Tax Smart Real Estate Investors Podcast
Episode 358: 2025 Tax Strategy Buzzer Beaters & Last Minute Q&A
Air Date: December 16, 2025
Hosts: Hall CPA Team (B & D: Tom and Nate)

Episode Overview

This year-end episode serves as a comprehensive “buzzer beater” guide for real estate investors preparing for closing their 2025 tax year. The Hall CPA team addresses crucial, last-minute reminders and answers frequently asked community questions. Topics include major 2025 legislative tax changes, strategy pitfalls, deadlines, and real-life scenario Q&A for short-term rentals, REPS (Real Estate Professional Status), cost segregation, 1099s, and more. This guide is especially relevant for those seeking actionable tips just before year-end.

Key Discussion Points & Insights

[02:22] Major 2025 Tax Law Changes (The "One Big Beautiful Bill")

• OBBA Legislation: Substantial adjustments this year, including:
  • 1202 stock adjustments
  • 100% Bonus Depreciation extended/reinstated
    • “Don’t forget the big one—100% bonus depreciation. Keep those things in mind.” – Nate [02:28]
  • SALT Deduction Changes: Now a “sweet spot” at $500K income.
    • If you’re at $600K, there are legit ways to lower your AGI and pick up approximately $10,000 in savings. [02:40]
  • Section 179 Expensing: Limits increased; may only affect larger investors, but still noteworthy. [02:50]

[03:21] Year-End Moves for Short-Term Rental Investors

• Short-Term Rental Strategy Eligibility:
  • Must have actual guest stays before year end to use the STR strategy for 2025. Rentals to family don’t count.
    • “You need to have guests actually live in the property…two guest stays to determine the average period.” – Tom [03:51]
  • Swapping stays with friends doesn’t qualify. Must be arm’s length, ideally at FMV.
  • Material Participation: Ensure activity and meticulous documentation, especially for cleaning, pricing, guest comms, maintenance, etc.

[04:45] Placed-In-Service Rules

• Standard Rentals: Must be listed and available to rent as of year end.
• Short-Term Rentals: Mere listing isn’t sufficient—requires qualifying guest nights for STR strategy.
  • “If someone can walk down the street, say, ‘Hey, I have my bags, can I move in right now?’ that’s placed in service.” – Nate [04:45]

[05:26] Cost Segregation: Year-End Deadline Myth Busted

• Cost Seg Studies: Do NOT have to be completed by December 31, 2025.
  • “You can absolutely do your cost seg after the year ends—as long as it’s ready for your 2025 tax return.” – Tom [05:26]
• Tax Filing Timeline: As long as the study is ready before your filing (April 15/Oct 15 for extensions), you’re good.

[06:10] Retirement Contributions: 401(k), HSA

• 401(k) Employee Contributions: Must be made by 12/31/2025.
  • Some flexibility exists for sole proprietors under SECURE Act 2.0—can open and fund in 2026 for 2025, but S Corps have stricter deadlines.
    • “You still have to do the employee [portion] this year.” - Nate [06:32]
• HSAs: Must open by 12/31/25, but can fund up to April 15, 2026.

[08:30] Importance of Documentation: Material Participation Logs

• Audit Trend: Every real estate audit (REPS/STR) requests a material participation log.
  • “Every…audit…even ones we thought would close, the IRS asks for your material participation log.” – Nate [08:30]
• Pro Tip: Complete or update logs BEFORE year end when memories are fresh.

[09:35] Q&A: Advanced Year-End Tax Scenarios

1. Multiple STR Units on One Lot—Material Participation [10:01]

• Can group STRs on the same lot as a single economic unit for material participation via “dash-4 election.”
  • “That actually helps qualify for material participation…group together, combine hours.” – Nate [10:01]

2. Foreign Short-Term Rentals & Cost Segregation [10:42]

• You can use STR strategies and cost seg on foreign properties, but bonus depreciation does NOT apply outside the U.S.
  • “Not going to get the benefits of 100% bonus depreciation.” – Tom [11:11]

3. Issuing 1099s: The Critical Year-End Checklist Item [11:53]

• Get Form W-9 from every contractor paid over $600.
• Failure to issue required 1099s: substantial (>$10,000) penalties in audits.
  • “If you check ‘yes’ on issuing 1099s…auditors can ask for them. Failure…was over $10,000 in fines and penalties.” – Nate [13:32]
• Pro tip: Obtain W9 before paying—it’s your leverage.

4. Travel Time and REPS/STR Hours [15:45]

• Travel hours are rarely allowed and IRS’ first disallowed item for REPS.
  • Legit if you’re actually working and logs are specific; travel should be minimal/fractional, not bulk of hours.
  • “Count legit time…but don’t try to count all your travel.” – Nate [16:36]
  • Home office claim can increase credibility.

5. Filing Status: Married Filing Separate & REPS/STR [17:47]

• In non-community property states, losses from rental activity stay with the active spouse.
  • If high-income spouse files separately, cannot benefit from other spouse’s REPS/STR activity.
    • “Unfortunately, you’re not going to get to utilize those real estate losses…ownership and time spent need to belong on the W2 [holder’s] return.” – Nate [19:44]

6. Three-Property Scenario – Grouping Elections [21:03]

• If third property is managed by a third-party PM, likely not materially participating.
  • 500-hour rule: Must hit this for any long-term rental grouping election.
  • STR and long-term rentals cannot be grouped together; all STR hours help REPS test but not the LT rental MP test.
  • “You can group two long terms together, but STR is its own animal.” – Tom [22:18]
• If needed for tax year, consider taking over management for a year.

7. Qualified Opportunity Zones (QOZ) – Last-Turn Deferral [23:40]

• 2025 is last year for QOZ deferrals.
  • E.g., sell crypto, invest gain in QOZ fund, defer tax recognition until 2026 return (but paid in 2027). Potentially extend further under new rules.
  • “You can continue to defer your gain with the new QOZ OBBA rules.” – Nate [24:36]

Notable Quotes & Memorable Moments

• “You need to have guests actually live in the property…two guest stays to determine the average period.” – Tom [03:51]
• “If someone can walk down the street, say, ‘Hey, I have my bags, can I move in right now?’ that’s placed in service.” – Nate [04:45]
• “You can absolutely do your cost seg after the year ends—as long as it’s ready for your 2025 tax return.” – Tom [05:26]
• “Every…audit…even ones we thought would close, the IRS asks for your material participation log.” – Nate [08:30]
• “If you check ‘yes’ on issuing 1099s…auditors can ask for them. Failure…was over $10,000 in fines and penalties.” – Nate [13:32]
• “Count legit [travel] time…but don’t try to count all your travel.” – Nate [16:36]
• “Ownership and the actual time spent need to belong on the tax return where the W2 exists.” – Nate [19:44]
• “You can group two long terms together, but STR is its own animal.” – Tom [22:18]

Final Year-End Action Items & Parting Tips [26:20]

• Download the hosts’ year-end checklist (link in show notes)
• Proactive planning is always better than scrambling at deadline—get on the next year’s strategy now.
• 100% bonus depreciation is here to stay for 2026; set up your plan early.
• Spread the word—share the podcast with friends, and rate the show to help others save on taxes.

Timestamps for Key Segments

• [02:22] – Major 2025 Tax Law Changes (OBBA, bonus dep, SALT, 179)
• [03:21] – STR eligibility, placed in service, documentation
• [05:26] – Cost segregation studies
• [06:10] – Retirement plan (401k, HSA) deadlines
• [08:30] – Participation logs & audits
• [09:35] – Year-end Q&A: Grouping, Foreign STRs, 1099s, and more
• [15:45] – REPS, STR, travel time
• [17:47] – Filing status: married filing separate
• [21:03] – Grouping election with multiple property types
• [23:40] – QOZ last chance deferrals
• [26:20] – Final action items, host send-off

For more information and resources mentioned, visit TheRealEstateCPA.com/Podcast

Overall Tone:
Professional, practical, and a bit playful—Tom and Nate banter, joke about “holiday hustle” and “not wanting to play audit roulette,” but the advice is straight-shooting and focused on helping real estate investors make smart, proactive tax moves.