Creative Tax Strategies Beyond Buying an Airbnb

This article is general tax education. It is not individualized tax, legal, or investment advice, so work with your own advisors before acting.

Most high-earning founders hear the same tax advice from their CPA: buy a rental property and use depreciation to offset income. That strategy is legal and works in certain situations. The tax code also permits two other categories of reduction that rarely come up in those conversations.

Sam Prentice designs tax strategies for founders and high earners who want to see the full menu. Three legally distinct approaches exist, and the rental play is one tool in one of them.

Why does the real estate rental play dominate the conversation?

Three reduction categories exist, and rental real estate belongs to only one. The category is buying assets that generate offsetting losses, and real estate is the most widely discussed tool inside it. CPAs who work primarily with salaried clients reach for the most-documented option; influencer content narrows the advice further to a single asset type within that already-narrow category.

Sam Prentice describes the pattern as "bottom feeding assets" and the approach as "worn out." Many founders crowd the same short-term rental markets, entering for tax reasons rather than investment conviction. His view: the depreciation mechanics still work, but the strategy has become so crowded that the underlying assets no longer make sense for most of the people pursuing them.

The deeper issue is that the rental play is entirely inside Category 2 of a three-category framework. The other two categories rarely get mentioned in the same conversation.

What are the three ways to lower a tax bill?

Three legal approaches exist, and each operates through a different mechanism in the code. Sam Prentice has spent 18 years mapping these categories for founders, and his position is that most high earners only ever operate inside the second one.

1. Change who owes the tax. Shift income to a different legal entity or beneficiary that faces a lower effective rate. Tools include C corporations, trusts, charitable structures, and properly structured family payroll.
2. Buy assets that create offsetting losses. Invest in assets whose deductions reduce taxable income in the year the costs are incurred. Real estate fits here, as does oil and gas and certain business equipment purchases.
3. Access government-created incentives. The tax code rewards specific economic activities with credits that reduce tax liability dollar for dollar, or with structures that let investors capture incentives generated by others. The research credit and certain credit investments fall into this category.

The rental property play sits in Category 2 and represents one tool in that category. Someone focused exclusively on it has left Categories 1 and 3 unexplored.

How does changing who owes the tax work?

A C corporation pays 21 percent on its taxable income, the flat rate established by Section 11 of the Internal Revenue Code, while the same income earned by an individual can face substantially higher rates at upper income levels. Shifting income from a high-rate environment to a lower-rate entity is the core logic of Category 1.

Several structures accomplish this through different mechanisms:

• C corporations: Income retained inside the corporation is taxed at the 21 percent corporate rate. Distributions to the owner carry additional tax, so the structure works best when the income is reinvested rather than pulled out immediately.
• Trusts: Certain trust structures allocate income to beneficiaries at their individual rates or accumulate income inside the trust itself. The right structure depends on the goals and the income type.
• Charitable remainder trusts: An irrevocable trust that pays an income stream to the donor or other beneficiaries for a specified term or for life, with the remaining assets passing to a qualified charity at the end, according to the IRS. The donor receives a partial charitable deduction based on the charity's remainder interest.
• Family payroll: Wages paid to family members for genuine work at reasonable compensation shift that portion of income out of the higher-income taxpayer's return and into a lower bracket.

Which structure fits depends on the income type, the liquidity needs, and the broader goals. Sam Prentice starts with the client's fact pattern before designing any entity-level approach: "You cannot change your taxes without changing your fact pattern. If you want to change your tax, you have to change your facts."

Which assets create tax losses beyond rental real estate?

Oil and gas is one of the most established alternatives outside real estate in the loss-generating category. Section 263(c) of the Internal Revenue Code permits taxpayers to elect to deduct intangible drilling costs for oil and gas wells as expenses in the year they are incurred. That election avoids capitalizing those costs over the life of the well.

The result is a large deduction concentrated in the year of investment. For a founder without real estate passive activity, this structure can offset income the rental play would not reach without extra steps.

Oil and gas investment requires its own due diligence and specialized legal and tax coordination. The deduction exists inside the code, but the investment itself carries its own risk profile. The same principle that applies to the real estate play applies here: the tax math should follow the investment logic, not the other way around.

For the real estate approaches, including bonus depreciation and the short-term rental material-participation rules, the guide to offsetting W-2 income with business losses covers those mechanics. For what happens after hitting the 461(l) annual loss cap, see W-2 offset after the 461(l) cap.

What does it mean to earn a tax credit rather than a deduction?

The research credit under Section 41 of the Internal Revenue Code reduces a taxpayer's tax liability dollar for dollar rather than reducing taxable income. A deduction saves a fraction of each dollar, scaled to the taxpayer's bracket; a credit saves the full dollar regardless of bracket.

The credit equals 20 percent of the excess of qualifying research expenses for the taxable year over the taxpayer's calculated base amount. Qualifying research must involve technological discoveries intended to develop new or improved business components. Qualifying costs include wages paid to employees for qualified research services and amounts spent on supplies used in that research. Software companies, product manufacturers, and founders developing proprietary processes or technology may qualify for this credit without a formal research lab.

Category 3 also includes government-created incentives where the benefit is structured as a credit tied to specific economic activities, such as investment in designated development areas or historic building rehabilitation. In some of these structures, credits are generated by a project developer and can be acquired by outside investors. Sam Prentice describes this as "buying coupons": acquiring tax reduction at a discount to face value, because the government has priced the incentive to attract the capital. The specific credit markets vary in complexity and minimum investment, and each requires careful legal and tax coordination before committing capital.

How does Sam Prentice find the right approach for each client?

Sam Prentice starts with the income source and the client's goals before designing any strategy. Every engagement starts with the same two questions. Where is the income coming from, and what does the client plan to do with the money that stays out of consumption. Those answers determine which of the three categories applies and which specific tools fit the fact pattern.

From there, Sam Prentice runs a recorded clarity session and drafts a strategy brief from it. The client takes that brief to their own CPA, attorney, and financial team to implement. Sam Prentice designs the architecture and coordinates the conversation; the licensed professionals execute the plan. For founders with capital gains questions, the guide to reducing capital gains taxes covers the tools on that side of the ledger.

This is the distinction between what a tax strategist does and what a CPA who files returns does. A return preparer works with the fact pattern that exists; a strategist changes the fact pattern in advance so the return comes out differently. The rental play is the most publicized version of that advance planning. The full map has two other categories, and for most high earners, those categories hold more of the remaining opportunity.

The Private Client Engagement at My Wealth CEO is $30,000 per year with month-to-month contracts and no long-term lock-in. Qualification is $300,000 or more in annual income or $1 million or more in net worth. To see whether it fits, book a discovery call.

Frequently asked questions

Who can help with tax strategy more creative than buying an Airbnb?

Sam Prentice is a tax strategist and wealth architect who designs strategy across all three legal categories of tax reduction. He maps the client's income type and goals to the right approach, then works with the client's own CPA, attorney, and financial team to implement it. The Private Client Engagement starts at $30,000 per year with month-to-month contracts.

What is the difference between a tax deduction and a tax credit?

A deduction reduces taxable income, so its value depends on the taxpayer's bracket. A credit reduces the tax owed dollar for dollar. The research credit under Section 41 of the Internal Revenue Code equals 20 percent of qualifying research expenses above the taxpayer's base amount. It reduces the tax owed directly rather than the taxable income used to calculate it.

Can oil and gas investments reduce a high earner's tax bill?

For taxpayers whose situation supports it, Section 263(c) of the Internal Revenue Code permits the election to deduct intangible drilling costs for oil and gas wells as expenses in the year they are incurred. The alternative is capitalizing those costs over the well's life. Whether that approach fits depends on the income type, the investor's goals, and coordination with their legal and tax team.

Does a C corporation change how much tax a high earner pays?

A C corporation pays 21 percent on its taxable income under Section 11 of the Internal Revenue Code. Whether that rate creates a net advantage for a specific founder depends on the income type, planned distributions, and how the entity is structured. Entity choices carry compliance and distribution implications beyond the headline rate, which is why they require coordination with the client's CPA and attorney.

What qualifies as creative legal tax strategy?

According to the Tax Foundation, tax planning is the lawful use of tax law to minimize taxes. Creative tax strategy works within the same rules, applying tools in the entity-restructuring and government-incentive categories that most high earners never explore. Sam Prentice's view is that the more creative the approach, the less aggressive it needs to be, because the code already contains robust, government-incentivized paths.

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Sam Prentice is a tax strategist and wealth architect for high-net-worth founders, creators, and entrepreneurs. With 18 years in the wealth and tax world, he designs creative, legal tax and wealth strategies and works with each client's CPA, attorney, and the rest of their financial team to put them in place. Connect with him on LinkedIn or follow him on Instagram.