Is Real Estate the best way to reduce your taxes?

[Tim Johnson]

Real Estate is THE BEST way to decrease/eliminate your tax burden.

Here's why:

This is a picture of a Schedule E.

It outlines profit and losses from rental real estate.

Look at all of the losses you can count against your rental income.

Now look at line 18.

Line 18 is usually:

(Value of your property) - (Land value) / 27.5 years.

For example:

($650k) property value - ($150k) Land value = $500k / 27.5 years.

That's $18k in losses you can deduct against your rental income.

Now add that with lines 5-17 and you will most likely show a loss on paper.

***EVEN IF YOU CASHFLOW IN REAL LIFE***

Ready for the boatload of cherries on top?

- Run a cost segregation study on this property in 2024 and you might have $100k on line 18...

Without diving too deep on this post - If you run this scenario as a real estate professional while materially participating in the property, You'll be able to reduce your's and your spouses taxable income that year... 

P.S. - When you go to qualify for your next proeprty, your lender can actually add losses from line 18 back into your income... allowing you to qualify for the next property. (Have your Cake and eat it too!)

[Michael Quarles]

The absolute best way to avoid taxes is not earn income.  Or at least report it.  

No real estate needed.  

In fact, come to the USA and live off of those of us who pay taxes.  Free healthcare free cell phones free housing.