Real Estate Tax Strategies That Save You Thousands (With Heidi Henderson)

Heidi Henderson (00:00)
Have you ever thought about the IRS as your business partner or that they are your partner in success? And nobody ever says yes. But the amazing thing is the tax code for investors, for business owners and investors, is your partner in your success. When you take on risk, it is there with incentives to actually help offset some of the risk. That is what deductions and depreciation is for. It’s what bonus depreciation is for. Energy incentives, when you go do an LED lighting retrofit or you put solar panels on your building, you are investing in a community, helping to reduce the need for having to build more infrastructure and more power grids and all of these things. And so the IRS says, look, if you’re willing to do that, we’ll come in and help.

Kristen Knapp (02:18)
Welcome back to the Real Estate Post podcast. I’m Kristen and I’m here with Heidi Henderson, who is the CMO and minority partner of the engineered tax services. And she also hosts the Slash Tax podcast. So we’re going to talk about tax reduction strategies with real estate investing. She’s got a lot to educate us on. So thank you for being here, Heidi.

Heidi Henderson (02:35)
Absolutely. Thanks for having me. I’m so excited for the conversation.

Kristen Knapp (02:38)
Yes, I mean, I am too. I think that you can help a lot of people with some complicated information out there. let’s go to the beginning. Tell us a little bit about your background.

Heidi Henderson (02:49)
Yeah, absolutely. I went to, when I went to college, I told the story a few times, but when I went to college, I started off in accounting and business and accounting, very analytical. I liked the numbers side of things. And during school, I ended up taking a temp job. I just needed something to make a little money on the side. So I took a temp job as a receptionist at a real estate brokerage. And

They were a mortgage firm and it was owned and run by this really successful woman. This was in Eugene, Oregon. And that temp job ended up being what was supposed to be two weeks and I ended up staying and she began to mentor me. So I ended up staying there for a few years. And from the way I had been raised, I had not been raised around a lot of highly successful women at that time.

And so to have that exposure to this woman that was really successful, really driven, really smart, and running her own company and really seeing the benefits of real estate, I’m kind of studying tax and accounting, but I had all of this exposure to the real estate world and kind of resided in that space for a few years. It gave me really interesting insights and made me recognize the opportunities that exist in the industry.

Kristen Knapp (04:04)
Yeah, it’s so great to have a mentor so early in your career to really shape your experience.

Heidi Henderson (04:09)
Yes,

absolutely. Yeah, mean, not enough people have that, I think. And, you know, not to age myself, but, you know, this was in the very early 90s. And even now we’re seeing more women, more really successful women in the space and in real estate. But I feel like then it was even more rare. So I feel like I was very blessed to have stumbled upon that opportunity.

Kristen Knapp (04:30)
Definitely, and now does that kind of shape how you work with other people? Like are there women that you work with in Mentor?

Heidi Henderson (04:35)
Oh, that’s such a great question. Yes, yes, I appreciate that. know, one of the things after my time there and after college, I went out into the world and started working. I’ve worked in a number of different industries, mostly within real estate. So I have a master’s degree in accounting and I was the controller for development, a second home.

⁓ Resort in Utah, which was amazing. I had so much fun there, but we did a lot of residential and commercial developments and there was a golf course and ski resorts and all of these things that I got to be involved with the development and the growth of that particular whole development. It was a very large project. It was so interesting to see all of it kind of come together and be fluid.

Then when it transitioned, really went then into more of a consulting space. So I’ve been doing what I’m doing now for the last 15 years. And in consulting, a lot of what I do is actually working with CPAs. So we provide a lot of specialty tax analysis with CPAs across the country. This is a sector that is predominantly male. And historically, especially when I started even 15, 15, 20 years ago, predominantly male.

And they are running their firms and managing directors of these large CPA firms that I was working with. And I didn’t really think about it as being a negative. I didn’t feel like I had something that I needed to work towards to become successful or to of break through. But it was when I read Sheryl Sandberg’s book Lean In, someone had recommended it to me. I’d never really felt like I had had a lot of pushback as a female in the professional world. But when I read that

book, it did make me realize that a lot of the things that I just thought were normal really don’t have to be that way. And one of the most fascinating things that stuck with me from that book was not necessarily the differences in how we view men versus women in the workspace. It was how women treat each other, other women in the workspace.

Kristen Knapp (07:08)
right?

Heidi Henderson (07:22)
And that really just made me think about, I don’t know what it is, I don’t know why we tend to be competitive. I think we are more competitive with each other, women and other women in professional world, than with men. And that just changed my perspective. I don’t know that was 10 years ago or something. But ever since then, I just really thought, you know, I want to support other women and be there to support each other and be each other’s biggest cheerleaders.

And I am surrounded by amazing people. One of the other partners here happens to be my sister, and I feel so blessed to work with her in this business side by side. And we have some phenomenal women in our firm. And I just absolutely love that. And I think it’s a huge opportunity to help support people in this space, in real estate, in tax, both which tend to be mostly male.

Kristen Knapp (08:12)
Absolutely, and I feel like you touched on an interesting point where I do think as women, a lot of us have been made to feel like there’s only so many spots because we’re dominated. So then we’re competing for the spots and then we’re treating each other like competition. And I agree with you. I mean, we do so much more when we’re able to mentor each other and foster a great relationship.

Heidi Henderson (08:22)
Mm-hmm.

Yes, absolutely. Understanding that we can be each other’s cheerleaders and having someone succeed doesn’t make you less successful. Yeah.

Kristen Knapp (08:41)
Absolutely. Yeah.

Well, I think that’s amazing. I mean, I can imagine it is a very male-dominated field, so I mean, even more so. So, you you had your upbringing and your mentorship, and then you’re now at Engineered Tax Services. When did you get involved with this company?

Heidi Henderson (08:56)
Yes, so engineered tax services is where I shifted from really being in the accounting world, being a controller in real estate over into working more on the consulting side. so engineered tax services is a specialty tax firm. A lot of people are not even knowing that that’s a thing, but it’s super specialized. Technically, we’re a licensed engineering firm. We specialize in really complex areas of the tax code where we can do cost segregation and

Kristen Knapp (09:14)
Yeah.

Heidi Henderson (09:24)
energy certifications for buildings that are energy efficient. We realized there are all these incentives, really complicated areas of the tax code that are opportunities for investors. And these areas of the code are actually there to help support people who are willing to take risk. So you asked me a question earlier, like what’s one of my weaknesses? One of my weaknesses is because I’m hyper analytical, I have a very low threshold for risk.

I don’t want to take risk. want to know that everything’s all fits within my box. But there’s always a bit of risk with investing, particularly with real estate. And I took a huge leap of faith in working with this firm. But what’s fascinating, and I ask people this question all the time, I say,

have you ever thought about the IRS as your business partner or that they are your partner in success? And nobody ever says yes.

Kristen Knapp (10:52)
gonna eat.

Heidi Henderson (10:53)
But the amazing thing is the tax code for investors, for business owners and investors, is your partner in your success. When you take on risk, it is there with incentives to actually help offset some of the risk. That is what deductions and depreciation is for. It’s what bonus depreciation is for. Energy incentives, when you go do an LED lighting retrofit or you put solar panels on your building, you are investing in a community.

helping to reduce the need for having to build more infrastructure and more power grids and all of these things. And so the IRS says, look, if you’re willing to do that, we’ll come in and help.

And we’ll do it in the form of tax credits and deductions and other incentives. And so when I started to understand that, I was like, this is a game changer. This is huge for investors and really does help infuse additional benefits into someone’s business to help them be more successful.

Kristen Knapp (11:47)
Definitely, I mean, I think that just shifting that mentality helps so much. What are some of the typical, like what are some maybe mistakes or things that people miss about how like tax reduction strategies, I’m sure you see the same things over and over that people are doing that can be improved upon.

Heidi Henderson (12:07)
Yeah,

yeah, absolutely. Probably the biggest one is, and I’ve heard it for years and years and years, it’s like my CPA is taking care of all of that stuff for me. And that is rarely the case. Now, there are some amazing CPAs out there. I named a few of them earlier. We’ve got some amazing CPAs that really specialize in real estate and other areas that are very strategic. But the typical CPA, they are trained in compliance.

That means they are trained in accuracy to ensure that your tax return is correct based on the data you supplied. They are not trained in strategy or in looking at opportunities. They weren’t trained to be opportunistic. In fact, it’s almost the opposite. They are trained from an ethical standpoint to not look at it opportunistically. They are trained to look at the numbers you provide and to interpret those. That’s all. And so most taxpayers

don’t realize that if they are not working with a very specialized CPA, that they likely are missing out on a number of things that they could be applying or they could be taking advantage of because they just kind of assumed, well, you know, I send it to my CPA, it’s being covered.

Kristen Knapp (13:16)
Right, and I’m sure there’s just so many scenarios within the real estate world that it’s kind of hard to think of everything. You kind of have to know what you want and be educated. I think that’s really good advice. Something that you and I were talking about before this podcast is kind of the current landscape of everything, especially with this new tax bill that was just introduced. I would love for you to kind of shed some light on what’s going on in general, because I think there’s a lot of conflicting messaging and people are a little confused.

Heidi Henderson (13:44)
the one big beautiful bill has been passed and with it was the reinstating of 100 % bonus depreciation. And there is a lot of confusion. I have heard all kinds of things like, ⁓ great, 100 % bonus is applied and so now I can buy a building and deduct the whole thing. That is not what that means. Just to clarify.

Kristen Knapp (14:04)
Good.

Heidi Henderson (14:06)
Bonus depreciation applies to is someone who owns a business or an investment and is buying equipment that has a useful life shorter than 20 years. That’s the tax term. But without getting technical, if you buy tangible personal property, the IRS will allow you to just take it as an expense, the whole thing, instead of what would normally be that you have to just take like a fifth or a tenth of 15th percent each year.

You can take the whole thing year one. Cost segregation is really the way that we apply that for real estate, but it applies to all kinds of things. It’s why we hear lots of things on social media about buy that really cool truck and ride it off as a tax deduction for your business. Buy office furniture or buy equipment or all of these things because equipment or more tangible personal property can be applied with these bonus depreciation rules. What is happening?

We have thousands of investors, we’re a national firm, so we work with hundreds and hundreds of investors every single month. There were a lot of them that were sitting on capital waiting for this tax bill, wondering what was going to happen and choosing to make investment decisions based on what the tax implications would be for these investments. So because of that, we saw a slowdown through the end of 24.

And well, actually all of 2024 and then half of 2025 as what we felt like was kind of a limbo phase of people anticipating what was going to come in this new tax bill. We saw it personally. We saw it even through transactions. We work with large syndicated funds, small investors, everything in between. had many conversations with people who were saying, look, we’re just going to wait and we’ll see what happens.

When that bill passed the first week in July, it was like the floodgates opened and we have seen so much activity of people feeling this huge rush or need to close on properties before the end of the year. And a lot of it is because of the ability to use cost segregation, apply bonus depreciation to the pieces of that building, which could be 20, 30, 40 percent of their building cost, and take a huge deduction.

People realize if I can do that and I just reinvest this amount of money and then I’m not paying the IRS because it’s going to offset my income tax dollars, I could almost pay for the down payment on this property. And so we are actually seeing that happen. I see investors, I take advantage of it. Being able to buy an investment property, we see it a lot with short-term rental properties. People buy these properties, get a large deduction, get a tax refund.

and then they just continue to roll it over from one investment into another. I think especially now as we’re hearing rumors that interest rates are going to come down a little bit, I think that we are really in for a really interesting time in real estate as we’re already seeing a pretty dramatic increase in transactions.

Kristen Knapp (17:40)
Yeah, I mean, that’s so interesting. You mentioned, you know, obviously we’re going to hear about interest rates soon. what are, even just the general market, when do you think is a good time? I think people have a lot of trepidation because they just don’t know whether it’s a good time or not or whether I should wait. Like, what’s your perspective of that?

Heidi Henderson (17:58)
Yeah, I felt a little bit of the pause. I had every intention of buying another property in 2024. When I looked at the cost, the cost of everything, mean, insurance, we also have an insurance company, insurance liability premiums, looking at property taxes, just the cost of construction, looking at interest rates. I’m looking at potential property sitting cap rates of four, five, six. And I’m thinking, this won’t even cover the cost of capital as it stands right now.

You would literally be upside down from the day you close on this building. so it just financially, I couldn’t tie that together. That didn’t make sense for me being the analytical person that I am. But I feel like there’s been a pretty dramatic shift. It does also apply to people with a lot of tax liability in a high tax bracket who can use that as an offset. It completely changes the ROI.

I mean, completely. So it may look like a six cap or seven cap. But then if you have the ability to use that to get a refund on all your income tax and you get a couple of hundred thousand dollars as a refund, and then you factor that into what you put as a down payment, all of a sudden, maybe you’ve got an eight or a nine cap, that changes everything. So because of what I see with a lot of our investors and people really jumping into certain types of properties and certain verticals,

I am anticipating we’re actually going to start to see property values increase between now and probably first quarter of next year because of this fire. Another really interesting metric that I was reading about recently and I sat in a phenomenal presentation with an economist saying one of the interesting things about what we saw in 2007, 2008 when we saw all the foreclosures and the struggles and the recession.

The difference with what we’ve seen here in the last couple of years is although we have a lot of increased rates, we’re looking at a ton of properties coming up for refinance with, know, that have lower interest rates. So maybe they had gotten leverage, you know, five or 10 years ago when rates were really low. Now they have to refinance and they’re going to be up in these, you know, six, seven percent ranges.

It’s going to hurt a lot of people. So there’s been some fear and trepidation about what’s going to happen in the market as this all comes to fruition. But what’s kind of interesting is I think with all of these tax bills and things starting to shift, I think it’s going to start to turn. And the biggest difference is that people have more cash on hand now than we have ever seen, I think ever in history.

So that’s what’s interesting is, okay, we’re hearing, things are too expensive and things aren’t moving and things are softening and inflation, but there’s a whole bunch of people sitting on a lot of money and they’re ready to deploy. They’re just waiting for things to have numbers to look right. And I think we’re getting really close to that point.

Kristen Knapp (20:47)
Yeah, like floodgates will open. That’s interesting. So I mean, to kind of utilize all of this stuff that you’re talking about, you suggest going to somewhere like engineered talk services and like getting involved with someone who’s a little bit more niche down to your industry.

Heidi Henderson (20:50)
Yes, yeah.

Well, we would certainly love to work with investors. We love working with real estate investors and we are, we do not do tax preparation. So I always love to explain, we work with your existing CPA and then we come in as the strategist to look at strategy, look at incentives, see what’s available and then actually deploy. What’s a little different about what we do is we physically do the studies like cost segregation. We physically do them. We don’t outsource those to other firms.

We do over 650 site visits a month all across the United States. And we work incredibly hard. We’ve been in business for 25 years to do a really great job with a lot of detail and a lot of value to clients. So yeah, we always love working with investors and helping look at their projects and also just providing some guidance on which projects might make the most sense.

Kristen Knapp (21:50)
Yep.

Heidi Henderson (21:53)
I have a lot of investors that will come to me and say, hey, I’m looking at these three. What do you think? Let’s look at it for depreciation and tax benefits. I have three projects all look good, but when we look at all of those and actually look at the tax implications, it’s amazing the difference between some of them. So that can actually make it much easier to make a decision on those as well.

Kristen Knapp (22:10)
now.

Well, I think that’s great because I think a lot of people are probably hesitant to switch CPAs. So think the fact that you work with their existing team is wonderful. That’s probably a much easier thing for people to assimilate into the business. ⁓ Well, I mean, you’ve given such good insight on the current market. I would love for you to talk a little bit about your podcast and what people can learn if they tune in.

Heidi Henderson (22:26)
Yeah.

Thank you. I appreciate it. Slash Tax has been kind of a fun project because I worked with a ton of investors, not only on the real estate side, but also then saying, hey, I bought this property, I got the deductions, but what else can I be doing? What else can I deploy or what did I not know about? I created this podcast to have exactly that conversation. I talked with a lot of CPAs. I talked with a lot of other

types of sponsors and alternative investments so that people can look at that, hear the podcast and understand different opportunities that exist. And we’re really catered towards people who are high-income earners and who are really looking at building generational wealth and setting themselves up for success as they continue to grow their wealth and understand how that eventually will transition onto the next generation.

⁓ But it’s a lot of fun and they great guests on the podcast.

Kristen Knapp (23:30)
Well, should definitely tune into that. You’ll probably learn a lot. And where else can people find you?

Heidi Henderson (23:37)
⁓ So I have Slash Tax with Heidi on Instagram. So try to post on there. Also on Facebook, our website is engineeredtaxservices.com. And of Slash Tax podcast is on all the platforms.

Kristen Knapp (23:50)
Awesome. Well, thank you so much, Heidi. I think that people learned a lot from this episode. Thanks for being here. And thank you everybody for listening. We will see you back next time. Bye.

Heidi Henderson (23:56)
Absolutely. Thanks for having me.