The United States Government has actually been PAYING ANY AMERICAN savvy enough to be paying attention…to buy INVESTMENT REAL ESTATE! And how does the government “PAY” any American? Through current REAL ESTATE INVESTMENT TAX POLICIES!
Let me ask you a simple question. How would you like to walk out to your mailbox on the 1st of every month, and PICK UP A CHECK from your tenant that rents your investment property….DEPOSIT IT into your bank account… and NOT PAY TAXES on it? How would that MAKE YOU FEEL? How would that CHANGE YOUR LIFE? THAT, my friends, is WHAT YOUR LIFE WILL BEGIN TO LOOK LIKE when you start to INVEST IN REAL ESTATE!
How can this be…you say? Because the US Government is practically PAYING YOU to buy investment real estate through the current tax code!
Here’s how it works. It’s all about what we call the “Two T’s.” “Type” of income and “Timing”. WHEN you RECEIVE the income determines WHEN it is taxed.
Unfortunately, for the vast majority of Americans, the only “type” of income they receive is EARNED INCOME. This type of income is taxed IMMEDIATELY. Every dollar earned, is taxed, WHEN earned, and the tax dollars are deducted from paychecks. This tax money, deducted from paychecks…IS NEVER POSESSED, for even a second, let alone used or spent for other purposes. These earnings are taxed at the taxpayers specific tax brackets… typically 10% - 39.6%, and TAXED IMMEDIATELY!
The other type of income is PASSIVE INCOME… derived from investments in Stocks, Bonds, Real Estate and other “longer term” (more than a year) investments. The incomes from these types of investments are typically subject to Capital Gains Tax ranging from 0% - 20%, depending on the taxpayers tax bracket.
Here’s THE BIG DIFFERENCE between the two types of income and why it’s DAMN NEAR IMPOSSIBLE TO BUILD WEALTH WITH EARNED INCOME as opposed to the TAX ADVANTAGES OF PASSIVE INCOME:
THE IRS TAXES YOUR EARNED INCOME DOLLAR FOR DOLLAR, IMMEDIATELY.
The IRS DOESN’T TAX YOUR RENTAL INCOME DOLLAR FOR DOLLAR…THEY TAX YOUR PROFIT AFTER DEDUCTIONS, AND NOT UNTIL THE NEXT YEAR!
WHEN YOU SELL YOUR RENTAL PROPERTY…YOU CAN DEFER THE CAPITAL GAINS TAX… UNTIL YOU DIE! (UNLIKE STOCKS AND BONDS!!)
IS THIS A GREAT COUNTRY……OR WHAT!?
Let us explain how this type of TAX TREATMENT OF PASSIVE INCOME through owning Real Estate benefits YOU!
RENTAL PROFITS are taxed AFTER DEDUCTIONS that the property owner is entitled to take under the current tax code. The deductions include, but are not limited to the following:
Interest on Mortgage Loan Liability Insurance Travel Expenses to/from Property HOA Fees Landscaping Repairs Depreciation Property Taxes
Here’s an example of how these TAX ADVANTAGES BENEFIT YOU in the real world:
You own a Condo in Las Vegas, and you walk to your mailbox in San Jose the 1st of every month to get a check for $900 from your tenant renting the Condo. There is no mortgage on the Condo. That check comes in EVERY MONTH for 12 months… and you cash it, and it is NOT TAXED IMMEDIATELY.
You can SPEND the money you receive, SAVE IT, or a combination of the two… and IT’S NOT TAXED!
On April 15th of the FOLLOWING YEAR, you deduct all your expenses incurred maintaining the Condo during the course of the previous year, from the total amount of rent you took in for the year… to arrive at your “PROFIT”.
Remember, the IRS ONLY TAXES THE PROFIT AFTER DEDUCTIONS. But because your total deductions and ONE OF THE MOST POWERFUL ADVANTAGES OF OWNING INVESTMENT REAL ESTATE………. DEPRECIATION,…you actually have a $1,500 LOSS “ON PAPER” FOR THE TAX YEAR!
So think about the concept of “timing”… You CASHED CHECKS EVERY MONTH FOR 12 MONTHS, AND THE MONEY WAS TAX FREE because, AFTER TAX BENEFITS,…..the IRS said you had a “LOSS”. This is the “magic” of PASSIVE INCOME!
If that $900 would have been EARNED INCOME, it would have been taxed DOLLAR FOR DOLLAR IMMEDIATELY. Even if there had been TAXES DUE on April 15th of the following year, you still just got the use of $900 a month for 15 months……TAX FREE!
And it gets better! DEPRECIATION TAX TREATMENT of Investment Real Estate is POWERFUL!! Unlike your principal residence, the IRS tax code says RENTAL PROPERTY “depreciates” every year you own it. They figure year by year that property slowly physically deteriorates, and gives you a “DEPRECIATION DEDUCTION” EVERY YEAR FOR 27.5 years! (Value of property at acquisition ÷ 27.5 years = yearly deduction). This depreciation deduction is deducted from any profit, and lowers or helps eliminate any taxable gain…..when in fact the property may be ACTUALLY APPRECIATING IN MARKET VALUE! Get it? The IRS TAX CODE says your property is DEPRECIATING and gives you a DEDUCTION TO OFFSET YOUR “LOSS”, when in fact the property is probably APPRECIATING IN VALUE! CAN’T get any better than this, right? WRONG! There’s more!
While you were picking up that TAX FREE MONEY at the mailbox every month…and if you paid attention to our company’s advice on this web site and invested in an “EMERGING MARKET” we identified for you… DURING THE CORRECT “MARKET CYCLE”… your rental is probably APPRECIATING!
Let’s say your condo appreciates $30,000 over 2 years. That “GAIN IN VALUE” (appreciation) “STAYS WITH THE PROPERTY”… the IRS can’t touch it… NOR TAX IT! The $30,000 appreciation, or termed “gain” by the IRS, can only be taxed WHEN THE PROPERTY IS SOLD!
Now remember when we said you could SELL YOUR RENTAL and NOT PAY ANY TAX ON THE GAIN IMMEDIATELY? Welcome to the world of one of the most POWERFUL WEALTH BUILDERS used by savvy Investment Real Estate Investors…..the “1031 TAX DEFERRED EXCHANGE”. You’re able to actually SELL your property…..but the proceeds are funneled through a neutral 3rd Party Intermediary (An Exchange Company) and used to purchase a replacement rental property. The beauty of this process is ALL OF YOUR GAIN CAN BE USED TO INCREASE YOUR PURCHASING POWER WHEN BUYING THE REPLACEMENT PROPERTY BECAUSE YOUR GAIN IS “TAX DEFERRED”…NO TAXES DUE WHEN YOU SELL/EXCHANGE TO THE REPLACEMENT PROPERTY IF EXECUTED CORRECTLY!
And if you have followed our recommendation on this web site, the REPLACEMENT PROPERTY will be in another EMERGING MARKET…in the right MARKET CYCLE… and you will RIDE THE APPRECIATION WAVE AGAIN, and simply repeat the process over and over again! Each time deferring the Capital Gains Taxes…until you die… and pass on, by now, your MASSIVE PROPERTY PORTFOLIO to your heirs!
And lastly… even if you DON’T SELL/EXCHANGE into an EMERGING MARKET… remember that $30,000 APPRECIATION in the condo? Your rental property can be used as a “BANK”.
That’s right! You can take a “CASH OUT REFINANCE,” pull money out…..and use the proceeds to buy more rental property (see “Property Pyramiding” on this web site), or take a LAVISH VACATION! And it gets better. The INTEREST YOU PAY ON THIS MONEY IS TAX DEDUCTIBLE…..with no limits on the amount you can deduct (as with your principal residence)!
If you walked into your local bank and applied for a personal loan…and asked if the interest is TAX DEDUCTIBLE…they would laugh you out of the place!
But when you own Investment Real Estate….
……you can go to your OWN “BANK” WHEN YOU NEED MONEY… and THE INTEREST IS TAX DEDUCTIBLE! God Bless America!
As you can plainly see at this point, when the power of PASSIVE INCOME is combined with APPRECIATION and the HUGELY FAVORABLE TAX TREATMENT of Investment Real Estate, THE “WEALTH EFFECT” IS STAGGERING!
ANY AMERICAN……savvy enough to take that first step and invest….can RIDE THE APPRECIATION WAVE TO FINANCIAL FREEDOM!
Knowing what you know now…..you have to ask yourself… “WHY”, with these MULTIPLE TAX ADVANTAGES OF OWNING INVESTMENT REAL ESTATE, do most Americans continue to invest in Stocks and Bonds? The answers are many……but most obviously……Wall Street and Main Stream Media have conditioned the American public through years of advertising… that WALL STREET IS THE ONLY PATH TO FINANCIAL FREEDOM!
So while savvy investors continue to reap the OBVIOUS TAX ADVANGES OF INVESTMENT REAL ESTATE AND MASSIVE WEALTH ACCUMULATION over time……most Americans are stuck with EARNED INCOME that is TAXED DOLLAR FOR DOLLAR, IMMEDIATELY…and CAN NEVER GET AHEAD!
We, as a company, perceive this as an INJUSTICE, and say as much throughout this Web Site. We, as a company, intend to have a role, albeit very small, in modifying this current paradigm, one investor at a time….
We, as a company, intend to HELP YOU move from THE PRISON OF EARNED INCOME to the FREEDOM OF PASSIVE INCOME!
Without the KNOWLEDGE OF MONEY…THE WORLD PUSHES YOU AROUND! We hope YOU’RE SICK AND TIRED OF GETTING PUSHED AROUND!
CALL US TODAY…AND LET’S ROLL!
INVESTMENT PROPERTY USA
“Live Anywhere – Invest Everywhere”
*Any reference to Tax or Tax Law, Procedures, or Outcomes, are intended as EXAMPLES ONLY. DO NOT make any decisions based upon the foregoing information. ALWAYS consult your Tax Advisor, CPA or Financial Advisor before making any decision related to Real Estate.