DEBT IS NEVER TAXED
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- เผยแพร่เมื่อ 14 ต.ค. 2024
- Debt is never taxed. You’ve heard people say this before, but there are a couple of things you should know. First, you need to be careful using debt.
You can become over-leveraged and lose your assets. Second, paying interest is not the same as paying taxes.
Last, there is a tax when you sell, but most investors exchange their gains into another property and kick the tax can down the road.
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#investing #debt #howto
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Interest rate rises, and bad tenants entered the chat.
Tenants that become squatters!
Furio has entered the chat
@@connor3288 😂
Lol right?! Interest rates bro. That’s what you’re looking for. Interest rates.
And capital gains tax
Thanks for confusing me even further now.
I’m the same 😂😂
All that I saw was him moving cash from one pile to another. Dude’s thinking that he is simplifying things, but in reality he is just making it worse.
The guy makes good sense if you listen to him.
Seems pretty simple honestly. Using the banks money and the appreciation of the home to gain income passive income.
@@jmack91 Yeah, we all get the idea behind it, but just like his "very simple visual breakdown", you elaborated nothing.
In theory it works, until the moment, your tenants screwing you up by not paying the rent and you can’t evict them as the government protects them. 😂
Tenants always pay in a business plan on paper. What are you talking about.
don't forget to add the 11thuosand in damaged property when u can finaly evict them
That’s what Muscle is for lol
How about the taxes on the rent collected from the tenant.
1000 - 400 + 300 + 300 ( for bank fees, property expenses and taxes on rent). Nothing left in the end and the city will come for property taxes after that.
The debter is a slave of the lender
This feels like a 2008 financial move, terrible idea in these times too lol
Stop trying to confuse others with your stupid opinions when people are actually trying to learn something useful unlike you.
Me personally I like to pay down the loans. That frees up money to buy more property instead of going into more debt on one property.
More properties and diversified properties are safer than huge debt on one property.
Once I got to the point that the rent from one property covered the mortgage on two properties I slept better at night.
Now I’ve got four properties and any one of them can cover the mortgage for all the properties.
No, the 30k pulled - 20k of it is used as down pay on another property
@@InsuranceSpecialist good point. I wouldn’t want to pay for the extra refi cost to pull the money or depend on that if rates are going up. I usually keep an equity line available for the down payment. Since I do commercial properties that’s allowed. That way I can pay down the equity line, free up the money and be ready for the next property quickly. I’ve had a cycle of doing this for about 10 years. I target $500,000 properties and use $100,000 equity.
I find it takes 1-2 years to pay the equity line off and about the same amount of time to find my next property.
You can’t beat that
@@miracleman75not only that, but in the video he fails to mention that if you refinance the whole value of the property again the you're going to pay pmi
@@Wildwestwrangler he still refinanced around 80%. He borrowed $110,000 on the building that’s worth $140,000 now. The reality is that this strategy only works when rates stay down and prices go up.
Right now your property might lose value and you are refinancing to a higher rate.
I refinanced all my properties before rates started going up (5 year mortgages on commercial) so for the next five years I’m focused on paying down the loans. If rates are high it’s not bad because I’ll have less to finance. If rates come back down I can refi and get my money back out.
All I heard was,”instead of paying taxes once, you can pay interest for the rest of your life”
Interest is a business expense that can be written off to reduce the rental income. These types of strategies are for people who have large tax liabilities. If you're still getting tax refunds, this isn't for you.
@@mommom3172 finally someone in these comments who knows what theyre talking about
@@mommom3172
Except people with large tax liabilities already know this, he’s breaking it down for unsophisticated investors who are liable to get themselves underwater doing it.
Thats the beauty of it your tenants money covers all expenses while you pull out the appreciated value across time you use none of your own money to do any of this it's brilliant.
And expecting everything to keep going up is the real problem.
Agreed - 4 months without renting out your property, and the asset price going down would be such hhhhrrraaaa sweet deal - not
Lol, would be nice if everything went exactly as you planned! Bad tenant, market downturn, unforeseen expenses…..this is a SIMPLE breakdown
and no mention of property magmt or if you lose a tenant.
@@miken5413 It's called risk. You assume the risk for potential profit. This is why we don't all live in government subsidized housing and why the debt is tax free. Government incentivises the risk takers for this and other types if business so the economy will run. The difference between super rich people and average people is the level of risk they are willing to assume. Even average people with above average incomes did this when they took on college loans to get degrees. They assumed risk to gain in a place that is pretty volatile. Why do you think we have such issues with bad debt in this nation? If you are unwilling to risk anything for financial advancement, you basically give up liberty for a "stable" and often low quality existence.
Prices have to go up and the value of the dollar has to go down, they will keep printing money and pushing prices up. That is how they manage the system. You can't have a lot of money as well as cheap assets. If the prices don't go up, then the whole economy will come to a standstill and nobody would be motivated to do anything in life to grow financially.
Did anybody else notice that if you get out of calculator and quote this video the numbers don't add up, well I noticed.
Ignores depreciation and then recapture at the sale of property. Also ignores closing costs, etc
That's what I was thinking, not to mention the fluctuations of market and how that affects the property value.
Spot on buddy
Well, by putting this and MANY of these financial advices video out here, they can convince a whole lot of people to buy in the similar things, ended up inflating the price since the demand is so high.
...hmm, why do I vaguely feel some sorts of pyramid scheme here though
I loved this Poor Dad Poor Dad lesson
You mean Poor Dad, Bankrupt Dad?😂
Clear as mud. He's a genius.
Straight to the point. Simple and clearly spoken. No sales push. Love it! Well done!
It is a sales push lol
You pay tax on the rental income, you pay property taxes, and you pay interest on the loan which may as well be a tax.
Yea this kinda makes me think of eating a snickers bar while on a diet. What about the cost of refinancing.whats the 30 thousand for?
All that is less than 10% compared to 25% tax
@@mattmansfishing5899 30k you get back tax free and you get the 100 each time income. Then you refinance to make up for the 30k you've pulled out. And them your 100 income doubles. You just keep levelling up in this situation.
Yeah some neighborhood in San Diego charge around 10k a year in property tax that "never" ending
Is all that equal to the taxes of 100k?
im far more confused after watching that than i was before hand
hahahaaa
Me too bruh! So I borrowed $80k in the beginning and then another $110k. What the hell for?
Maybe thats the purpose
Kikiki me too
Kept on repeat! Still confused hahaha!
And then when the bottom drops out, as it's designed to do, you are left with a mountain of debt and no way yo pay it. Too much stress for my life
Step 1. Find the extremely hot property that will always have tenant, will always go up in value, and will always only need 300 usd for maintenance and try to buy it with only 20k capital invested.
Yes. I agree.
Step 2: Go bankrupt when the tenant refuses to pay the rent and becomes a squatter, and you can’t pay the mortgage because you over leveraged yourself.
You better have cash flow cause if tenant doesn’t pay you owe that money still
The government won’t make them pay, and will let them squat. AIR BNB only/short term rentals only
@@mr.terwilliger5728 Depends where you're at. Different tenant/landlord rights & laws in different places.
@@michaelfoster4479 ummmm, did you not see the federal government enforce an eviction moratorium for an entire year?
Tenants have wised up to asset holders games. Who needs who more is the name of the game and with nothing to lose I say the cards are stacked in the poorer man’s favour at the moment.
@@rickjones2912 uhhhh no…. Localities are raising taxes, Biden is raising taxes and keeping gas and diesel at $5-$8/gallon skyrocketing every single commodity, and cities around the country and raising property taxes. Property owners and renters are forced to raise rents just to cover costs of ownership let alone making a capitol gain.
The poor man has never been on top of the game. In fact, it’s the other way around. After all of this chaos, simply keeping a stable place to live is the average persons highest priority so they will pay whatever it takes to stay off the streets
Dope skater, Mikey Taylor, Speaking on Finance game. Love it. Takin over.
Great recipe for a house of cards.
Only works with multiple properties and time to pay down the loans like 10 years plus from buying first investment property
It is if you're foolish with it. Dave Ramsey speaks of his experience in that situation. But then you have people like Graham Stephan who show how it works beautifully if executed properly.
The biggest issue imo is behaviour. That has alot to do with determining success in this setup. Assume you had 2 people who had similar deals, but differing behaviours. You can see how it makes a big impact.
@@paulwisdom5383 graham stephen makes his money off of his youtube channel, not his real estate business. Just like Ramsey makes his money off of his business, not by following his baby steps
I was about to say, Graham Stephan makes his money off of his TH-cam channel. The OPM strategy is high risk, high reward but that doesn't mean it works for everyone. It worked for Graham because of that source of income he is receiving. Remember these banks can recall their loans when ever they want to and that ended up burning Dave Ramsey when he was leveraging in the 80s. His kind of leveraging was needed at the time due to interest rates being so high
I did this. I will never do it again. Cash is king. I'll pay the dang taxes.
Forget that. Never pay taxes. Use the loopholes at your disposal
@@michaela.754 it’s not such a loophole you’re just taking out a loan to get cash and reducing your passive income. Youre not getting any richer unless you invest that money and have a guaranteed higher return than whatever the bank is charging you which today’s rates will put you at around 6%
@@jakerubin2250 but you want to perpetually grow your debt as you grow your revenue so you never pay taxes. You will die with the debt no different than the government.
Until you sell it then you pay tax on the lot, but you spent the $30k you financed out and now you're screwed.
“Over time” is the key word here. Cheers
You are correct and that is why all the homeowners or anyone who has any asset always borrows more once in awhile and this is how more money comes into the system and bubbles are created and eventually are burst.
This is completely by design and mathematically correct.
The way this monitoring system is designed since it's not really controlled in a fixed manner it is guaranteed that all our assets appreciate because the value of the unit of exchange or money always depreciate. They called it inflation but in my opinion this should be called deflation of the monetary asset.
So once in awhile they raise my pay for two or three percent meanwhile the value of my work annually has decreased in monetary sense hence I get poorer every year.
Who have homes or houses think when the value of their house I appreciate in their houses now more expensive they are richer, without taking dispatching that their house is not larger and in fact is more depreciated in terms of material the only reason it's value in relation to money has risen is that money is less valuable.
Keep this in mind unless you have three or more houses you will always get poorer when houses appreciate in value or money depreciates in value.
i am sorry i have to "like" your comment because there is no "love" option available.
i am also going to add that some people i know use gold as an index to finetune the amount of money they need to sink into real estate, as gold have become a tool to hedge but it does not grow the money asset merely to keep the spending power (one hopes), once in a while when the interest rate hints a certain level and the housing market feels soft enough gold bricks become real bricks and mortar.
but again, alot of factors would also play a part: developmental robustness of a city, gentrification, desirability, convenieces etc etc, calibre of tenants, employment index etc... all matters. it's deceptively simple. and the emphasis is deceptive
Maybe I’m stupid, but if property appreciates in value because money depreciates wouldn’t that even it out? You get paid more money, but the money isn’t worth as much, so you’re not gaining or losing anything?
this dude be skating through life.
By working hard and being smart with his money
Where I live I pay taxes on those 1000bucks of income like it's normal job payment.
Most places are the same!
Not really like a normal job but rent is taxed everywhere, at least 10% . He is talking about a 300$ in expenses. That probably includes the house tax and rent income tax.
So what he actually did here is borrow an extra $30,000 from the bank and reset the mortgage table to day one! Meaning you reset your mortgage table to the highest interest to principal ratio and (currently) paid a higher interest rate for the second higher mortgage loan than you probably did for the first mortgage loan(interest rates are rising). This is may be "tax free" cash but it in no way is "free" cash! it's $30,000 loan and it will be paid back over the loan term with interest. Now if you instead used the "asset " as collateral for a loan on a new cash flowing "asset" that would have been a much more financially wise move.
"Simple" - this was probably the most complicated explanation I've ever heard!
The first loan wasn’t tax free, this video just says “you’re refinancing to have more liquid cash but also more debt”
What nobody is saying is that the loan or principle will needs to be paid down with earned income that has already been taxed. So, no. The loan is not tax free. At best you may defer the capital gains but then again, this all work under the scenario that home values continue to go up.
Most people are too young to have lived thru rising high inflation,,many made money in the beginning,,only to see the prices drop as rates rose in76-82**bargains came after,,many people got burned on bank recalls..how nimble are you,Trader..
debt is not taxed but you going pay interest!
You still owe the 30k from the refinance. Yes you can make it back but your adding risk and in a recession (like we are in now) it is alot more risky
Agreed. But you can also loan assets from people and still give them some interest. Just lower. They wouldn't get that much money if I had to borrow it from the bank. The bank would make more though.
Don't forget the initial 80k loan, it would take 16 years to pay it off at $400 per month and would end up with about 40k in interest paid
That's why you only pull this money out to buy another asset that makes sense and you do it without any money out of your pocket. This is assuming you have a cash fund already in place in case a recession hits.
Debt is antithetical to a free society. For 90% of our nation's history we were a wealth based economy with a Constitutionally sound currency
🤣 i have a decent IQ and i was feeling bad i didn't understand what the fcuk he said but i feel much better now that others are confused too
I love how they forget you have to pay interest on the loan. They make it seem you get 100k you payback only 100k forgetting there's 20k+ extra you need to payback
That’s why I’m so confused. You originally borrow 80k but you’ll end up owing much more than that especially if you’re paying so little back each month. Then decide to add another 30k to your debt. Only way it makes sense is if you can guarantee you can use that 30k to turn a huge profit but by that point you alrdy had 20k might as well save up another 10k plus most likely they’ll be using that 30k to buy another property which will require taking out another loan. I understand the benefit of not having to pay tax on that 30k but it doesn’t seem worth it to me to ask for that extra 30k, at least based on this example. Unless the play is to continue to borrow money from the bank with no Intention of ever paying them off fully 😂
Let’s not forget interest rates paid back on borrowed money.
Seriously what’s the difference if you’re paying the bank or the government
@@davidwooderson5926 Interest is a business expense and is a tax write off
It just depends on your income. In most states, the interest that you pay on a home is a tax deduction, which could lower you down to another tax bracket, in turn, increasing your tax returns.
Dave Ramsey thanks you for his future listeners
😆
it's taxed later. you are just deferring it. explain that so people understand that also..
Exactly...you die and now someone else has to deal with all your debts and taxes.
Nothing...nothing is tax free. Ever
Damn straight. Uncle sam always gets his cut. And housing doesn't always go up.
But before you pay any tax, it is growing and compounding tax free.
Yep, but you can also buy in opportunity zones. Not deferring it, but exemption. Only caveat is you gotta hold it for 10+ years.
All I'm saying is tell all.
I didn't understand a word. I just kept looking at the money 💵
What a weird time line we're in.
I'm watching Pro skater Mikey Taylor talking about investing
Is this really him or a doppelgänger? lol
I was fucking like wtf I know this guy
I came to check the comments, to verify it 😂
"Daddy, how did every bubble burst in history happen?"
"Mary, just watch this video and pet me drink away my tears."
So true
Greedy ass impulse purchase Americans will never learn. They will just rinse and repeat
*let me
(hopefully Mary isn’t petting her daddy😳) 😂
I love how they always glance over the fact that there is still a real cost to debt. Your paying someone, bank government, investor. It's not necessarily better than earned income. Just a different way to make money. And not everyone has the skills to manage an asset obtained with that debt.
Of course there is a cost to debt. But debt is what makes it possible for people who don't have money, and choose to learn how to use money to make money. This is the same concept of how a lot of businesses get started up.
The issue comes when property taxes increase based on home value, the bank calls the debt or the tenants don’t pay.
I still endup with a debt over my head. That 30000 is not my income it's my debt.
Yeah but what's the interest rate on that debt 5% versus the 25% or more that the government wants
You realize that 25% is one time, not an APR
You realize that 25% is one time, not an APR
Your interest rates are 5%. That's really a great interest you're getting, in our country it's around 10 to 14 percent.
If this formula worked out perfectly then there shouldn't be any recession in 2008. The primary cause of that recession is us mortgages collapsed.
Wow, awesome seeing one of the best pro skaters sharing some extremely useful knowledge
How to go bankrupt in 2 years! Lol
I mean what he’s saying works, just only for the ultra wealthy, like high 8 figures and up net worth
@@pokerbuddy62 So, basically get rich first. The Loop. 😵💫
What color is your Bugatti
@@pokerbuddy62 Lol that's totally not true. There are so many people doing this on small scale.
Working for me I now have 3 rental homes I started with 15k going on 5 years ago
I have built my net worth up to where it is without debt, and I am not about to start borrowing now. You can do all the financial gymnastics you want, but at the end of the day, you cannot substitute the peace of mind that comes with not owing anyone.
This guy is so smart that he fails to understand that we are where we are because of "smart" guys like him...
Fortunate...
We are were we are because the govt sucks. All govt sucks, but lately they are weak
Thanks bro I’m going to wait for these prices to drop like everyone else who is stockpiling cash 😂😂😂
And they'll call your notes faster than you can say my name's Dave Ramsey
What does that mean? They'll call your notes?
@@melissachartres3219 pay up now
Just for fun, call up to the Ramsey Show and ask good ol' Dave what he thinks of this strategy. 😂
This is how you start a real-estate bubble
And bubbles inevitably burst.
Doesn't work when the property appreciates so much that rent doesn't even cover half of the monthly debt payment. All the best to find a 100k house and rent it for 1k dollars.
Yep, this algorithm isn't just giving me suggested videos based on the conversations I have. It's giving me suggestions for videos that were just thoughts. I'll be damned if I wasn't thinking about the debt structure on a deal yesterday and today. This is in my feed.
They've modeled your mind based on the inputs you've provided.
Refinancing is out of the window now what next?😂
Save cash for the next cycle or get into stocks that pay dividends.
That was the most confusing “visual”. It was pretty much memorizing numbers in my head while you played with cash
Why do you say that I work in mortgages do you need a second look
@@Chris_da_rulerwhat's the rate for a 30 year fixed mortgage now?
@@GBXS 7%
Thanks bro!
It's better to pay off the property and stop paying interest to the bank.
Right? Like either pay in full or just put down SOME cash then get ANOTHER mortgage for DIFFERENT property (for income) while keeping some cash flow reserves. F'ing refinance to avoid taxes... 😂😂😂
This is the last thing I’d expect to see from Mikey Taylor… wild
Right I had to do a double take!
I love how he just pulls a random # out of his ass "it's going to be worth $140k"
It is an example of how the system works 🙄
Worth $140k one year... Refi. Then a few years later it's worth $90k...
The only true prediction of how a market will be in the future: It might go up... Or it might go down!
Look at the housing market from 2019-2022
This dude is a professional skate boarder lol 😆
@@OldsmobileCutlass1969Va maybe in the short term but in an economy like America’s and for homes that are held 10-20 years, its safe to assume its going to go up
Debt also brings risk. Understanding the risks makes you Warren Buffett. Like all things in life, debt has its good sides and bad ones.
In the UK the 300 is taxable income as is the 30k if not reinvested elsewhere otherwise that’s also treated as income.
Same in the us. The 30 grand is taxable. am I wrong? Or is that considered a loan?
So you put in 20k to borrow 80k (total 100k)
You refinance now to borrow 110k (total 110k)
The only money you gained was the cash flow which you now lowered from 300 to 200 a month.
All you did was borrow an additional 30k and then take it out which you now have to payback anyways. (Your original 20k invested with an additional 10k)
Yea in a perfect world this might work but we definitely dont live in a perfect world. Bad tenants, not being able to evict, they tear up the place. Court fees and remodeling etc. My parents went through this renting out a home and had to track the people down because they moved out of state trying to disappear. My parents never rented anyone else after the ordeal and lost valuable time and money from all of it, not to mention the headache.
To dumb it down
He waits for the home to appreciate, then he refinances with a higher loan amount and keeps the difference as his amount owed (the amount he bought it for) stayed the same.
This inturn makes your monthly income potentially go down as you begin to start paying a lot of intrest as you start paying most of your intrest in the beginning on the loan but you can keep the diffrence which in this case is 30k (as loan = debt the 30k extra in his loan will not be taxed)
All in all his expenses don't change much and he gets a load of cash.
Rogue tenants have entered the chat
When he says debt is free, he means that the tenant is paying your debt, because that debt that you made still comes with an interest rate it's just that the tenant pays it to an asset, which some calls a liability, which increases in equity with time
It’s called…
The debt slave trap
exactly , i think the usa have made debt untaxable only for this example. on paper ur winning but reality as u said it
No, because you have a 140k asset that you can sell at any time to pay off the 110k loan
@@minesadab not if you haven’t paid off the mortgage yet, then you just get back what you put in minus the interest on the mortgage, minus all the fees you paid in utilities, property insurance, property tax, broker fees, real estate agent commissions, etc. , and then you pay craaazy capital gains tax on whatever profit you made on the appreciation of your property, which quickly erodes the profits you just made. Better to own the asset for longer periods for this reason as it appreciates more (hopefully, but not necessarily depending on the location, market etc.), but there are always capital intensive hidden costs
@@lnguage8010 point is that you're not a victim - you're not trapped. It's the tenant that's the victim, trapped paying off your mortgage with no money left to get started for themselves.
Yes the way to play the system for your own benefit is to never sell, just keep remortgaging as the house prices go up and spend the difference tax free
If this was your main home then yes it's a debt slave trap, but if it's an asset earning you enough to cover the interest AND still leave you with positive cashflow then it's not a trap.
Respect Mikey!! Been a big fan since I was a kid man nice to see something like this
When he said “borrow more” every red flag in my head 😬
All from Money 💰 that just magically appeared out of nowhere 👍🏻
It all comes down the ROCE. Here in the uk any such income is subject to tax up to a point. Property prices have stalled and are currently over valued and interest rates are high.
For some reason this dude wonders why the bank is willing to off load the risk onto him.
You've recouped your initial $20k down-payment and made $10k tax free dollars from the refi. The $200/month cashflow is taxable but you should have enough depreciation and expense write-offs on that Asset that you won't owe any taxes on that positive cashflow. So You've made $10k lump sum and $2400 each year tax free. $2400 doesn't sound like much but multiplication is the key. The problem is, you need many of these assets to make a significant impact on your household financial needs. The more houses you have the more potential problems you'll have (unless you have an awesome property management company)
MDD Asset Management, Decatur, GA
2 questions if its possible for you to answer
can you please explain to me how in the hell is he getting a tenant to pay $1000 when the tenant can himself get a mortgage and pay 400 to the bank for the same property... ( i do understand the rest of the process)
and if the above is possible how is it happening... like i read comments where people saying they pay off 2 mortgage from 1 tenant...
Aww yes the guaranteed appreciation mortgage. I only get those mortgages when my daddy gives me a small loan of one million dollars as well. We should all learn from this clearly financial connoisseur.
Debt is taxed in the UK on landlords, not directly but you have to pay tax on your profits from rent before you pay the mortgage. Unless your a limited company
This is how greed works and this is why we are into a housing crisis
Exactly avoid taxes but pay monthly interest for borrowing against your equity 🙄
Then you get over leveraged and then broke and become the renter while working at McDonald's and seeing your kids on weekends and holidays.
Dont one have to pay Interest on debts? So you are saying interest to be paid on debts are lower than taxes charged on the same sum of money? Sorry I am confused just need a little more clarification
Borrow $80k
Borrow $130k
Borrow $350k
Borrow $700k
Borrow $950k
Borrow $2M
Borrow $10M
Borrow $50M
Borrow $400M
Borrow $1B
Borrow $15B
I like this game
This only works if everything goes perfect. It’s really not that simple however he’s right for the most part. Robert kiyosaki lives by this. He always brags about not paying taxes. Also you might want to bring up that fact if you sell the house (which is the assets your referring to) that if it’s over a certain amount you will pay taxes on it. Only works
If you never sell the house/ property and hold it until you die.
Also this is crazy watching Mikey Taylor talk about finances.
He forgot the part where the renter was a dead beat
The problem is that the rent is not higher than the EMI. Say if I take 3 Million loan, I would have to pay 30K to bank each month. Property rent would only come 10K per month..
You can't do this in the UK because if you hold property in your own name you are taxed on the gross rent, you cannot deduct mortgage interest as an expense. If you hold in a company you can borrow on the asset, but you will be taxed on anything you take out of the company.
that $300 cash flow is taxed.
After you take a 20% tax discount on passive income, depreciate the property and write off your interest to the bank it’s taxed at a fraction of what you would pay on $300 earned from a job.
@@miracleman75just curious, how can u depreciate a property if you go to a bank and say your property has appreciated and needs a refinance?
@@dluoultra9633 that’s the wear and tear of the building you are depreciating for tax purposes. You can itemize as you go along like carpet and cabinets etc. over shorter periods of time or use the irs standards for wear and tear on a building which works out to about 3.6% residential and 2.5% commercial of the building. You can’t depreciate the land.
@@dluoultra9633 all rentals allow depreciation if u use it or not
@@dluoultra9633 ok, sonthis is actually a tax law, and an important concept to learn.
You should actually look it up a bit, but long story short you get (30)? Years to depreciate a house.
It is said to have 30 years of value to a business.
So when you buy it, you take the value that is depreciable (value of home - value of land without home) and divide it by 30?
(I think it's 30)
And you can deduct that amount every year on your taxes.
Here's the thing.
You can very well make a profit, and make it look like you're taking a loss. Pay 0 or negligible taxes, and still profit.
There are some more real estate hacks too. And real estate is the best vehicle go carry money through inflation too.
That's why Bill gates bought millions.
Real estate gains value when inflation does.
That's why everyone bought real estate at high rates during covid.
And right now there is lull in housing, great time to buy if you have money.
Inflation doesn't stop, houses will catch up.
Of you can't afford real estate investing, check out fundrise.
Except in the UK for sole trader landlords where the UK government will tax you on the interest you *paid* to the bank.
They don't describe it that way of course, they just say finance costs are not tax deductable.
Don't buy real estate in 2023. Massive price drops all over the states due to a surplus in the supply, high interest rates, and inflation.
Smart people were saying this since mid-2020. We're going to see 50% drops from the 2021-2022 highs. Back to 2017 levels.
Debt is not "taxed" in the literal sense but it is taxed in the form of interest. Over 30 years you typically pay triple sticker price, its probably cheaper to pay taxes.
Interest is a tax write off. You dont know what youre talking about, stop acting like you do and learn.
Do NOT go into debt to make money. Work well, save well, invest well 👍
Do this if you want to be a slave to your boss and to fear
DO GO INTO DEBT BUT GO INTO GOOD DEBT LIKE THIS VIDEO :D
People tried that with houses in 2009 and present. Won't work if home prices take a dive.
I have no clue wtf he just said...
His numbers don't match up
Neither does anyone else.
DEBT IS TAXED. Every dollar is in fact a debt note and every debt note that you acquire is considered taxable income.
Debt needs to be handled very very carefully. That's why most people following this stupid advise will fail
Government steps in says you can't evict tenants during a pandemic and you end up having a damage property and no cash flow for 2 years.
That's no problem, just borrow more money!
Then your tenet stops paying and you loose your job.
That’s why you have emergency fund. Hopefully 1-2 years worth of payment.
Never go out on the streets you may get hit by a bus ? 🤷♂️
Life is about taking risk to improve or grow financially.
Emergency fund and a high demand occupational skill is a good safety net. Some will say "ohHH not everyone has that" ... well, then you shouldn't be a real estate investor if you don't have the foundation. Tell me how you afford to even leave your house? What if a car runs off the road and hits you??
They’re called tenants not tenets. Or call them renters.
Interest is a tax, the assets takes your time, a tax. Go back to finance class
Yep. He’s just an online con
No. Government in Canada is starting to crack down on house flips and income properties. That money is taxable now.
Reminds me of algebra . It looks good on pa😊Er until you are left in more dept and Tennant that are sponging off your asset because they feel entitled and the law enables their poor choice.
Ambiguous explanation with arbitrary results!
That does not work in most Europe. Loans are not eligible expenses, the amount you borrowed goes to linear depreciation over 20-50 years and you can do that only as a company, not as an individual
I kind of understand but can we get a part two of this video?
This is very specific for the country you are in and probably also what state or region of that country.
My simple question is if income gets taxed then why is there no such rule for expenses..why do all the mandatory expenses of any individuals like food, electricity, cooking gas, property tax, water tax, clothes & others..gets deducted before calculating his income..??
As a financial advisor: "do not do this unless you fully understand the meaning of "leverage"
It only works if the % return you make on your investment is higher than the expenses for finance it