If you’re a high-income earner, you may have noticed your tax bill get higher with each new success. That said, there are smart ways to keep more of what you earn. For investors looking to reduce tax exposure and preserve wealth, alternative investments can provide tax mitigation strategies that go beyond traditional tools available to the masses.
In the following sections, I’ll lay out three options. We’ll look at real estate syndications, energy tax credits such as oil and gas deductions, and structured private funds. When used strategically, each can help high-income earners defer, reduce, or even eliminate certain taxes.
Real Estate Syndications: Income and Deductions
Real estate syndications allow you to put your capital in with other investors to acquire income-producing properties. These often take the form of apartment buildings, self-storage units, or commercial assets. While the income may be attractive, there is additional value available in these properties.
One advantage consists of depreciation. While the property may be appreciating in value, tax law allows you to deduct a portion of the property’s value each year, reducing your taxable income. In many syndications, you can receive losses on paper and still collect positive cash flow.
For certain investors who qualify as “real estate professionals,” these losses can offset ordinary income. Even if you don’t qualify, passive losses can often be used to offset other passive gains. If structured correctly, syndications can also permit capital gains deferral through 1031 exchanges or Opportunity Zone reinvestments.
Energy Tax Credits: Deductions
The U.S. tax code still favors domestic energy production, especially in oil and gas. Investing in these projects through direct participation programs can provide tax deductions, and sometimes these are significant. With this setup, a portion of your investment (often up to 80%) may be immediately deductible in the first year due to intangible drilling costs. Additional depreciation on equipment and infrastructure can increase that deduction. In some cases, these deductions can be used to offset ordinary income.
These tax advantages come with certain risks. Oil and gas investments can be volatile and aren’t suitable for every portfolio. But for accredited investors with a high tax bill, they can work if used correctly. There are different ways from a risk/return perspective to access these markets. Wildcatting is more speculative and risky but offers more upside with a tax deduction if it hits. Most investors prefer to invest in development programs with proven reserves based on petroleum engineering and known geology. The returns are lower but more consistent, and the tax deductions still apply.
Structured Private Funds: Tax Efficiency
Structured private funds, such as private credit, opportunity zone funds, or customized structured notes, can also offer tax benefits. Some funds are designed to delay income recognition or offer long-term capital gains treatment instead of ordinary income. Others provide access to sectors with unique deductions, such as agriculture, conservation, or development funds with built-in depreciation benefits.
With the right structure, these investments can help smooth out taxable income across years or minimize exposure in high-income periods. They also offer the opportunity for long-term wealth building without triggering an annual tax hit.
The Bottom Line
If you’re in a high tax bracket and looking to preserve more of your wealth, now is the time to explore how real estate, energy credits, and structured private funds can work as part of your tax mitigation strategy.
Before choosing a tool, consult with a knowledgeable tax