Real Estate Tax Planning in 2025: What Investors in LA Need to Know

Smart Tax Strategies for Real Estate Investors

Real estate remains one of the most powerful paths to wealth, but it’s also one of the most complex when it comes to taxes. Whether you’re flipping, renting, or 1031 exchanging, having a strategic tax plan is essential. 

At Holmes & Associates, we work with real estate professionals throughout Los Angeles and Long Beach to ensure they’re maximizing their deductions and staying compliant. 

Key Considerations Before Year-End 

1. Bonus Depreciation is Changing 

2025 is one of your final chances to capitalize on elevated bonus depreciation. If you’ve placed assets in service this year, or plan to before year-end, you may be able to write off a substantial portion of those costs. 

Pro tip: Pairing bonus depreciation with a cost segregation study can significantly reduce your tax burden. 

2. Plan for Passive Activity Losses 

If your real estate activities are considered passive, your losses may be limited, unless you qualify as a real estate professional. Now is the time to assess your hours and documentation. 

3. Track Repairs vs. Improvements 

What you call a “repair” and what the IRS considers an “improvement” are two very different things. Misclassification is a common audit trigger and can drastically impact your deductions. 

Why Work With a Real Estate CPA in LA? 

Navigating tax law as a property investor in California comes with state-specific nuances, local property tax considerations, and multi-entity ownership strategies. Our team knows the landscape and can help you stay ahead. 

Ready to talk tax strategy? Call 562-495-3331 or book your free consult. 

How to Reduce Taxes and Protect Your Business for the Future

Small business owners often overpay on taxes due to a lack of proactive planning. Here are key strategies to reduce your tax liability while securing long-term financial success: 

Maximize Deductions and Credits 
Business expenses like home office costs, vehicle use, and employee benefits may qualify for deductions. An accountant can help identify savings opportunities. 

Structure Your Business for Tax Efficiency 
The right business entity (LLC, S Corp, C Corp) can significantly impact taxes. A CPA can help determine the best structure for your goals. 

Take Advantage of Retirement Plans 
Contributing to SEP IRAs, Solo 401(k)s, or other retirement plans reduces taxable income while building long-term wealth. 

Defer Income and Accelerate Expenses 
Delaying income recognition and prepaying deductible expenses before year-end can optimize your tax position. 

Use Estate and Succession Planning to Your Advantage 
Business succession planning strategies can reduce tax liabilities while ensuring smooth transitions. Additionally, trusts and family partnerships may offer valuable tax benefits.