I ended 2017 with 4 duplexes out of state. 3 mortgaged, 1 owned out right. These properties are generating more cash than I need at this point in my life because I still have a good 40/hr job.
What are my strategies for sheltering this cash from my marginal tax rate?
I think you might want to talk to an accountant. My accountant told me that you never really need to worry about income from investment properties because the depreciation, mortgage, expenses, etc will typically negate any income. How I don’t know how it would apply to your outright owned property, but all of my properties are mortgaged. If I understood correctly, if your actual income is below 150k (I’m assuming it’s higher though), you can even use the depreciation to offset any tax burden from your regular income. My first rental property allowed me to actually get a bigger tax refund despite having more income.
You also need to be properly depreciating your properties. Again according to my accountant, when you sell, the IRS will treat your sale as if the property had been depreciated, whether you actually did or not. Again, check with an accountant, I’m basing all this off what my accountant told me for the past few years.