Most people wait until April to think about taxes. By then it's too late. The moves that actually lower your bill have to happen before December 31, while you still have time to act.
Here's how I think about it: every dollar saved is another dollar of deployable capital. My husband and I have paid close to nothing in federal taxes for the last 15 years, not because of some secret, but because we run these plays every year before the calendar flips. None of this is complicated. It just has to be done on time.
A quick disclaimer before we start: I'm not a CPA, and this isn't tax advice. This is how I think about year-end planning as an investor. Take it to your own tax professional and build a plan around your specific situation.
Here are the seven moves I make every year before year-end.
1. Get a Real Tax Projection From Your CPA Now
You can't plan around a number you don't know. Before you do anything else, get with your CPA and run a projection of your current tax liability. Not a guess. An actual estimate of what you'll owe or get back based on where the year has landed.
This one step changes everything downstream, because every move below only makes sense if you know how big the problem is. If you're getting a refund, you may not need to do much. If you owe six figures, you have real work to do and six weeks to do it.
Here's the honest part: most accountants aren't strategists. A lot of them are paper pushers who look at last year's paperwork and file it. By the time they're looking at your return, the year is over and the opportunities are gone. You have to be the one driving the strategy, and you have to start before year-end, not after.
2. Put Your Kids on Payroll
If you own a business, and your rental portfolio can be structured as one, you can pay your kids for legitimate work and shift that income from your high tax bracket to their zero tax bracket.
For the 2026 tax year, a child with no other income can earn up to the standard deduction of $16,100 completely tax free. They owe nothing. They file nothing. And you get the deduction on the business side. The money stays in the family and comes off your taxable income.
The rules matter here. The work has to be real, the wage has to be reasonable (tie it to your state minimum wage), you need a W-2, and you need to keep a running log of dates, hours, and what they actually did. We do not put our kids down as owners of the business. They're employees doing real work, a system I walk through in detail in how to pay your kids from your real estate business.
The bonus: because they now have earned income, they can fund a Roth IRA. For 2026, the contribution limit is $7,500 (a child can contribute up to their earned income, capped at that limit). Money going into a Roth at age 10 has decades to compound tax free. That's generational wealth built out of a deduction you were going to take anyway.
If you want the full mechanics of doing this compliantly, that's exactly what we built Kids Payroll for. It handles the W-2, the logs, and the paperwork so the strategy actually holds up.
3. Lock In Your REPS Hours
Real Estate Professional Status (REPS) is one of the most powerful designations in the tax code. It lets you use the paper losses from depreciation to offset your active, ordinary income, not just your passive rental income. That's the difference between depreciation that sits idle and depreciation that wipes out your W-2 or business income.
To qualify under IRC Section 469(c)(7), you generally need to meet a three-part test: you spend more time in real property trades than any other work, you log at least 750 hours in real estate during the year, and you materially participate in your properties. That 750 hours works out to about 14 and a half hours a week. I go much deeper on how this actually erases a tax bill in REPS and the year-end tax moves that save investors the most.
The catch every year is the hours. If you're close to 750 and it's December, you may be able to legitimately close the gap before year-end with qualifying work you were going to do anyway. But you can't reconstruct hours you never tracked. This is why the log matters, and why we built REPS Time to track hours by property, tied to your calendar, so the record exists if the IRS ever asks.
Don't wait until you're filing to find out you were 40 hours short.
4. Or Qualify for the Short-Term Rental Loophole
If you don't qualify for REPS, there's a separate path that doesn't require full real estate professional status. It's often called the short-term rental loophole, and it's a different test with a much lower hour requirement.
The STR loophole works under a different part of the material participation rules. Instead of 750 hours, you generally need about 100 hours, and you need to be the person doing more work on the property than anyone else, including your cleaners and any property manager. The property also has to qualify as a short-term rental, meaning an average guest stay of seven days or less, and your personal use has to stay under two weeks a year.
Meet those tests and you can use the property's paper losses against your active income, similar in effect to REPS but through a completely different door. These are two separate strategies with two separate tests, a distinction I break down further in do you need REPS if you invest in short-term rentals. Don't assume qualifying for one means you qualify for the other.
Before year-end, the move is the same as with REPS: confirm you've actually hit your hours and that you have the log to prove it. We built STR Loophole specifically for tracking the 100-hour test on short-term rentals.
5. Order a Cost Segregation Study (and Capture 100% Bonus Depreciation)
A cost segregation study reclassifies the components of your building off the standard 27.5-year (residential) or 39-year (commercial) depreciation schedule and onto much faster 5, 7, and 15-year schedules. Things like flooring, cabinets, countertops, certain electrical, window treatments, and landscaping get pulled forward, which front-loads a huge amount of depreciation into the early years.
Here's a real number from our portfolio: we did a cost seg on a small six-unit building we bought for $415,000, and it produced a $168,000 first-year write-off. That's the power of the study.
Two things make this a year-end move. First, if you pay for the study in the current tax year, you can write off the cost of the study this year, even if the report isn't finished until January or February (it just has to be done before you file). Second, 100% bonus depreciation is back and, under the 2025 tax law, it's now permanent for qualifying property placed in service after January 19, 2025. That means the components a cost seg pulls into 5, 7, and 15-year lives can often be fully deducted in year one.
Cost seg tends to pencil at around a $300,000 property value and up, and it delivers the most when you also qualify for REPS or the STR loophole, because that's what lets those losses hit your active income. If you bought a property this year, getting it placed in service before December 31 is what unlocks the deduction for this tax year. And if you own something you didn't cost seg at closing, it's not too late: cost segregation timing covers why your bonus depreciation rate is locked in by your purchase year, not the year you finally order the study.
6. Hold Your Annual Entity Meeting (and Deduct It)
If your properties are held in LLCs or other entities, you should be holding an annual meeting anyway for good governance, a piece of the broader structure I cover in bulletproofing your rental portfolio with asset protection. The move is to actually do it, document it, and deduct the legitimate expenses around it.
We hold an annual meeting for our entities every year. If it involves travel, that travel can be a deductible business expense when it has a real business purpose. Keep meeting minutes, keep the agenda, and make sure there's genuine business being conducted (a good rule of thumb is at least a couple of hours of actual meeting).
One caution: only spend money on this if you still have a tax bill to reduce. Don't fly somewhere to create a deduction you don't need. The point is to get credit for business you're legitimately conducting, not to spend a dollar to save 30 cents.
7. Fund Your Retirement Accounts
This is the last lever I pull, the one I use if I've run every other move and still have a bill to bring down.
Retirement accounts are a straightforward deduction, and some of them give you until the tax filing deadline (April 15) to fund for the prior year, which buys you breathing room. I use a self-directed solo 401k, which for 2026 allows total contributions up to $72,000 for those under 50. What I love about the self-directed version is that I can use those funds for private lending, private placements, and syndications, so the money keeps working in real estate while it grows tax advantaged.
Run this move last, because retirement contributions lock the money up. If you can lower your bill with the earlier moves and keep the capital liquid to deploy into deals, that's usually the better trade.
Do These in the Next Six Weeks, Not in April
Studies suggest most investors miss somewhere between 20% and 40% of the deductions they're entitled to. Almost always it's because they ran out of time, not because the strategy was too advanced. Every move on this list has a deadline, and most of them close on December 31.
Pick the three that apply to you, get on your CPA's calendar this week, and knock them out while there's still runway.
FAQ
Q: How much can I pay my kids tax free? A: For the 2026 tax year, a child with no other income can earn up to the standard deduction of $16,100 without owing federal income tax, as long as the work is legitimate and properly documented with a W-2 and time logs.
Q: What is the difference between REPS and the STR loophole? A: They are two separate strategies. REPS (Real Estate Professional Status) requires roughly 750 hours a year and full real estate professional qualification. The short-term rental loophole requires roughly 100 hours and that the property average a seven-day-or-less guest stay. Both can let paper losses offset active income, but through different tests. You have to qualify for whichever one you're using on its own terms.
Q: Is it too late to do a cost segregation study for this tax year? A: Usually not. The study just needs to be completed before you file your return, and if you pay for it in the current year you can typically deduct the cost of the study itself this year. The property does need to be placed in service before December 31 to claim the depreciation for that tax year.
Q: Do I really need to start before December 31? A: For most of these moves, yes. Placing a property in service, paying your kids for the year, holding your entity meeting, and hitting your REPS or STR hours all have to happen inside the calendar year. Retirement contributions are the main exception, since some can be funded up to the filing deadline.
This article is for educational purposes and is not tax, legal, or financial advice. Tax figures reflect the 2026 tax year and change annually. Consult your CPA or tax professional before acting on any strategy.
