Paying Zero Taxes by Investing in Real Estate?

" In this world, nothing can be said to be certain, except death and taxes." - Benjamin Franklin

The earliest known tax was documented in Mesopotamia approximately 4500 years ago. People used to pay using livestock, which was one of the prominent and acceptable currencies. As we can see, they occur as long as human civilization exists. We don't doubt that taxes are an essential part of the state. But sometimes paying less money benefits the government budget itself. How?

As an active real estate investor, you can generate more cash flow, and then, benefit the overall economy. The wealthier you are, and the bigger your cash-flow is, means you are creating more jobs. Thus, you are helping the state. The government has left some loopholes in the law to encourage active investors to generate more money. In today's blog post, we will cover some of the most significant ways to pay zero taxes by investing in real estate.

1. 1031 exchange - According to the law, you can defer paying taxes indefinitely. To make it more understandable, let's look at the example: James buys equity for $150,000, spends $50,000 on improvements and sells for $250,000 for $50,000. You have two choices: use the earnings immediately, which means that you will be taxed ordinarily, lose the most significant part of it, or REINVEST in a new property - add another $50,000 to your profit and purchase a new estate. You can continue the cycle indefinitely. Or don't sell the property at some point, and generate better cash-flow. The better property will bring considerably better monthly revenue. Therefore, use this advantageous loophole to gain wealth quickly and make even more money.

2. Create your own self-directed IRA - It's the best way to save for your retirement. Compared to the regular paths of investments, it has numerous taxation advantages. A piece of good news is that you can have your own self-directed IRA. However, be aware that it won't be an easy task. It requires decent management skills and experienced professionals. Also, keep in mind that you can rapidly grow your wealth under the IRA shelter, but you won't be able to withdraw money before age 59,5.

3. Keep up properties for more than a year - Buying and selling the property at a higher price, brings you a profit. It's an excellent way to earn money; however, selling it too quickly means you will be taxed at a regular tax income rate. To avoid extra paying, make sure to hold the property for at least a year. Selling too many times a year puts you under risk of being classified as a dealer. This, you will have to pay double FICA taxes.

Schedule a 15-minute call with me to discuss how you can earn passive monthly income with real estate: https://calendly.com/shannonrobnett/15min