Someone with a ~$12M IRA reached out yesterday.

That’s a massive future tax liability… and he knows it.

Here’s the framework we typically walk through:

• Acquire a rental and qualify for Real Estate Professional Status (REPS)

• Use the grouping election so depreciation from all real estate investments can be treated as active

• Layer in tax‑aware hedge funds to add diversification and realize additional deductions

He’s already bought his first rental and I usually tell people to stop there.

Let that be your anchor property for REPS and, instead of taking on the complexity/risk of managing a bunch of rentals yourself, invest alongside experienced operators across different:

• Assets

• Sectors

• Geographies

You can also be selective, focusing on managers who prioritize:

• High building‑to‑land ratios (to maximize depreciation)

• Manufactured housing with +80% of basis subject to accelerated treatment

• Thoughtful exit structures (including 1031 optionality where appropriate)

Stack enough depreciation and TA HF deductions, and you can materially reduce the tax drag on large pre‑tax balances over time.