Why Tax Strategy Is the Real Wealth Multiplier (and How Real Estate Investors Actually Use It).

David Wiener: Many real estate investors and business owners are quietly overpaying the IRS every single year and they have no idea why. In today's episode of the Tax Strategy Playbook, we're going to show you how to stop doing that. I'm your host, David Wiener and my guest today is Greg Taylor with Taylor Tax Strategy. Greg and his team help investors and entrepreneurs use the tax code as a wealth building tool instead of just an annual bill. So let's get right into it. Greg, thanks for being here.

Greg Taylor: Absolutely, thanks for having me.

David Wiener: Greg's a good friend, Greg's a colleague, and he's the founder of Taylor Tax Strategies. So one sentence or two, how would you describe what Taylor Tax Strategy does for clients who are tired of overpaying taxes?

Greg Taylor: Yeah, a big thing that we do that I think is different from a lot of accountants and CPAs is we are proactive about planning. So we are asking our clients to meet with us. We're sending reminders, we're sending text and emails saying, please schedule a meeting with us to talk about your tax needs.

David Wiener: Fantastic. think the extra touches really help. know, people seem to appreciate that. Give ⁓ the Reader's Digest version of your journey. How did you end up so focused on real estate and tax strategy?

Greg Taylor: Yeah, so I grew up around real estate my whole life. My parents, grandparents on both sides, aunts and uncles, almost everybody in my family has owned real estate. And so for me ⁓ in college, I bought my first rental and rented out the rooms to my friends. So real estate has always been really frankly a part of my life growing up and then income producing for me from a young age. then I got into the accounting and tax world ⁓ just saw kind of how they met together to really help you save on your taxes. And so it's been

David Wiener: Was there a specific moment where it just kind of clicked that the tax code could be an offensive wealth building tool, not just a bill to pay?

Greg Taylor: Yeah, yeah, think it was really probably the first time I started putting depreciation on my own tax returns and seeing that I had my first couple returns and I was like, wait a minute. I get to take this loss against my other income? How does this work? Is this right? Those kind of questions.

David Wiener: So does Taylor Tax work best with what kind of investors, what kind of business owners

Greg Taylor: So mostly we're working with blue collar and collar business owners. like service based, you know, type businesses, real estate investors, ⁓ flippers, that kind of thing. And so one of the, one of the hardest ones honestly is the wholesalers because they don't keep anything right. So we don't have the depreciation. So ⁓ it's a hard hurdle sometimes for me to convince wholesalers to ⁓ keep a couple of properties and BRRRR them or just buy a rental and keep it for the tax savings. So.

David Wiener: So you see a lot of different kinds of clients. What are like the top three ways you see that real estate investors or business owners are quietly overpaying the IRS every year?

Greg Taylor: So one thing is just not keeping track of things. They don't keep track of all those expenses that happen. And so things just fall by the wayside. Another one is, especially with people who are doing burrs, they don't think about the types of material that they're putting in their property. And as you know, ⁓ tile is a long-term depreciation. Wood flooring is a short-term depreciation, right? And so ⁓ things, ⁓ you want your property to look a certain way, you can make choices one way or the other that can significantly affect the depreciation.

David Wiener: and you help out with that.

Greg Taylor: Absolutely, yeah, we talked through that as they're as they're doing the thing another big thing that will hurt some some Property investors is they'll buy that beach house and the land is a lot of the value of that beach house and it's not actually the building structure. And so we talked through how all properties aren't created equal multifamily, you know, is, going to have more kitchens and bathrooms, which is going to give you the specialty plumbing and the cabinets and all that stuff. So those things really matter when we're looking at, what they're investing in. So

David Wiener: Now you mentioned a BRRRR For those who might not know it, go ahead and define what a BRRRR is.

Greg Taylor: So let me see how many Rs, because it always catches me off guard. So it's renovate, rent, refinance, repeat. So there's four Rs in it. It's basically idea that you're buying that house, fixing it up, and then getting your cash back out of it ⁓ so that can do the same thing again to the next property.

David Wiener: ⁓ Fantastic. you give me ⁓ real life example, no names obviously, of an investor who was overpaying ⁓ what you found when you looked under the hood?

Greg Taylor: Yeah, so one really good example. It's one of my favorites. There's a lady who is a real estate broker, so she has significant income as a broker, but she's also a real estate professional. So all of the deductions for depreciation and rental property. She came to me five years ago now and she had prepaid about $120,000 in in taxes like estimated tax payments and she came to me in March or April right after kind of that tax season was over. So we had a good portion of the year to work together that first year and that first year we actually only used it was like $3,000 of that hundred and twenty so rest of it she actually she's kind of funny I was like why don't you take that as a refund and buy another rental she was like I have money for the rental my goal is to never send another check to the IRS again and so we've carrying it's absolutely we've been carrying that forward

David Wiener: And it's possible,

Greg Taylor: She is now down to 97,000 left. So ⁓ years. So we've used up 30,000 over six years of that. And her goal is to retire without sending them another check just by taking this strategy and basically continuing to carry ⁓ money that's sitting in there forward ⁓ year.

David Wiener: ⁓ got to be aggravating to you when somebody says, I'm not paying for all that strategy stuff. I'll just let my CPA take care of it.

Greg Taylor: Yeah, I mean we often hear that one of the things that we we've been hearing lately as people do sign up with us is nobody's ever done that for me before. Nobody's ever talked to me about this. Nobody's ever told me this and one of the pieces of advice I give new entrepreneurs when they ask me what's the best tax advice, I always say the same thing. I say no, the difference between a tax preparer and a tax planner or strategist because what happens often is CPAs that are doing your taxes only and talking to you only in April. It's not that they're incapable, but they have a different focus for their business, right? And their focus is prepare your taxes. And so they may give you a strategy here and there, you know, throughout, you know, when it's, when they're reviewing your return, but they're not in your life regularly. You're not asking them to meet. They're not asking you to meet. And so, a prepare a planner, a strategist is really going to focus on that on a regular basis with you.

David Wiener: And in my work doing cost segregation and those kinds of things, I see a lot of people who work with CPAs that are not familiar with real estate. And I think it's really important, and I think you'd agree, it's really important for a real estate investor to have a tax strategist and or a CPA who is very versed in real estate and the different tax angles from real estate and that sort of thing.

Greg Taylor: Yeah. Mm-hmm. Yeah, I've had people come to me or get on webinars where there's Q and A's, things like that and say, well, I don't own commercial property so I can't do a cost seg. And so you'll hear stuff like that and it's just, they heard from their CPA who maybe didn't know how to do it, maybe wasn't comfortable, thought that it was too risky, whatever the case may be. so they have that, or they frankly maybe heard it years ago and ⁓ rules might've changed ⁓ for some of the things. so, so I think it's important that you have somebody and the opposite is also true, right? I had somebody come to me and they were a drop shipper for Amazon and they said, Hey, can you help me with tax strategy? And I said, I can give you basics, but I don't have any drop shipping clients. And so I guarantee you, I'm going to miss some stuff that somebody who's really familiar with drop shipping is going to be able to advise you on. So, yeah, it's important to just stay kind of frankly in your lane, ⁓ with this. ⁓ That's right. So.

David Wiener: Okay. Know your, know your niche So let's, let's shift a little bit from problems to solutions. If somebody listening realizes, yeah, well, I'm probably overpaying my taxes. do you start with them at Taylor tax?

Greg Taylor: So we're going to first look at last year's return, not necessarily to criticize whoever did it, you know, and things like that, but just to see what might be there. Right. And so a good example is, you know, if they're in real estate is did they do cost segregation studies? Right. That's a very easy one. Did they have the accelerated depreciation? And so that's one of the things we're going to look at first. The second is, are they even categorizing all of their expenses on their rental property? So for real estate, there's a couple I always look at on the schedule E if it's a personal return and I want to make sure they have interest listed taxes Insurance and depreciation those four should be on every single rental property unless they don't have a mortgage on it And then the interest would be gone But so we kind of do quick reviews there to just see what their situation is and then we talk through how advantageous rental property can be For the the taxes if you do it, right?

David Wiener: ⁓ ⁓ you say those are the biggest two or three tax levers that somebody who just has their first property or one or two properties needs to understand right away?

Greg Taylor: Yeah, absolutely. You want to make sure that you have those four things. So you have interest, insurance, depreciation, and taxes, property taxes on your schedule E where your rental property is listed. You want to make sure they're putting that on there. And then beyond that, I really look at repairs, maintenance, and utilities if it's a short term rental.

David Wiener: I love hearing the stories about your client. So give me a practical example of how better planning, whether that's choosing the right entity or depreciation or something else, changed the numbers on a real client situation other than the one you told me.

Greg Taylor: Yeah, so I have a client that I met with towards the end of last year. They signed up with us and we reviewed their return and I don't normally go this far throwing their previous person under the bus, but this was a $125,000 mistake. So I was like you gotta you gotta go back to this guy so so he went back in the in the the other CPA and did a very great job. Acknowledged it, filed the amendment for free like very very much took ownership and did the right thing. So you

David Wiener: Ouch.

Greg Taylor: But ⁓ we were looking at it and and literally it was going through those they have multiple properties and I I said hey this one doesn't have insurance did you have insurance on this property this one doesn't have interest did you have interest did you have a loan on this property you know and it was literally just those four those top four that are my low-hanging quick things that I look for and So they were able to by doing all those

David Wiener: .

Greg Taylor: on multiple properties they were able to then have a pretty significant loss that was just missing.

David Wiener: So if a to takes nothing else from this episode, what's the first thing they should do in the next seven days to improve their tag situation?

Greg Taylor: Yeah, I think make sure that you have proper records of all of your, all of your expenses and that those get on your tax return. So we're coming up near tax time right now. And so make sure that those things are all listed on there.

David Wiener: And the easiest way to do that is something like QuickBooks? Or what would you recommend?

Greg Taylor: Yeah, you could use QuickBooks if it's just rentals, if it's long-term rentals, I don't know that you have to do that. There's some other free softwares out there. I Stessa is the name ⁓ of one that some other clients use for just rental property management. And there's some other discounted ones if it's just rental property management that I, frankly, if you're not an accountant and you only have rentals, probably go with something that's more rental focused than even QuickBooks is.

David Wiener: OK, so stessa is the name of one. ⁓

Greg Taylor: Yes, that's one. There's a couple others you can just really Google. And then honestly what I do when I'm looking at new software is before Googling the software, I do I use YouTube and I look for like which one has the most instruction videos for how to use it. And that's that's how I kind of pick or I look at reviews, you know, video reviews.

David Wiener: Hahaha That's actually how I picked how I was going to record my podcast. So works. If somebody booked a planning call with you, what do you want them to bring to the conversation

Greg Taylor: Yeah.

David Wiener: it's truly strategic and not just about last year's return?

Greg Taylor: Yeah, so definitely we want to know kind of how last year was looking. We want to know if you can, what status you are. Like, are you a real estate professional? Are you, do you have an S corporation? Is this a partnership? You know, those kind of big bucket things. And then from there we can, we can begin to make a plan and see what you qualify for. So for example, if someone comes to us and they say, Hey, I'm, I'm a physician and I work full time, you know, as a physician, I 500,000 or whatever. year and I have these long-term rentals can we do? ⁓ You know, my first question is going to be, you willing to buy short term? And if the answer is no, then there's not much we can do in the real estate game. So we've got to look at other strategies because the offsetting doesn't allow it. a of the things, honestly, on that first call, you will know off the top of your head, you know, so ⁓ really making sure you have access to a copy of your tax return in case we ask a question about how you're filing ⁓ or you're doing. And then we're able to look at that return and see what it says.

David Wiener: And you like to meet regularly with your clients, right?

Greg Taylor: Yeah, absolutely. So the way our company is structured is we have ⁓ what we call a strategy and accounting representative. ⁓ And they also do accountability. So if someone signs up for a full package with us, they would meet with me quarterly. then the other two months of the quarter, somebody is going to check in. David, if you were a client, they're going to check in and say, Hey, David, Greg told you to do that thing for strategy. Did you do it? Did it happen? ⁓ Questions. What is stopping you from doing it? So ⁓

David Wiener: Ha brother Greg is watching.

Greg Taylor: That's right. We're batting a thousand on saving people more than we bill them. And so we want to be able to say that five years from now as well. And part of that is the accountability that we provide.

David Wiener: That's really important. Say that again. You want,

Greg Taylor: So we're batting a thousand on saving people more than we bill them. So every client who has stayed with us for the year, we are saving them more than, than they have been billed. Or we've told them that they need to move on from us because they're not willing to do the strategy and they're wasting their money. So, and we tell some clients that because they just ⁓ either don't time capacity, you know, it just doesn't make sense. So I'm not looking to just bill people. want to be a profit center in their company.

David Wiener: Fantastic, yeah. And you know, I've referred a bunch of people to you for that very reason, because it's not going to be an expense. It's an investment in strategy. And you're going to, like you say, make them more than you cost them. You've referred a bunch of people to me for cost segregation and those kinds of things. And we try and do the same thing. you and I both, if we talk to somebody and it's not right for them.

Greg Taylor: Right. Yep.

David Wiener: and we ask those questions, we're not going to try and push them into something that they don't need. I hear from a lot of people who say, no, I don't want to do the strategy thing because it's too expensive. I can't afford it. And I tell them you can't afford not to do it. And that's the whole that's the whole reason for this podcast. ⁓ People need to know tax strategy. They need to know the things that they don't know. They need to know the truth about some of the things that they probably have misconceptions about. So

Greg Taylor: Mm-hmm. Right. Yeah. If you're making a couple hundred in profit. Yeah.

David Wiener: If somebody's ⁓ an investor, small investor, large investor, a business owner, and they're thinking, I don't know if my CPA does this or not, what should they be asking their current CPA or tax pro to see if they're really getting strategy and not just compliance?

Greg Taylor: Yeah, I think, think honestly that's, that's the big question right there is do you provide strategy services? and then, you know, you'll, lot of times, and I had somebody actually just sign up with us in this week, they text me and they said, well, I met with my, current ⁓ CPA my, you know, the one they were transitioning away from. And he said that he could do that. And I said, but is he going to do that? Like, you know, he can do it, but is he going to like, is he available? And so I think it's really about the availability. And so a lot of accounting firms, tax prep firms, CPA firms, they're really swamped during tax season. So, and we really specialize in having our focus. It's not that we don't have heavier days or, things like that, but I mean, I haven't done this. haven't.

David Wiener: Yeah

Greg Taylor: done a single tax return this year. It's, don't know, the middle of February. And so, and I don't plan to do one other than my, my parents, right? Like I'm going to do mine and my parents and that's about it. But, because we have a team that prepares taxes. My role is make sure the strategy happens and run the company and things like that. But my role is making sure that the strategy happens. And so we have people on staff that are doing each of those specific things. ⁓ when you have sometimes that are more focused on tax prep, you just have a bunch of preparers and they're just trying to crank out those returns ⁓ and don't have the time. They don't have the bandwidth to check with people and give them strategies. So.

David Wiener: And I can speak from experience because I've worked with almost everybody on your team, I think, at some point. Greg's got a fantastic team that does everything that needs to be done. So let me ask you a few quickfire questions. What's one tax strategy you wish more real estate investors knew about?

Greg Taylor: Yeah. ⁓ man, well, a big fan of short-term rentals right now. ⁓ I know a lot of people are saying it's dead and boutique, know, is the way to go boutique hotels and things like that. But what I like about short term rentals is if you don't sell that, ⁓ don't have depreciation recapture. Even if you move it to less term rental, more second home, like you still don't have the depreciation recapture. So you can buy this eventual retirement or second home right now, rent it get it paid for for a while, get the tax advantages and then 10, 15, 20 years from now or whatever, it can become your second home or retirement home. So I really love that as part of the plan. And ⁓ then I just knowing the difference between multifamily and the benefits of that ⁓ from single family be really, really helpful.

David Wiener: What's a common piece of tax advice you see online that absolutely makes you crazy?

Greg Taylor: ⁓ I don't own anything. My trust owns everything. I won't call out the guy who said it, but that is really frustrating to me because what happens is all these people who don't, ⁓ who multimillionaires, maybe nine figure millionaires like this guy are trying then set up all these trusts ⁓ and ⁓ ⁓ doing it, hoping that it's going to save on their taxes and it's really complicating their tax returns and not really saving them money.

David Wiener: OK, one more thing, and I think I probably know the answer to this question. Finish this sentence. The investor who wins on taxes is the one who

Greg Taylor: is buying real estate.

David Wiener: There you go. Greg, this has been fantastic. For people who resonated with what you shared or want more information, what's the best place to find you and Taylor Tax strategies?

Greg Taylor: Yeah. Yeah. Yeah, honestly, just our website, TaylorTaxStrategy.com, and we are on Facebook as well.

David Wiener: Do you have any kind of resources that would be a good next step for somebody who wants to dig a little bit deeper into this?

Greg Taylor: Yeah, I think if you if you want to dig a little deeper and figure out kind of what makes sense for you, think honestly, just learning more about cost segregation is really going to help you to understand how the strategies can play in. And then and then you get somebody like you and I to help them apply that in a way that is meaningful on their on their tax return.

David Wiener: And I'll put all of contact information into the show notes in the description. If you're listening and you got value from this conversation, do me a favor, subscribe to the Tax Strategy Playbook, comment with any topic you'd like to see covered on future episodes. We mentioned a few of them today. We're going to be talking about a deep dive into cost segregation, bonus depreciation, those kinds of things. And then share this episode with one investor or business owner that you know is probably overpaying the IRS every year. And if you'd like to explore tax strategies like cost segregation or or R &D for your own business or your properties, you can always contact me. My contact information is directly in the description. Greg, thanks ⁓ for being here. Thanks to all of you for listening. We'll see you in the next episode of the Tax Strategy Playbook.

Greg Taylor: Absolutely.