategies you can do before year end. If you and I have already discussed some of these earlier this year, please reach out to me so we can chat and talk through what needs to be done before year end to take advantage.

BONUS DEPRECIATION ON VEHICLES / EQUIPMENT

If you're looking to buy a new business vehicle before year end, you may want to consider buying a vehicle that weighs over 6,000 pounds (gross vehicle weight). You can take up to 100% bonus depreciation on that car this year. A $100k car could produce up to a $100k tax deduction. And with this example, assuming a 30% tax bracket, that's roughly $30k in actual tax savings.

My suggestion would then be to take the tax savings and park it in an investment (rental, stocks, crypto, business, etc). That $30k in savings could boost your finances and wealth much quicker.

Same concept for equipment. You can take up to 100% bonus this year. I wouldn't buy new equipment just for the tax savings, but if you need it for your business, this is a great move before year end.

RENTAL REAL ESTATE - BONUS DEPRECIATION

Before reading below, keep in mind that either you or your spouse has to qualify as a real estate pro to take advantage of this. And if you can't qualify as an RE pro, you'd want to run this rental as an air bnb (meeting certain qualifications), to take advantage of this.

Another strong move before year end is buying a rental property. If you purchase a rental and place the property into service before year end, you have the opportunity to do a cost segregation study on the property and take advantage of 100% bonus depreciation.

Let's say the property cost $1m, building value may be $800k. The $200k of land value is not depreciable. But the $800k is and you can take bonus depreciation through the cost seg study. The cost seg company that clients have used in the past, have been able to find between 20-30% that can be taken with bonus depreciation.

That means based on $800k building value, you can take a deduction in year one between $160k and $240k. Assuming a 30% tax bracket, you could save somewhere between $48k and $72k in actual taxes. And again, my suggestion would be to then reinvest the tax savings.

Hope this helps. If you want to chat, please let me know.