All Forum Posts by: Rick Recker
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Post: Reducing Tax Burden for 2025/2026. What to do.
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Asking for a friend in Minnesota...
Husband has earned approximately 900k in W2 income for 2025. This is expected to drop to @ 600k for 2026. they got wrecked on taxes for 2024 due to 100% reliance on W2 income.
A few existing conditions:
A paid for 900K-ish primary residence on a nice lake which has an adjacent undeveloped 100' lake lot that is flex zoned for SF, MF, or commercial (500k value). A healthy 401k and IRA savings for their age (early 50s), a paid for little old commercial building valued at 200k that is currently being renovated for wife to start a small business out of. There are probably 100k in bills for that building coming up late this year and hopefully the business will be open by the end of this year. Zero dollars of any kind of debt but not much cash on hand due to paying off real estate and kids college. There is @ 100k of available cash right now, and will be additional 250k or so cash in February. The wife is very adamantly opposed to debt (Dave Ramsey). Husband is also anti-debt but is willing to consider a good business case if it will create opportunity to ease the upcoming tax burden.
The primary residence is on a lake and could easily be converted into a triplex that would be 1/3 primary residence, and 2/3 STR and/or family visit spaces. Would need some light remodeling to do this but the general layout is already there.
I've been hearing about changes in bonus/accelerated depreciation that sound interesting including some STR stuff, but haven't exhaustively researched them.
Again, the main goal is to reduce tax burden but there is also a long term plan to possibly hold some income producing real estate as a bridge income along with other investments to allow leaving W2 job in the next few years
What would you do in the remaining 2 months of 2025? What to do in 2026? It doesn't necessarily need to be real estate. I heard Robert Kiyosaki talking about billboards yesterday for example.
Feel free to ask further questions, offer your ideas, and I'll pass them on.
Thank you!