Ever wondered how so many people seem to avoid paying taxes…legally, of course, when investing in real estate? Want to know how YOU can avoid paying taxes, legally? Here’s how - enjoy! Add me on Snapchat/Instagram: GPStephan
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Number 1: The first is that pretty much anything in real estate that relates to your business is a write off against your income. Just about anything you related to the income you make on a rental property is a BUSINESS expense, and that’s subtracted from your total income - and you pay less taxes.
Number 2: Depreciation. This is probably THE best write off in real estate. This is often how people can make thousands of dollars in profit every month, but on PAPER, they’re claiming they LOST money. In some circumstances you can even use this loss to offset other income you made!
Number 3: This is probably the most well known, and probably one of the coolest write offs in real estate… but for those who aren’t familiar with it, this is the 1031 Exchange. One of the benefits of investing in real estate is that you can INDEFINITELY defer paying taxes when you sell a property, and “exchange” it for another property to avoid paying tax on your profit.
Number Four: This would apply to most of you watching, especially if you own your own home, is the capital Gains exclusion. This capital gains exclusion means that you can make $250,000 TAX FREE PROFIT if you’re single, and $500,000 TAX FREE PROFIT if you’re married when you own a primary residence and have lived there for 2 of the last 5 years.
Number 5: There’s no tax on appreciation until you sell. This is similar to owning a stock that goes up in value, you don’t pay taxes on that stock until you actually sell…until then, any profit you’ve made is called an “unrealized gain.” Same thing in real estate. If the property goes up in value 5% annually, your net worth goes up without you owning a dime in taxes.
Number 6: The cash-out refinance and HELOC, which stands for Home Equity Line Of Credit. The benefit of this is that you get access to your money, totally tax free, without technically “making” money. In the eyes of the IRS, you don’t pay tax until you actually sell…and because you don’t sell, you don’t owe any tax. Same principle applies to a HELOC. All of the money you pull out is tax-free since technically it’s a loan and you need to pay it back.
Number 7: Rental income doesn’t pay self employment taxes, which consists of social security and medicare taxes. This means that rental income, right off the top, is taxed 6.2% LESS than that same income you’d make from you job - or 15.3% less if you’re self employed, not even including all the deductions, tax write offs, depreciation…so you can see, real estate is a good way to make some money 😉
Number 8: Mortgage interest deduction. Now this is a great one that not only applies to rental properties, where you simply just use that as an expense against rental income, but this also applies to your personal residence. The IRS says that you can deduct the interest you pay on up to $750,000 of your mortgage against your earned income, lowering the amount of taxes you’d owe.
Finally…number 9…the holy grail for real estate people…is the title called “Real Estate Professional.” Becoming a “real estate professional” opens up a lot of advantages. The biggest advantage of being a real estate professional is that you can use your PAPER LOSSES to OFFSET other earned income!
Remember: this is not financial advice, and CONSULT A CPA for any of your specific tax questions. Everyone is different and it’s important to hire someone for your own specific tax advice and needs.
For business inquiries or paid one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at GrahamStephanBusiness @gmail.com
Suggested reading:
The Millionaire Real Estate Agent: http://goo.gl/TPTSVC
Your money or your life: https://goo.gl/fmlaJR
The Millionaire Real Estate Investor: https://goo.gl/sV9xtl
How to Win Friends and Influence People: https://goo.gl/1f3Meq
Think and grow rich: https://goo.gl/SSKlyu
Awaken the giant within: https://goo.gl/niIAEI
The Book on Rental Property Investing: https://goo.gl/qtJqFq
Favorite Credit Cards:
Chase Sapphire Reserve - https://goo.gl/sT68EC
American Express Platinum - https://goo.gl/C9n4e3

By Stock Chat

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27 thoughts on “Real estate revealed: how to avoid paying taxes… legally, of course”
  1. Avataaar/Circle Created with python_avatars Tyson says:

    We have fk all in Australia to reduce our tax other then CGT

  2. Avataaar/Circle Created with python_avatars Lukamagic says:

    Can you still take advantage of appreciation (HELOC etc.) on your property if you depreciate it on paper? If so, how does that affect the amount you can potentially pull out?

  3. Avataaar/Circle Created with python_avatars Ahmet Turker says:

    so what s the limit on Depreciation?

  4. Avataaar/Circle Created with python_avatars SomeReturn says:

    Does the tax benefit of being a real estate professional apply to mortgage brokers as well as real estate agents?

  5. Avataaar/Circle Created with python_avatars Dylan Graf says:

    Your evil.

  6. Avataaar/Circle Created with python_avatars Hiroko MLM says:

    Wait, so if I have a $2 million property I can write off 55k depreciation every year?

  7. Avataaar/Circle Created with python_avatars SIZZ604 says:

    U obviously have to pay interest on th HELOC this right?

  8. Avataaar/Circle Created with python_avatars MOON LIGHT says:

    I think that I'm gonna need some money LEGALLY OF COURSE!

  9. Avataaar/Circle Created with python_avatars Daniel Pavia says:

    And can u avoid paying property taxes legally but don't make a lot of money yes or no

  10. Avataaar/Circle Created with python_avatars Daniel Pavia says:

    Is it possible to avoid paying property taxes legally in new York city yes or no

  11. Avataaar/Circle Created with python_avatars Mojtaba says:

    Great! First time, I got what exactly is depreciation.
    Thanks for the video👍👍

  12. Avataaar/Circle Created with python_avatars Justin Isa says:

    😂😂. I love it when you talk about getting ready to read the comments.

  13. Avataaar/Circle Created with python_avatars Win Pierce says:

    Your best video

  14. Avataaar/Circle Created with python_avatars Ragnar7034 says:

    Graham is teaching us how to launder money by “mowing lawns” in this video.😂

  15. Avataaar/Circle Created with python_avatars Kane Walker says:

    How can I hired u to b my coach

  16. Avataaar/Circle Created with python_avatars Jeff Scalfano says:

    Comment

  17. Avataaar/Circle Created with python_avatars brian consylman says:

    Random question… first year renting out a home- can I still have the standard deduction as well as the rental write offs or if my write offs are less do I only get standard

  18. Avataaar/Circle Created with python_avatars Moises Cisneros says:

    That sounds good but passive income sounds better for a long term investment and by getting rental income you can then get more rental properties with rental income⁉️😢

  19. Avataaar/Circle Created with python_avatars JD says:

    Depreciation doesn’t avoid taxes. It just pushes them off until you sell (and perhaps puts the gain on the sale into a different tax category). Still super valuable—it just doesn’t actually eliminate the tax.

  20. Avataaar/Circle Created with python_avatars Robert says:

    Your brilliant, thank you for the info

  21. Avataaar/Circle Created with python_avatars Brian David says:

    Hey, for non real estate people, is that 25k write off for other earned income for an individual or filing jointly can we do 50k? OR is this just per LLC / Corp? You also said for when you make under 100k, what if you make 200k, can you not write off anything? Again, same question, of I file jointly with my wife, is that under 200k? Thanks

  22. Avataaar/Circle Created with python_avatars josh nieboer says:

    5his isnbullshit no one sets us up in life i went to school for 14 years never herd a word of this!

  23. Avataaar/Circle Created with python_avatars Personal and Investment 1 says:

    Do you need to two LLC for this set up?

  24. Avataaar/Circle Created with python_avatars Sensible Mind says:

    Graham you should do the whole video in your sinister voice

  25. Avataaar/Circle Created with python_avatars clayton bartels says:

    This guy is such a slumlord never worked hard a day in his life

  26. Avataaar/Circle Created with python_avatars Anto says:

    I am originally from Chile, looking to buy some properties in the USA. Thank you so much for your videos, they have such valuable information. Especially making all the processes legal. THANK YOU!

  27. Avataaar/Circle Created with python_avatars Real Estate Photography Master Class says:

    I actually did a coaching call with Graham last Friday. Easily the best money I have spent all year. I estimate his $200 phone call saved me at least $96,000 on a deal I am making and I still had time at the end to ask him questions for fun.

    10/10 would recommend.

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