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While many entrepreneurs are dealing with shrinking margins and layoffs in an uncertain economy, others are experiencing outsized growth in high-margin businesses. As liquidity builds, a familiar question emerges: should you reinvest in your business, buy an office or move into investment real estate? But once you buy an investment property, you’re not just acquiring a building. You’re effectively starting another business.
The smartest investors understand that profit is not just about what you earn — it’s about what you get to keep. And in an environment of higher interest rates and tighter cash flow, that mindset is no longer optional. It’s essential for capital preservation.
As CEO of Dimov Tax, working with high-growth entrepreneurs and executives nationwide, I’ve developed what I call the “stacking” approach to maximizing deductions on investment real estate. I was recently speaking with a client — a surgeon who owns two single-family rentals — who said something I hear constantly: “I know I can deduct mortgage interest and property taxes, but I still feel like I’m sending a huge check to the IRS every April. There has to be a better way.” He was right. There is. It’s called stacking.
Stacking is not about finding one loophole or magic deduction. It’s about building a layered tax strategy that combines baseline annual deductions with accelerated depreciation tools and advanced planning techniques. It’s not gaming the system — it’s operating within it at a higher level. If you’re an entrepreneur or investor looking to maximize rental property returns, it starts with what most people already know — but rarely optimize.
Your annual deductions
This is the foundation of your tax strategy. These are the recurring expenses required to operate the property, and every landlord should be capturing them fully. Mortgage interest is usually the largest deduction, especially in the early years of a loan. Property taxes follow closely behind, along with landlord insurance and property management fees. But the most commonly underutilized category is repairs and maintenance.
There’s a psychological disconnect here. A $4,000 roof repair feels like money lost. But in reality, it is a direct offset against rental income. Fixing plumbing issues, repairing drywall or replacing broken windows are not just operational costs — they are immediate tax deductions that reduce taxable income. Still, relying only on these deductions is like building a house on a basic slab. It works, but it misses the deeper structural advantages available in the tax code.
Planning your deductions
This is where strategy begins. Two key tools come into play: depreciation and the de minimis safe harbor. Depreciation is your silent partner. You don’t spend the money each year, but the IRS allows you to deduct the cost of the structure over 27.5 years.
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