Last-Minute Tax Moves Real Estate Investors Need to Make Before December 31st

The clock is ticking on 2025. While most people are planning holiday gatherings and New Year's resolutions, savvy real estate investors are making strategic moves to optimize their tax position before the calendar flips. These weeks left in the last quarter present critical opportunities to reduce your tax liability and set yourself up for success in 2026.

Here's your action plan for closing out the year with peace of mind:

First: Maximize Your Deductions NOW

December 31st isn't just another date—it's your deadline for deductions that can meaningfully impact your bottom line. Real estate investors have unique advantages here, but only if you act before time runs out.

Then: Prepay Expenses That Make Sense

Consider prepaying property taxes, insurance premiums, or management fees for early 2026. These payments are typically deductible in the year you pay them, potentially lowering your current tax bill. Check with your accountant first—some prepayments may have limitations depending on your accounting method.

Next: Complete Necessary Repairs

Repairs completed and paid for before December 31st can be deducted this year. This includes fixing leaky faucets, repairing HVAC systems, or addressing structural issues. Just remember: repairs are deductible, but improvements that add value must be depreciated over time.

Finally: Document Everything

Gather those receipts. Track down invoices. Organize your records. You can't deduct what you can't prove. Create a comprehensive file of all property-related expenses from 2025, including:

• Maintenance and repair receipts
• Property management statements
• Travel expenses for property visits
• Professional service fees (legal, accounting, etc.)
• Utility bills you covered during vacancies
• Marketing costs for finding residents

What About Making Strategic Property Decisions?

Consider Cost Segregation Studies

If you acquired properties in 2025, a cost segregation study could significantly accelerate depreciation deductions. This specialized analysis breaks down your property into components with shorter depreciation schedules, creating larger upfront deductions. While this requires professional help, the tax savings often justify the investment.

Evaluate Portfolio Performance

Before year-end, review the performance of each of your properties. Are any consistently underperforming? December might be the right time to consider selling (or a 1031 exchange), especially if you have capital gains from other investments to offset. A strategic sale could help balance your overall tax picture.

(Your investment markets also impact tax advantages. Read more about it here: What It Means to Invest in Tax-Friendly Markets)

Plan for Next Year's Growth

If you're considering expanding your portfolio in 2026, lay the groundwork now. Meeting with lenders, researching markets, and connecting with your REI Nation advisor in December means you're ready to move quickly when opportunities arise in the new year.

Retirement Account Contributions

Real estate investors often overlook retirement planning, but these accounts offer powerful tax advantages. If you're self-employed or own your properties through an LLC, you may qualify for SEP IRA or Solo 401(k) contributions—some of which can be made all the way through April 15th, but planning now is essential.

Consider whether a self-directed IRA makes sense for future real estate purchases. While you can't contribute to next year's account yet, understanding your options now helps you strategize for 2026.

Review Your Business Structure

Is your current business structure still serving you well? As your portfolio grows, the LLC or other entity formation that made sense initially might need adjustment. December is an ideal time to consult with your tax professional about whether restructuring before January 1st could provide better liability protection or tax advantages.

Estimated Tax Payment Check

If you owe estimated quarterly taxes, your final (federal) 2025 payment is due January 15th, 2026. However, reviewing your year-to-date income and expenses now helps you calculate the correct amount and avoid underpayment penalties. Better to know in December than scramble in early January.

Overwhelmed? You don’t have to do it alone.

Tax season doesn't have to be overwhelming. The strategies outlined here represent just the beginning of what's possible for real estate investors with proper planning. Your best move?

Schedule a consultation with a real estate-savvy CPA before December 31st. They can identify additional opportunities specific to your situation and ensure you're maximizing every available advantage.

At REI Nation, we understand that successful real estate investing extends beyond property acquisition and management. Tax optimization is a crucial component of building long-term wealth. Our portfolio advisors work alongside your financial team to help you make informed decisions that serve your broader wealth-building goals.

The next few weeks are crucial. Take action now, and you'll start 2026 with confidence—knowing you've done everything possible to protect your investment returns and minimize your tax burden.

Ready to optimize your real estate investment strategy? Connect with your REI Nation advisor today.