1 August 2025 - The #1 Tax Hack PAs to PAs, NPs, and PharmDs Are Using in 2025

If you're a PA, NP, or PharmD and you're looking for real tax savings—not just a couple of bucks from writing off scrubs or CME—this blog is for you.

Because in 2025, there are two powerful strategies that are helping medical professionals save $10K… $30K… even $50K+ on taxes. And they don’t involve changing your job, lowering your income, or sacrificing your lifestyle. They DO require investing in real estate, which means you need to be financially ready to do so. In my mind, this means:

1. Free of all high interest debt (debt above 10% interest rate)
2. 3-month emergency fund in place (separate from property down payment)

When you’re ready, these are real wealth-building tools that I use myself. Let’s break them down.

Why Most Real Estate “Losses” Don’t Help High-Income Earners

Here’s the kicker: when you own an investment property, the IRS lets you deduct things like depreciation and expenses. This often creates a paper loss on your tax return—even if your rental made money.

But normally? These losses don’t touch your W-2 income from medicine.

That’s because W-2 income = active, and real estate = passive. They live in different tax categories. So unless you qualify for a specific exception… those juicy tax savings don’t help your paycheck.

That is, unless you use one of these two strategies:

Strategy #1: The Short-Term Rental (STR) Tax Loophole

If you’ve ever thought about buying an Airbnb… this could be the nudge you needed.

Short-term rentals (average stays under 7 days) fall into a unique IRS category. And if you materially participate in managing the rental, your paper losses can offset your active income from medicine.

Here's what you need to qualify:

✅ Average stay under 7 days
✅ Minimal personal use (less than 14 days or 10% of rental days)
✅ Material participation (track your hours!)

There are technically 7 “tests” you can use to qualify, though most medical professionals qualify through this test:
➡ You work 100+ hours/year, and more than anyone else (including your cleaner or property manager).
That means you need time logs, receipts, documentation—the IRS wants proof.

💡 Pro tip: We’ve done this ourselves. With full-time jobs and kids. It’s totally doable with systems in place.

Bonus Tip: Use a Cost Segregation Study

Want to supercharge your tax savings? Frontload depreciation using a cost segregation study.

This breaks down your property into parts (walls, appliances, fixtures) and lets you accelerate the write-offs. It’s especially powerful in Year 1—where most of your loss comes from. Since the One Big Beautiful Bill brought back 100% bonus depreciation, this is a particularly high leverage time to use this strategy.

You’ll need a CPA and a qualified cost segregation firm. If you don’t have one yet, we recommend Taxstra for this kind of service.

If you do this correctly, you will save tens of thousands on your taxes It’s not the “don’t forget the home office deduction” kind of tax advice - it’s a needle mover that can completely shift your tax burden for the year.

Strategy #2: Real Estate Professional Status (REPS)

This one is for dual-income households where one partner isn’t working full-time.

If your spouse can clock 750+ hours/year in real estate—and it’s more than 50% of their working time—they can qualify as a Real Estate Professional in the IRS’s eyes. You do NOT need a real estate license to qualify. It is important to note that it’s essentially impossible to qualify if you’re working full time. Most CPAs I have asked indicate you need to be a 0.6 FTE or less at your job in medicine if you expect to reasonably qualify for REPS.

Once you qualify, ALL of your real estate losses? They can now offset your entire W-2 income from medicine.

Read that again.

Example:

Your spouse manages the portfolio.
You earn $600K/year.
Your properties generate $100K in paper losses (please remember this does not mean negative cashflow)
Taxable income drops to $500K = $37,000 saved (if you're in the 37% bracket).

It’s a massive lever—but only works if you:
✅ Have multiple rental units (usually 10+ doors)
✅ Track hours meticulously
✅ Use a CPA who specializes in real estate

You can’t DIY this. You need a real plan.

Common Mistakes to Avoid

🚫 Using a CPA without real estate experience
🚫 Trying to claim REPS while working full-time in medicine
🚫 Not tracking hours or failing to keep clean books
🚫 Not separating rental income and expenses in a dedicated LLC or business account

Remember: treat your rental like a business, and your CPA like a partner.

Why This Matters for PAs, NPs, and PharmDs

You’re already earning a high income. But taxes can erode 30–40% of that if you’re not proactive.

If you want to:
✅ Keep more of what you earn
✅ Build wealth faster
✅ Create multiple income streams
✅ Legally reduce your tax bill

Then these real estate strategies are worth exploring.

You don’t have to buy 10 properties tomorrow. You just need a roadmap and the right support.

Final Word: Don’t Wait to Learn This

These tax strategies aren’t just for the ultra-wealthy. They’re how they got there.

You have the income. Now it’s time to use it wisely.

✅ Get your financial house in order.
✅ Learn the tax code (or hire someone who knows it).
✅ And start building the kind of life you actually want.

This is how real wealth gets built.

Want help designing your real estate and tax plan?

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