Real Estate Tax Strategies to Save More and Buy More Property

Jose Garcia Venegas (00:00)

…that would be to qualify for real estate professional status. That’s gonna allow you to depreciate the properties that you’re purchasing. And even though, you know, it it’s it’s one of the things of either you pay the tax man that amount or you keep it and purchase another property with that amount. And with so many different ways to purchase a property, such as subject to or a traditional lending route.

You know, with thirty to forty K that you have extra in your pocket, you can get into another property and then just continue growing your portfolio from there.

Scott Bursey (02:01)

Welcome back to the Real Estate Pros podcast, powered by Investor Fuel. I’m your host, Scott Bursey. And today we’re delighted to be joined by Jose Garcia, the founder of Pacific Crest Tax Advisors. Jose is

A master enrolled agent who is changing the game for real estate investors. He’s not just looking at the forms, he’s helping pros use proactive tax strategy to keep more of what they earn and turn it into massive portfolio growth. Pros expect a masterclass today on turning your tax burden into your biggest competitive advantage. Jose, welcome to the show.

Jose Garcia Venegas (02:39)

Yeah, thanks Scott. Thanks for having me on. Appreciate it.

Scott Bursey (02:41)

To help our listeners get up to speed, please give us the ninety second highlight reel of how your career ignited and where you’re pouring your fuel now.

Jose Garcia Venegas (02:51)

Yeah. So actually my career started back in, I want to say it was like twenty eighteen, twenty nineteen. I was working for another CPA part-time. I’m actually an electrical engineer by degree. I don’t know if you knew that, but that’s how I started in, you know, just general professional industry. And I saw the growth potential of the CPA industry, and so I decided to work for a CPA part-time, and then after working for him for two years, I opened up my own firm. And

That’s where I started Investors Tax Bros. And we just did a rebranding from Investors Tax Bros to Pacific Crest Tax Advisors here this last season. So we’re technically a one year company, but we already carry that experience and carry forward our clients over to Pacific Crest Tax Advisors.

Scott Bursey (03:38)

Thank you for highlighting that for us, Jose. You know, what really caught my attention about you was the way that you’ve been able to help serious real estate investors use proactive tax strategy to keep more of what they earn and reinvest it. Getting into the weeds here, what was the biggest shift you made in your own financial philosophy that allows you to help investors the way you do today?

Jose Garcia Venegas (04:06)

Yeah, it and actually this comes from firsthand experience. I was part of a flipping partnership to where we were flipping about nine to ten properties at a time. And the thing with with flipping, wholesaling, all these careers is that you make a large amount of income, but at times money in, money out. And before you know it, you’re not buying assets to, you know, wipe off the taxes. You’re not really building your net worth long term. And

I think that as an industry, we get that shiny object syndrome and we really need to, you know, stay focused on the track of like what is it that we’re after, right? Because I believe that everyone’s after that financial freedom. And at times we get a little taste of it and then we just, you know, start spending frivolously and before we know it, we’re back at square one. And that actually happened to me there with with the wholesaling and flipping side.

You know, we had a downturn and things went south and made a lot of money, but then, you know, at the end of the day it’s really what you keep, not necessarily what you make that really matters.

Scott Bursey (06:00)

Jose, to kick things off, what do you see as the number one strength an investor brings to the table when they start working with you?

Jose Garcia Venegas (06:07)

One of the strengths is that they know they have a problem and they’re ready to solve it. That’s one of the things that we actually look for when we interview people, whether we’re gonna bring them on as a client. You know, it’s one thing to talk about like I wanna make a million dollars. Like, okay, are you gonna make the phone calls? I’m not willing to do that. You know, it’s like you can hire people out to help you with some of the tax strategy, but at the end of the day, you have to be willing to hire that person out.

Or, you know, be able to do the work yourself. But it’s being a serious, serious investor and ready to make that step forward to really reduce your taxes and increase your net worth.

Scott Bursey (06:46)

Digging into the weaknesses, where do you see even smart investors consistently failing on their tax planning?

Jose Garcia Venegas (06:55)

Not having one at all. I have met some investors that I know were making over five hundred K and they haven’t filed for multiple years. And they’re, you know, they’re digging their head in the sand and I mean, eventually the tax man’s gonna come around and collect. And similar to kind of what I mentioned earlier, you know, a lot of them have spent the money that they’ve made, but they still owe the taxes from three, four years ago that the government hasn’t came back around and collected.

So not even having a tax plan is actually one of the biggest weaknesses. They’re so focused on the business and they’re not hiring the right team to really help them out.

Scott Bursey (07:30)

Is there a quick fix or a mindset shift to correct that, Jose?

Jose Garcia Venegas (07:37)

I don’t think there really is a quick fix. The mindset shift has to be an accountability shift, right? To where you’re now taking yourself accountable of not just the growth of your business, but also making sure the aspects around it. And like I said, you know, typically either you do it yourself or you hire someone to help you out, right? You hire an assistant to help you. I mean, you as a business owner, you don’t necessarily need to be, you know, handling with your books or the bookkeeping, but if you hire the correct assistant,

That can help guide you, that’s always gonna be one of the biggest shifts there.

Scott Bursey (08:09)

Looking at the opportunities with the current market, where should investors be putting their focus for tax savings?

Jose Garcia Venegas (08:17)

The, you know, one of the biggest loopholes right now that’s out there of course is the short-term rental loophole. The only thing with that is that, you know, you have to invest in markets that are already well developed or already have some sort of compliance in place. There’s been a couple cases in cities in Texas where they completely came in to completely, you know, ripped off the short-term rentals. And that is a potential strategy. But then also the short-term

rental loophole, all you have to do is for year one. You know, after that, as long as your investments can cash flow as a long-term rental, you can go ahead and shift them over to a long-term rental after that year one. So looking into markets that can cash flow as long terms and then applying the short-term rental loophole in year one would really get you both the benefit of the tax benefits and then also getting you the cash flow for that long-term wealth building.

Scott Bursey (09:09)

Jose, curious to know what is the biggest external threat to an investor’s tax position this year?

Jose Garcia Venegas (09:51)

Biggest external threat. Not even keeping books, you know. Not keeping books is really gonna be the biggest thing. Like I said, I’ve worked with a lot of individuals that their bookkeeping is their bank account. If there’s money in the bank, they think they’re ahead. But you know, sometimes they’re not even thinking ahead. They’re not thinking about the three payments they got next month or the, you know, the CapEx expense that’s coming up, you know, coming due. But definitely not even keeping books and keeping

Keeping a chart of accounts and being proactive about their spending.

Scott Bursey (10:20)

It really boils down to documentation, doesn’t it, Jose?

Jose Garcia Venegas (10:24)

Definitely. You know, with all these loopholes, they’re not necessarily huge loopholes, but if you don’t have the right documentation—you’re not gonna need that documentation until you’re audited. But if audited, I mean, it can—it’s just gonna be another storm that you’re gonna have to weather, you know. It’s gonna be huge changes and then penalties and whatnot. But documentation is key for literally everything.

Scott Bursey (10:44)

Wondering what is the biggest strength in having an enrolled agent in your corner versus a traditional tax preparer?

Jose Garcia Venegas (10:52)

Yeah, so traditional tax preparers typically all they have to do is, I want to say, like a sixty-hour course here in California. And with an enrolled agent, we have strict guidelines. We have to pass IRS-given tests. And then so one is the education part, right? Enrolled agents are much more educated than your typical tax preparer. On top of it, a typical tax preparer cannot represent you in front of the IRS.

So if there is any tax issues that arise, an enrolled agent can call on your behalf, have a power of attorney, and go ahead and represent you in front of the IRS.

Scott Bursey (11:26)

And looking at your vision a little bit here, Jose, where would you like to see Pacific Crest Tax Advisors in the next twelve to twenty-four months?

Jose Garcia Venegas (11:35)

I don’t know about twenty-four months, but I do have a three-year goal of being at a thousand clients. I want to help a thousand investors within the next three years. I haven’t broken that down into twelve and twenty-four yet, but that’s the long-term vision right now for the next three years.

Scott Bursey (11:47)

And for the pros that are listening and they’re thinking, hey, this is somebody that I like and I could use his expertise, what would you like them to know first about your operation?

Jose Garcia Venegas (11:57)

The first thing that they need to know, I mean, the majority of our clients are real estate investors. I want to say somewhere around like eighty to eighty-five percent are real estate investors. We’ve dealt with syndications, short-term rentals, long-term rentals, limited partners, and inactive partners there in syndications. So when it comes to real estate investing, we got you covered on that behalf.

Scott Bursey (12:18)

Thinking about your experience, what does your professional network look like right now?

Jose Garcia Venegas (12:23)

I’m part of the Association of Enrolled Agents in California, but I’m also part of real estate masterminds and also real estate-heavy groups like GoBundance. I mean, not all the people in GoBundance are real estate involved, but the majority are involved in syndications, also long-term net worth. I mean, some of the people that I’ve met, you know, have fifty to a hundred doors inside that group. And then also with the wholesaling and flipping with Ryan Pineda’s Wealthy Investor.

So still involved with those groups. And then like I said, here in California with the Association of Enrolled Agents as well.

Scott Bursey (12:55)

Jose, very curious. If an investor is ready to scale, what is the one tax-related move that usually unlocks the most capital for reinvestment?

Jose Garcia Venegas (13:05)

That would be to qualify for real estate professional status. That’s gonna allow you to depreciate the properties that you’re purchasing. And even though, you know, it it’s it’s one of the things of either you pay the tax man that amount or you keep it and purchase another property with that amount. And with so many different ways to purchase a property, such as subject to or a traditional lending route.

You know, with thirty to forty K that you have extra in your pocket, you can get into another property and then just continue growing your portfolio from there.

Scott Bursey (14:16)

That is some excellent advice. And Jose, you have given us a lot of great advice here today. But is there any additional words of wisdom that you can leave with the pros?

Jose Garcia Venegas (14:25)

Other words of wisdom, man, it’s, you know, by ignoring the problem, it’s not gonna get any better. If you need the help, if you’re behind on years, you need to just, you know, put your foot down and take action. Just like anything in real estate, you know, you ignore the roof that’s been leaking for the last two years, it’s gonna cave in. And the same thing with your tax side. If you don’t take care of it, there can be a big cave in.

Scott Bursey (14:50)

Thank you for that, Jose. And for those of our listeners that want to keep this conversation moving, stay in your lane or collaborate with you, what is the best way for them to plug into your pipeline and reach you directly?

Jose Garcia Venegas (15:02)

Yeah, they can reach me, they can go through our website which is pacificcresttax.com or they can reach out to me through Instagram @jose_garciavenegas. One or the other would work.

Scott Bursey (15:15)

Jose, thank you for joining us today on the Real Estate Pros podcast. This has been an absolute pleasure.

Jose Garcia Venegas (15:20)

Yeah, no, same here. I really enjoyed it, and thanks for having me on, Scott. I appreciate it.

Scott Bursey (15:25)

And to our listeners, we appreciate you. If you received value from today’s episode, please subscribe. We’ll be filling your tanks with a lineup of elite guests, just like Jose, who are accelerating and setting the pace for the rest of the industry. Until next time, keep your standards high and your vision clear. We’ll see you on the next episode, everyone.