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.
Lots of LLC firms do not pay taxes. $1,000,000 yearly earned income earners are working for Uncle Sam . The best advice is to set up a loan company. Almost like a bank. Just being the middle man.
Bro you just unpacked all the things all the other “real estate professional you tubers” skirt around and don’t ever take the time to define. So much quality content here, thanks a million!
Well, I am a CPA, and that was a really good video. And there are other points for real estate investors too, but your coverage was excellent! A tiny nit, especially since your point was that real estate businesses are not subject to SE tax, but employees pay 7.65% for social security (6.2%) and Medicare tax (1.45%) with a wage cap for the soc sec portion, with these amounts matched by their employers. Self-employed people in businesses other than real estate pay the entire 15.3%, but also get an additional deduction equal to one-half the SE tax that reduced their taxable income.
YELLOW KING Yes, he mentions that rate in the video, and correctly points out that Tax is avoided, versus other self-employment activities, if your business is real estate
James Crenshaw Can you answer my question since you are a CPA about the Capital Gain Exclusion? Do you have to be married at the time of purchase to be able to use this? Or Can you purchase the home when your single then get married to gain 500k tax free instead of just 250k?
alex bob Yes, but both spouses have to have met the two-year out of 5 preceding years’ rule of the home having met the principal residence test. During the two years immediately preceding the sale you can’t have sold a different residence and claimed the same exclusion. But only one of the spouses is required to have owned the home for at least two years of the five years preceding the closing date of sale. So if you meet those requirements, and you and spouse file jointly in year of sale, you can claim the 500K exclusion even though you were single when you originally purchased the home
wow, you're dropping gold nuggets with 100 miles an hour there Graham... it's hard for me to keep up, I'd have to repeat watch and then take notes over and over, to fully grasp your gold.
LOL I am taking tax accounting this semester and one of the first things I learned was the difference between tax AVOIDANCE and tax EVASION. Its hilarious to me how many times you said "you can avoid paying taxes LEGALLY of course" in this video.
@@HomelessNoob34 _Tax avoidance_ by definition is legal; it just means you follow legal strategies to reduce your tax bill. _Tax evasion_ is the IRS term for not paying the tax you actually owe (starting with pretending/claiming you don’t owe it).
Thanks Dude. I'm coming out of severe financial turmoil. I will be debt free this year and will be able to safe 70% of my income, while living abroad in Medellin. 2019 is debt destruction, 2020 is investment accumulation, and 2021 is real estate and stock investment. Once again, thanks for the tenant website, I saved in my notes.
Know ThySelf Trying to compete in real estate without debt is impossible. You will get the worst deals and will not be able to move fast enough to close on decent properties because the big guys are leveraging debt.. 🤷♂️ Been doing this a long time. Just saying. Good luck though!
Some cons. 1) show loses on tax even paper- You never get loan on tax return 2) write off are not 1 to 1 They are 1 to .6 3) take loan on property and not use on property you are paying taxes on it. 4) deferring taxes not always a go idea. In 1979 income taxes were 70% -- The rest was right.
You can take a HELOC on your property and use it however you want, it's not taxes. You can buy a car and you will NEVER pay taxes on that income, it's borrowed money, not income.
i just bought my first rental house.. i m new to this.. i think i have to watch this video over and over again until i fully understand this This video contains tons of great info that no new real estate investors would know. Thanks graham for this video
Question Graham. The step 6 (HELOC). When you borrow money using HELOC, yes it is tax-free but aren't you paying for the interest? It is cheaper than paying tax but you have to replay the HELOC back to the bank. How is that considered as an income? Am I missing something? -_-a Thanks for the great videos.
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.
Remember that depreciation merely defers taxes. Once you inevitably sell the property outside of a §1031 Exchange, you will be subject to depreciation recapture to the extent the selling price exceeds the adjusted basis of the property. Thus, the appreciation of the property over the original basis is taxed at capital gains rates, but the difference between the original basis and adjusted basis is taxed at ordinary rates.
Graham, this is phenomenal. I am a real estate professional in Boston that just recently began my career. I am also looking to become an investor in real estate like yourself. This is invaluable information to me and many others like myself. Thanks and keep up the great work!
Say you bought a house for 100k. Then sell it for 200k, file a 1031 exchange and get a house for 500k. If the 500k house now sells for 600k, do you pay taxes on 100k (current house appreciation) or 200k (previous house and current house appreciation)?
Could you elaborate more on what it entitles to be a real estate professional to acquire the tax deduction? Does it only counts if you do things related to being a real estate agent? Or can your responsibilities related to the industry equates to most time spent while still being considered a real estate investor but not an agent.
Yet another excellent and informative video. Your channel is what fully developed my real estate interest (had some interest since I was 14, but around 17 I started watching your stuff and fell straight in love with it - Now almost 19 and learning about our market where I'm at). Always love the looks I get when adults ask me what I do in my free time and I respond with "Watch the stock market", "Check out new listings in the area", "Look into different investing strategies" etc. And the majority of it started with you, man. To tie it all up, I'll ask a question. Do you have a favorite website to look at listings on? I use Zillow for the most part, but don't care too much for some like Trulia. I'm sure you REAs have your super top secret websites, but you do you have a favorite public site? Thanks for yet another amazing upload. - A long time fan
I know this is late, but you should check out Redfin. Also, find a friendly realtor that will send you expired and withdrawn listing that only the MLS will have....Good luck!
This channel is excellent. I'm currently in the rat race in the aviation industry but have wanted to get into real estate for the last 2-3 years. I'm hoping to buy my first rental property next year and will definitely be doing your course to guide the way.
Hi Graham, Great advice on this video. Just wanted to point something out: Mortgage interest for your personal residence is only deductible on schedule A (itemized deductions). With the new tax law, a lot of people (myself included) have stopped itemizing and opting for the standard deduction of $24k. Rental real estate interest would still be deducted on Schedule E, I believe. Therefore, interest expense only helps you on rental real estate, and not on your personal residence, if you don't itemize.
Graham Stephan actually not to be a nit. But the 27.5 year clock starts when the property becomes a rental property. If you purchase the house with the express intent it is in fact the day of purchase. But say for instance you own a second home and you decide to start renting it a few years after purchase than it would be that date.
I think ONLY PORTION of your down payment invested toward to purchase the building can depreciates 27.5 yrs, NOT the whole purchasing total amount$. For example, you pay $200k for a 20% down payment on a $1M deal, the ACTUAL total amount of invested $ (out flow$) is about $200k + 6% or 3% R.E. commission/transaction fee+etc fees approx. (say) $210k can depreciate 27.5 yrs, NOT THE WHOLE $1M list price apply to 27.5 yrs. Also, the whole $1M deal would split up value of Land + value of Improvement and the IRS said only the Improvement part can be depreciated, LAND CANNOT be depreciated. So in this case, you avg annual depreciation is $210k/27.5 yrs =(+/-) $7.6k or about 3.6% of $210k (the TOTAL invested actual $ towards this $1M deal)! My tax prof said DO NOT confused by depreciate 27.5 yrs on $1M+6% commission+doc+etc fee! ... BTW, my buddy said "R.E./Rental Business(R.B) IS NOT VG, you get all laws AGAINST R.B you ESPECIALLY IN COMMUNIFORNIA (Dummiefornia) where they keep on making LAWS against Landlord (LL) such as 1) Rent Control (R.C) laws ensure LL forever cannot get rich from rental income b/c only 60% CPI/inflation pass to tenants, every yr loss 40% inflation, that's why my SF, CA tenants hate/blame LL said we're GREEDY LL, all the blame/hate/class war b/c Dems controls the media=keep on brainwash voters said rents are damned high b/c LL we're GREEDY=blame/sue them=class war=Karl Marx start a Revolution. Now u see Dem=the Progressive=Liberal=the Progressive=Commies=will punish success/rich/capitalist and help the poor/lazy/stupid/illegals/gay/weak/homeless/druggies (legalize weed)=we the legal hard workers tax payers foot the bills esp LL. IF 2018 PASS PROP. 10 then ALL CA RENTAL units will be subject to R.C. laws, the 3rd part of Prop 10 means the future TENANT WILL PAY THE SAME RENT FROM LAST tenants rent FOREVER even if the unit is vacated or EVICTED=that's HOW EVIL LIBERALS ARE. Look at the women in USA are NOT longer be kind/nice all b/c the Libs brainwashed women be FEMINIST to fight for EQUALITY/class war=almost get GOP Judge ruins life+career from 36 yrs bs story! We're capitalist LL, hate commies to come to USA but just find out USA Lib controlled CA is even more worst then communist China b/c at least China does NOT have R.C. laws:). 2) Eviction Control laws=I've to pay $11k to evict 2 bad tenants out who enjoy R.C. cheap rent for 17 yrs live in SF; another white grandma hits me 20x said "this is my white country, u go back to China", I turned the video to SF cops but white cops don't arrest white woman. She lives in SF 42 yrs enjoy rent from $2xx/mo to $3xx/mo due to R.C. laws keeps the stupid/lazy/poor/druggies/gay/immoral/illegals whiners afford to live in SF, without R.C., she cannot live in SF. I help her LL find loophole to evict her out, after fix it then rent it evict by wrong reasons. SF tenants know all rental laws are help them so they're cocky+mean+attack LL + city gives them FREE LEGAL advise. ALL R.C.+E.C. laws are AGAINST LL we the investor. Also 3) most other business takes 3, 5, 7, 10 yrs DEPRECIATION TO OFFSET income so pay LESS TAX legally, but R.E. takes 27.5 yrs deprecation=NO GOOD=offset LESS income means pay more tax! So above 1)-3) laws are AGAINST Rental Business and Libs keep on making more laws against LL we, sad:(. U know how CRAZY+HARD TO fight/evict a bad tenant? My tenants change gf 2x, when I evict them out, I don't know her name & she said "SF law said if tenants move in over 3+ months, LL automatically ACCEPTS this is a legal tenants - you don't know my name, my criminal background/income/etc that's your problem b/c it's over 3 months, LL r busy forget KEEP EYES on tenants bf/gf move in=your problem; here is my name" then I've to write her a $5xxx check w/o know her name/background/mental health/illegal or not/income level". My white friend hates CA then move to TX said pay 0% tax & LAUGH AT me said "welcome u still stay in the Dummifornia or Libtard or Communifornia=Communist CA, with all the laws setup to screw LL or capitalist or hunger for success u & me. I'm out of CA. I pay 0% tax=TX is good! And the FUN thing is TX EARNS LESS TAX FROM CITIZENS yet they BUILD MORE FREEWAY INFRASTRUCTURES - faster and better, once again proof GOP=CONSERVATIVES BELIEVE SMALL GOVT IS GOOD, while CA tax you more, encourage workers/illegals fight for MORE BENEFITS/UNIONS protests that's why SF-BAY-BRIDGES TAKES 24 YRS only FINISH HALF of the bridge. With UNIONS BENEFITS more important than the BUSINESS OWNER/CAPITALIST interest, you will NEVER FINISH any project FAST & on budget; look at CA Pension crisis will causes Vallejo, Stockton, San Bernadion/3-4 CA cities BK 2X, 3X until ppl fire the Libs out & hire GOP in charge. TX/FL pays 0% tax= is good! MOST ppl are NOT SMART ENOUGH TO KNOW HOW EVIL Dems are! They takes our $ to support gay, druggies, illegals, lazy, homeless, dumb, whiners and USA women become NO LONGER KIND/NICE/MARRY-material with FEMINIST value: USA has 75% of lawyers in the world, they keep on encourage ppl fight/sue/blame=divorce u takes 50% of men's work hard whole life for and pay ALIMONY UNTIL SHE DIE (men are the one who sacrifice do the dirty jobs like fix house, repair bridge, invent pc, cars, missle or even die on wars; if feminist want EQUALITY, why NOT encourage female fix cars/house/bridge/pc/fight war + RESPECT+LOVE your men b/c she slept with 20 bf means SHE IS NOT KIND to future husband, but u cannot talk honest like that, they will protest u or almost ruin Judge Brett's whole family's life+reputation=SUCH WOMEN ARE NO LONGER LOVABLE/MARRY-ABLE/Adorable"... My friend, pls only answer the 27.5 yrs deprecation that part, the rest is sharing my TX white friends story:)! We can only change CA by start changing how Libs make those R.C./E.C laws=evil to hard workers.
@@MichaelJohnson-xr4vg 1)HERE THE MATH IS *WRONG****! YOU STILL HAVE TO PAY TAX AFTER U DO DEEPER MATH b/c I was RICH/SMART/HONEST engineer and own SF libtard R.C./E.C. properties-it cost me over $11k to evict bad tenants, some landlord EVEN HAVE TO KILL TENANTS THEN COMMIT SUICIDE IN ORDER TO EVICT BAD TENANTS DUE TO ALL LAWS IN CA IS AGAINST LANDLORD (LL) so RENTAL BIZZ IS ONE OF THE WORST BUSINESS - as Rich Dad said ANY ONE TELL U BUY R.E. IS BEST ARE BANK/R.E. AGENT WHO WANTS TO EARN $COMMISSION or make more $ doing RUclips or sell their programs b/c R.E. IS SO EASY COMPARE TO ENGINEERING OR DESIGN CPU/ROBOT/ETC - it's the Libtards politicians/lawyers make those R.E. laws to complicate things! ...some landlord in SF has to pay tenants $400k or $1M to EVICT bad tenants, who said R.E. IS GOOD IT'S BECAUSE THEY BUY IN THE DEEP AFTER 2008 crashed and now R.E. GOES BACK so they profit big$ - but WATCH OUT, LET THE RICH, SMART, HONEST MILLIONAIRE ME OR MY BUDDY EDU U (MAYBE U SHOULD PAYPAY ME alawgd@**yahoo.com** (buy me coffee or lunch as Thand You LOL b/c ALL LAWS INCLUDE TAX LAWS ARE AGAINST LL=it takes 27.5 yrs to Depreciate R.E. but almost all OTHER BUSINESS TAKES 3-5-7-9 yrs to DEPRECITE=OFFSET INCOME MEANS PAY LESS TAX so even R.E. TAX LAW IS AGAINST LANDLORD U=take my advise u become rich+smart better than most GURU; even the king of R.E. is Trump but takes him DECADES TO BECOME $B RICH but invest in STOCK/other bizz takes FACEBOOK CEO only under 10 yrs to become 4x more RICH than TRUMP TAKES 40yrs to get rich=R.E. IS SLOW & all LAWS ARE *AGAINST* LL you! IF R.E IS SO GOOD, WHY APPLE/WALMART/MOST RETAIL STORES DON'T BUY THEIR RETAIL STORES BUT ONLY NNN RENT from investor like me/buddy?! R.E. IS WORST=all TAX CODES + R.C/E.C law says that!) TO MENTOR U edu u to change your life, way better than let those R.E. GURU BS sell programs to u LOL). I'm telling u what Rich Dad or my smart/rich/honest buddy or maybe u guys PAY ME TO mentor you b/c I"m a millionaire in SF - the true is RENTAL business IS 1 of the WORST business of all - WARREN BUFFETT don't spend $30B buy 30k building of $1M each then collect rents from 30k families with 30% are ILLEGALS, criminals, murder or turn your home into whorehouse, drug-house and face politicians + tenants Unions protests said GREEDY landlord causes poor tenants become homeless if lose jobs/senior=basic shelter is a basic human RIGHT=all news blame GREEDY landlord u, that's NO FUN to hire team of lawyers evict druggies/illegals/whorehouse and ONLY GET 10% or 7% cap rate return vs BUFFETT buys over $30B in APPLE/KO stocks earn 3.5% dividends then stock goes up 10x in last n yrs means now dividend is 3.5%*10=35% div EVRY YR=NO GREEDY LANDLORD PROTEST=NO CRAZY Rent Control(R.C)/Eviction Control(E.C) laws. AND PAY 15%-20% CAP GAIN. R.E. IS ALL ABOUT DEAL WITH PEOPLE, your apt is someones HOME, evict them force they CHANGE DMV, JOBS, welfare, ALL ADDRESSES, tenants love their home with tons of emotion living there, so sometimes they sue u or kill LL or eviction gone wrong kill tenants then commit suicide as an old NEWS=that's NO FUN than BUFFETT INVEST $30B DEAL WITH NO 30K FAMILIES with 30% druggies, illegals, gay or poor tenants share someone lose jobs, injured or govt shut down cannot pay rents with tons OF HEADACHE STORIES of LIFE IS A MISERABLE/crybabies; BUFFET EARNS 35% dividend rate when stock up 10x in n yrs=APPLE ALREADY UP 25% easily, pays LESS cap gain tax, TROUBLE FREE but sadly SCHOOLS DON'T TEACH EVERY KIDS HOW TO PICK STOCKS. ***R.E. IS *NOT ALWAYS GO UP FROM 2008-2019, those GURU buys at the BOTTOM now make big$ brag about how smart they're in R.E.=all bs! B/C LOOK AT JAPANESE ECON+R.E. DOES NOT GO UP 30 yrs=who tell u R.E. ALAWYS GO UP & R.E. IS GOOD are BS/lie! RENTAL BIZ=1 OF THE *WORST* BIZZ=U DEAL WITH MANY FAMILIES with their BASIC AFFORDABLE HOME AS BASIC HUMAN RIGHTS so they will PROTEST AGAINST U UP RENTS OR EVEN BRING IN POLITICIANS CHANGE LAWS HELP THEM B/C TENANTS ARE *OUTNUMBER* the few LANDLORDS we=so all laws will pass against LL! ... In fast detail without u pay me MENTOR u change your life, here is the fast math that GONE WRONG in his Video: 1) assume he buys $500k home earn 8%-10% cap rate, IF WITHOUT 10% CAP RATE THEN FORGET IT=BUFFETT BUYS COKE stock earn 3.5% div TROUBLE FREE if most guru asks u buy R.E. with 5% cap but borrow at 4.5% mortgage interest=that's MEANINGLESS IF CAP BELOW 8%, for me I want 10%, yrs ago I see 15% cap rate, JUST NOT IN CA. BUFFETT SAID WHEN EVRYBODY/GURU tells u GO BUY R.E., ITS PRICE GOES 2 HIGH=WE BE FEARFUL when guru/every one is stupidly believe R.E. IS GOOD=we run away from R.E. b/c all laws are against R.E.... anyway, assume u pay 100k down to buy $500k home, earns a 10% cap rate that INCLUDES ALL repair, prop tax, everything he listed in the VIDEO=500k*10%=50k/y NOI. Borrow $400k at 4.5% or 5% rate 30yrs. 2)SO mortgage interest is about -19k/YR offset; 3) but ONLY ABOUT 60% OF $500K home is IMPROVEMENT so $300k or in line with his video of $275k takes 27.5yrs Depr.=offset -$10k. Do the math, you still have to REPORT TAX ON NET INCOME adding 1)-3)=50k NOI - 19k - 10k=$21k/yr NET RENTAL income, then subtract other income/lose. SO THE TITLE IS WRONG, AT THE END YOU STILL HAVE TO PAY TAX ON $21K, probably 25% on $21k, WHO SAID PAYS NO TAX LEGALLY?! WHEN U HAVE SUPER BRAIN DO DETAIL MATH, THEN REALIZE ALMOST ALL RICH DAD or all R.E. guru said R.E. PAYS NO TAX LEGALLY are all b.s/lie - U REPORTS NO INCOME THEN U PAY $0 TAX, THE MORE REINVEST U EARN, THE MORE TAX U GETTA PAY; for that, sometimes PAY TAX IS GOOD B/C IT MEANS you earn $21k/home * 10home=$210k, such income reinvest as RICH DAD bs lie about buy more R..E pays no tax is lie= reinvest those $210k buy $1M home at the end U STILL HAVE TO PAY TAX b/c every reinvestment earns another 10% cap rate or more=more income means pays more tax, so smart buddy said IT'S OK TO PAY 25% TAX THEN KEEP 75% to self. UNLESS U R TOO RICH THEN HIRE YOUR RICH DADDY BILL GATES SR tax attorney to teach u put 90% of $ in his CHARITY to AVOID TAX LEGALLY and ONLY 15% Charity money MUST spend on real CHARITY work, leaving GATES reinvest 85% of his Charity $ to buy MANY STOCKS - you need to pay me to edu u to show u how the rich/smart/powerful (some or many are crooks/liar=Gates+Buffett SUPPORTS TAX THE RICH more but they themselves PUT 90% of their $ to Charity to avoid tax=they're hypocrites/Liberal Liars=want others pay more tax but they DO NOT!) hide their $ in cayman island or Charity then what stocks their HOLD using Charity $ and Google find out when Japan 3/11 biggest Quake or Haitidi Tsumani those worst diasters kill many, how much 10% of $30B or $80B of Gates Charity REALLY SPEND to help the poor?! MOSTLY ARE B.S. liars. OK, enough saying. I'm telling u MOST GURUS or rich are LIARS. For that time-consuming writing, maybe 1 day u can paypal me coffee/lunch for my effort shield a light/DIRECT u to change your life or becoming smarter/richer:). Good night:)!
Nice, the big picture gets even bigger. My buddy went over the depreciation and 1035 exchange with me a while back but now things are fitting together better. Thanks again, you are an awesome you tube personality and natural teacher.
Buy an expensive place, a sledgehammer, have appraisals every time you break something, repair, then break stuff again before the next appraisal, then that should do it LOL
I'm in a class where everyone is talking about what netflix shows they watch while i'm watching a dude in his garage teach me how to legally evade taxes. I'm in highschool btw
Jeff Wybo undoubtedly! Your videos are no less buddy and it connects even more with me since I will be starting as an agent in Ottawa soon so I get to know about the canadian market through your videos. Keep up the good work man!
Then report it. Do you know how to report it? You simply hit the three dots on the upper right hand corner of the video screen and you will see a drop down list one of them says REPORT and from that drop down screen you will tap infringement copyright infringement
2. House does depreciate, but likely slower than the figure from government (so it is still possible to lose money on that one) 6. Adds risk which can be larger than tax since market prices and rent fluctuate.
Any cash you collect from tenants, it for some reason never made it into an account. Especially if the tenant happens to move out later in that year. "Man a tough year, house just sat vacant, damn." Just kidding. If you got audited, they could just find out through utility bill records who lived there. Better off just doing what I do and just play by the rules. Plus you look better to the banks for future loans with a legit hefty income you can prove!
Holy shit so if I stay under $100,000 By doing a medical directive thing or deferred compensation I can stay below $100,000 and get thousands of dollars in tax benefits. By claiming depreciation and losses on my rental property Now I see how people are doing this I think I get it now Damn this video was fire SUBSCRIBEDDDDD
Some"half the picture" info going on here. For viewers, please learn the difference between passive and active income as the deductions from one cannot be used on another (IRS requires proof that you work around 40/week on the properties for active income status on rentals). Second, depreciation needs to be paid back when you sell the asset. Third, deductions are different for primary residences vs rental/investment properties. Fourth, rent prices are often similar to mortgage monthly payments, but maintenance and repair costs, as well as the time between renters is a huge expense unless you have many properties or another vocation to support these costs plus mortgage payments. This doesn't include other issues with non paying renters and litigation timelines. There are reasons for rental properties, and there are tax deductions to help grow competition which helps lower rental prices, but it's not as simple as presented here. I'll end by saying, if you become a landlord, please treat your tenants like how you would want to be treated. From - a property manager.
And taking a HELOC out to pay yourself is expensive. Its a 7% loan that you are making payments on monthly. Plus 2-5% closing costs by the way. Might as well just pay the 15% capital gains tax and have all your money now and get to keep it. Yeah, this video got a little bit real estate internet guru on us. Misleading.
@Kuuryo After 30 years you will have $300,000+ in equity on the rental. If you let it stay there in the house you will find that to be a terribly low ROI. You will make more if you take it out and put it to work.
Graham's angry faces are priceless. Most of all, this video was informative & it should serve as a foundation of getting your personal questions answered by qualified professionals who do this legally of course.
Albert Calderon probably need a good sit down with your CPA and be sure to give him/her every receipt and they can sift through them and tell you what is eligible.
This is awesome. I’m newer to REI (purchased my first duplex this month, first as well as flip project) Grants info lines up with everything my CPA, other investors, and mentors have been coaching me. As always, love the content. The #1 thing they told me to do to avoid paying taxes is tO SMASH THAT LIKE BUTTON
Yep! Absolutely will. That video will take me a little while to plan out, film, and edit since I'll be basically needing a weekend off to get that done. But it'll happen!
you just answered the question I've been searching for the whole day on the left over depreciation and how it works. Thank you so so much. Also, Im about to close on my first house hack for a $1.2M 4-plex in San Diego CA using the VA loan. It will cash flow AND I'm only putting 2.6k in closing costs.
Legally “Donald trump voice” as someone who studied accounting and worked as one there are ways to have 0 tax liability at the end of the year But people often look for Tex breaks when it’s time to file but they should begin the year with there tax bill in mind to make every transaction something you can translate into a write off, depreciation, or even a possible credit clause!
And certain deductions such as advertisement and research development expenses that has no cap on how much of your revenue can be dictated. These expense of reinvesting will grow your revenue potentially and as long as you place your revenue in non tax liable or tax deferred entities you can repeat this I know I was going to make it short but I feel I should add this Even if you have tax liability you can add tax credits to break even or even profit at the end of the tax year. Let me add if you have a stock portfolio close your red positions at the end of the year even if you’re going long and re buy them at the start of the next fiscal tax season so you can report a capital loss for the year on something you’re holding long term either way There’s a lot more but I already wrote a lot lol
Ice Ice this is A very loaded and complex thing to go in depth about. So here’s the summary. First step is the transition your income sources out of pre taxed category such as w-2 income. You have to know what tax entities can serve as a refugee as tax free and tax deferred storage sanctuaries. Such as certain kind of annuities, 401k Roth and use these entities for portfolio lending since you can hedge these assets to leverage the money of others to acquire more assets and repeat along with reporting a loss. But you cannot report a loss consistently or us accountants will get flagged saying our client may be audited to prove there business actually has the intention of being profitable So real estate is a good loss haven but business you can’t endlessly report a loss. You can store your money in high deductible insurance account Stock accounts and deferred income account but the goal is to leverage these account on your net worth to north money to increase overall revenue If you approach it with a revenue mindset instead of profit you can tailor your cash flow to avoid showing active profit but it’s a lot of work so I say paying low amount of taxes consistently is more reasonable than paying 0 taxes There’s a lot of information I can dump but this comment would be like a 10 page essay lmao Lost internet connection not sure this was sent
Hey Graham, you forgot #10. That is if you are retired on Social security you need to make sure your rental income is passive income, not a real estate professional so your SS will not be reduced.
These are the types of videos that should get millions of hits on the internet instead of some stupid rap video. Thanks for the extremely valuable information Graham.
ohhh ok, let me know if you'd ever be willing to do a collaboration with me or do some kind of shoutout exchange. This is by far the best real estate channel on youtube! Keep up the great work man!
@@TheShortKing835 Finance Fantasy Don't think he's going to take on someone with 1) 35 subs or 2) videos telling you how to get free stuff from websites and eBay that are "totally legit"
this is good info .. the only issue , which I am trying to resolve, is when I lower my taxes with the write off, it make my income low which makes it a little harder to qualify for a loan the next year on a house .. unless its an amazing deal,, like the one I close on Friday with 90k in equity ..
Very true and valid information in this video Graham. I weighed those options (1031) heavily before selling my last rental. Didn't want to live in it for 2 years before selling, didn't want to exchange for another toilet cleaning property. The last tenant couldn't afford the property (carry back/installment sale not an option). Opportunity zone??? Ultimately, ended up selling and will suck it up and pay the taxes, depreciation recapture. Not looking forward to filing taxes next year. Some people need to think about when they get into rentals, what is their exit strategy 10-20 years down the line. Thanks for the video.
Talk to a CPA and see if you can set up an entity to be taxed as an S-corp. Then the entity will pay you wages, which have income taxes and fica taxes, but you will also receive the profits from the entity as income. The profit income does not have fica, or self-employment taxes which are at the rate of 15.3% starting from $1 of earned income (wage income). Paying self-employment taxes also gives you a tax deduction against your gross income of 7.65%, so the effect self-employment tax is a bit less than 15.3%. The social security part of the SE tax also stops at around 108k of wage income, so the rate actually stops. This is all rather complicated, and you have to be sure the S-corp you create pays you a fair wage or else the IRS will sue you for the SE taxes you avoided.
*You DO have to pay back the "depreciation" if you sell the property and the value of the building do not depreciate so there is no point of being happy of not paying that 5,000 $ coz the taxes are not deleted but deferred*
Really good content, worth every second of it. Thank u man for break it all down for us to understand it. Now i've homework to do ''legally of course''
If your property is paid off in the S-Corp, then buying money via a HELOC is quite stupid. Better to find another way to avoid taxes and keep 100% equity than add an extra interest expense to the income statement.
Technically, but consider this: you've shoes, motor neurons and are technically a self-propelled motor vehicle. You breathe in air of varying quality for free, eat food that isn't usually taxed, drink water that is usually taxed and your body emits CO2 and other gasses, which could subject you to a tax if your emissions exceed maximum. Not sure why food isn't subject to fuel tax, even when people tend to walk/operate themselves on sidewalks. Just hope IRS never does anything THAT absurd...
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!
The government wants to give the real estate pros more benefits through taxes since the investors have the money to make the neighborhoods look better.
For step 7 when he discusses taxes paid for social security and Medicare the total is exactly half and not 6.2%. 6.2% is typically the employee contribution for social security and 1.45% is taken as employee contribution for Medicare. Typically an employer has to pay and match those percentages for s.s and medicare. Then if self employed since there is technically nobody to match your contribution you have to pay the whole 15.3% total that is typically split between employee and employer.
![Quando Rondo - Grow Up [Official Music Video]](http://i.ytimg.com/vi/8zFnCg3BO4Q/mqdefault.jpg)
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.
Thanks so much man!! For real, that means so much to hear...please keep me posted on everything!!
By the way, start posting those RUclips videos...just subscribed, so now I'm expecting some cool camera/photography tips! lol
Your first subscriber had an almost 200k sub channel Wow ;) .
Welp, guess I have no choice now! Thanks for the add!
Lots of LLC firms do not pay taxes. $1,000,000 yearly earned income earners are working for Uncle Sam . The best advice is to set up a loan company. Almost like a bank. Just being the middle man.
Bro you just unpacked all the things all the other “real estate professional you tubers” skirt around and don’t ever take the time to define. So much quality content here, thanks a million!
Well, I am a CPA, and that was a really good video. And there are other points for real estate investors too, but your coverage was excellent! A tiny nit, especially since your point was that real estate businesses are not subject to SE tax, but employees pay 7.65% for social security (6.2%) and Medicare tax (1.45%) with a wage cap for the soc sec portion, with these amounts matched by their employers. Self-employed people in businesses other than real estate pay the entire 15.3%, but also get an additional deduction equal to one-half the SE tax that reduced their taxable income.
James Crenshaw 15.3%???!!
YELLOW KING Yes, he mentions that rate in the video, and correctly points out that Tax is avoided, versus other self-employment activities, if your business is real estate
James Crenshaw Can you answer my question since you are a CPA about the Capital Gain Exclusion?
Do you have to be married at the time of purchase to be able to use this?
Or
Can you purchase the home when your single then get married to gain 500k tax free instead of just 250k?
alex bob Yes, but both spouses have to have met the two-year out of 5 preceding years’ rule of the home having met the principal residence test. During the two years immediately preceding the sale you can’t have sold a different residence and claimed the same exclusion. But only one of the spouses is required to have owned the home for at least two years of the five years preceding the closing date of sale. So if you meet those requirements, and you and spouse file jointly in year of sale, you can claim the 500K exclusion even though you were single when you originally purchased the home
James Crenshaw Thank you ! Much appreciated brother !
The 1031 exchange 😍😍😍 I'm finally beginning to understand how upscaling is profitable, versus just getting lost in a sea of accumulated liability
When you learn, teach. When you get, give.
Mabey
wow, you're dropping gold nuggets with 100 miles an hour there Graham... it's hard for me to keep up, I'd have to repeat watch and then take notes over and over, to fully grasp your gold.
thanks so much for watching!!
LOL I am taking tax accounting this semester and one of the first things I learned was the difference between tax AVOIDANCE and tax EVASION. Its hilarious to me how many times you said "you can avoid paying taxes LEGALLY of course" in this video.
Can elaborate?
@@HomelessNoob34 _Tax avoidance_ by definition is legal; it just means you follow legal strategies to reduce your tax bill. _Tax evasion_ is the IRS term for not paying the tax you actually owe (starting with pretending/claiming you don’t owe it).
Thanks Dude. I'm coming out of severe financial turmoil. I will be debt free this year and will be able to safe 70% of my income, while living abroad in Medellin. 2019 is debt destruction, 2020 is investment accumulation, and 2021 is real estate and stock investment. Once again, thanks for the tenant website, I saved in my notes.
Know ThySelf Trying to compete in real estate without debt is impossible. You will get the worst deals and will not be able to move fast enough to close on decent properties because the big guys are leveraging debt.. 🤷♂️ Been doing this a long time. Just saying. Good luck though!
Waiting for the “IRS is auditing me” video lol just messin man great video as always. Learned a lot of new stuff!
;)
It says here you tried to deduct office coffees at a dollar each, but your video says you only pay 20 cents for them...
Studying for real estate exam while listening to Graham’s real estate videos. Multitasking at its finest.
Some cons.
1) show loses on tax even paper-
You never get loan on tax return
2) write off are not 1 to 1
They are 1 to .6
3) take loan on property and not use on property you are paying taxes on it.
4) deferring taxes not always a go idea. In 1979 income taxes were 70%
--
The rest was right.
You can take a HELOC on your property and use it however you want, it's not taxes. You can buy a car and you will NEVER pay taxes on that income, it's borrowed money, not income.
i just bought my first rental house.. i m new to this.. i think i have to watch this video over and over again until i fully understand this
This video contains tons of great info that no new real estate investors would know.
Thanks graham for this video
Question Graham. The step 6 (HELOC). When you borrow money using HELOC, yes it is tax-free but aren't you paying for the interest? It is cheaper than paying tax but you have to replay the HELOC back to the bank. How is that considered as an income? Am I missing something? -_-a
Thanks for the great videos.
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.
solid advice!
Thanks Nate!
very solid!!
Remember that depreciation merely defers taxes. Once you inevitably sell the property outside of a §1031 Exchange, you will be subject to depreciation recapture to the extent the selling price exceeds the adjusted basis of the property. Thus, the appreciation of the property over the original basis is taxed at capital gains rates, but the difference between the original basis and adjusted basis is taxed at ordinary rates.
Remember you have to have proof of all your expenses on paper.
Graham, this is phenomenal. I am a real estate professional in Boston that just recently began my career. I am also looking to become an investor in real estate like yourself. This is invaluable information to me and many others like myself. Thanks and keep up the great work!
thanks so much for watching, glad it's helpful!
Thanks for the professional financial advice brother. CPA consultations are too expensive
Thanks for watching!
Say you bought a house for 100k. Then sell it for 200k, file a 1031 exchange and get a house for 500k. If the 500k house now sells for 600k, do you pay taxes on 100k (current house appreciation) or 200k (previous house and current house appreciation)?
Could you elaborate more on what it entitles to be a real estate professional to acquire the tax deduction? Does it only counts if you do things related to being a real estate agent? Or can your responsibilities related to the industry equates to most time spent while still being considered a real estate investor but not an agent.
I'm reading that if you take advantage of being a real estate professional then you will be considered self-employed and have to report it as such.
Anything in real estate! You don’t need to be an agent (although it helps meet the 750 hours).
Damn...This dude just broke down the entire "game." Graham be droppin knowledge!!
This concept doesn't work in the UK. USA only I guess.
This video must have changed so many lives in the last 2 years. I am sad that i found it this late in the game! Thanks Graham!
Yet another excellent and informative video. Your channel is what fully developed my real estate interest (had some interest since I was 14, but around 17 I started watching your stuff and fell straight in love with it - Now almost 19 and learning about our market where I'm at). Always love the looks I get when adults ask me what I do in my free time and I respond with "Watch the stock market", "Check out new listings in the area", "Look into different investing strategies" etc. And the majority of it started with you, man. To tie it all up, I'll ask a question. Do you have a favorite website to look at listings on? I use Zillow for the most part, but don't care too much for some like Trulia. I'm sure you REAs have your super top secret websites, but you do you have a favorite public site? Thanks for yet another amazing upload.
- A long time fan
Realtor.com app is what I use for my personal searching! So much better than the mls.
@@GrahamStephan Thanks!
I know this is late, but you should check out Redfin. Also, find a friendly realtor that will send you expired and withdrawn listing that only the MLS will have....Good luck!
This channel is excellent. I'm currently in the rat race in the aviation industry but have wanted to get into real estate for the last 2-3 years. I'm hoping to buy my first rental property next year and will definitely be doing your course to guide the way.
Darn it, we came to see the which craft for avoiding taxes, still those tips are helpful (but for the next one please try the which thing!).
Witch*
Hi Graham,
Great advice on this video. Just wanted to point something out:
Mortgage interest for your personal residence is only deductible on schedule A (itemized deductions).
With the new tax law, a lot of people (myself included) have stopped itemizing and opting for the standard deduction of $24k.
Rental real estate interest would still be deducted on Schedule E, I believe.
Therefore, interest expense only helps you on rental real estate, and not on your personal residence, if you don't itemize.
Correct, that's why I mentioned if you itemize and take the real estate mortgage deduction!
Does the 27.5 years start when the property was constructed or when you purchased it?
Date of purchase!
Graham Stephan actually not to be a nit. But the 27.5 year clock starts when the property becomes a rental property. If you purchase the house with the express intent it is in fact the day of purchase. But say for instance you own a second home and you decide to start renting it a few years after purchase than it would be that date.
I think ONLY PORTION of your down payment invested toward to purchase the building can depreciates 27.5 yrs, NOT the whole purchasing total amount$. For example, you pay $200k for a 20% down payment on a $1M deal, the ACTUAL total amount of invested $ (out flow$) is about $200k + 6% or 3% R.E. commission/transaction fee+etc fees approx. (say) $210k can depreciate 27.5 yrs, NOT THE WHOLE $1M list price apply to 27.5 yrs. Also, the whole $1M deal would split up value of Land + value of Improvement and the IRS said only the Improvement part can be depreciated, LAND CANNOT be depreciated. So in this case, you avg annual depreciation is $210k/27.5 yrs =(+/-) $7.6k or about 3.6% of $210k (the TOTAL invested actual $ towards this $1M deal)! My tax prof said DO NOT confused by depreciate 27.5 yrs on $1M+6% commission+doc+etc fee!
...
BTW, my buddy said "R.E./Rental Business(R.B) IS NOT VG, you get all laws AGAINST R.B you ESPECIALLY IN COMMUNIFORNIA (Dummiefornia) where they keep on making LAWS against Landlord (LL) such as 1) Rent Control (R.C) laws ensure LL forever cannot get rich from rental income b/c only 60% CPI/inflation pass to tenants, every yr loss 40% inflation, that's why my SF, CA tenants hate/blame LL said we're GREEDY LL, all the blame/hate/class war b/c Dems controls the media=keep on brainwash voters said rents are damned high b/c LL we're GREEDY=blame/sue them=class war=Karl Marx start a Revolution. Now u see Dem=the Progressive=Liberal=the Progressive=Commies=will punish success/rich/capitalist and help the poor/lazy/stupid/illegals/gay/weak/homeless/druggies (legalize weed)=we the legal hard workers tax payers foot the bills esp LL. IF 2018 PASS PROP. 10 then ALL CA RENTAL units will be subject to R.C. laws, the 3rd part of Prop 10 means the future TENANT WILL PAY THE SAME RENT FROM LAST tenants rent FOREVER even if the unit is vacated or EVICTED=that's HOW EVIL LIBERALS ARE. Look at the women in USA are NOT longer be kind/nice all b/c the Libs brainwashed women be FEMINIST to fight for EQUALITY/class war=almost get GOP Judge ruins life+career from 36 yrs bs story! We're capitalist LL, hate commies to come to USA but just find out USA Lib controlled CA is even more worst then communist China b/c at least China does NOT have R.C. laws:). 2) Eviction Control laws=I've to pay $11k to evict 2 bad tenants out who enjoy R.C. cheap rent for 17 yrs live in SF; another white grandma hits me 20x said "this is my white country, u go back to China", I turned the video to SF cops but white cops don't arrest white woman. She lives in SF 42 yrs enjoy rent from $2xx/mo to $3xx/mo due to R.C. laws keeps the stupid/lazy/poor/druggies/gay/immoral/illegals whiners afford to live in SF, without R.C., she cannot live in SF. I help her LL find loophole to evict her out, after fix it then rent it evict by wrong reasons. SF tenants know all rental laws are help them so they're cocky+mean+attack LL + city gives them FREE LEGAL advise. ALL R.C.+E.C. laws are AGAINST LL we the investor. Also 3) most other business takes 3, 5, 7, 10 yrs DEPRECIATION TO OFFSET income so pay LESS TAX legally, but R.E. takes 27.5 yrs deprecation=NO GOOD=offset LESS income means pay more tax! So above 1)-3) laws are AGAINST Rental Business and Libs keep on making more laws against LL we, sad:(. U know how CRAZY+HARD TO fight/evict a bad tenant? My tenants change gf 2x, when I evict them out, I don't know her name & she said "SF law said if tenants move in over 3+ months, LL automatically ACCEPTS this is a legal tenants - you don't know my name, my criminal background/income/etc that's your problem b/c it's over 3 months, LL r busy forget KEEP EYES on tenants bf/gf move in=your problem; here is my name" then I've to write her a $5xxx check w/o know her name/background/mental health/illegal or not/income level". My white friend hates CA then move to TX said pay 0% tax & LAUGH AT me said "welcome u still stay in the Dummifornia or Libtard or Communifornia=Communist CA, with all the laws setup to screw LL or capitalist or hunger for success u & me. I'm out of CA. I pay 0% tax=TX is good! And the FUN thing is TX EARNS LESS TAX FROM CITIZENS yet they BUILD MORE FREEWAY INFRASTRUCTURES - faster and better, once again proof GOP=CONSERVATIVES BELIEVE SMALL GOVT IS GOOD, while CA tax you more, encourage workers/illegals fight for MORE BENEFITS/UNIONS protests that's why SF-BAY-BRIDGES TAKES 24 YRS only FINISH HALF of the bridge. With UNIONS BENEFITS more important than the BUSINESS OWNER/CAPITALIST interest, you will NEVER FINISH any project FAST & on budget; look at CA Pension crisis will causes Vallejo, Stockton, San Bernadion/3-4 CA cities BK 2X, 3X until ppl fire the Libs out & hire GOP in charge. TX/FL pays 0% tax= is good! MOST ppl are NOT SMART ENOUGH TO KNOW HOW EVIL Dems are! They takes our $ to support gay, druggies, illegals, lazy, homeless, dumb, whiners and USA women become NO LONGER KIND/NICE/MARRY-material with FEMINIST value: USA has 75% of lawyers in the world, they keep on encourage ppl fight/sue/blame=divorce u takes 50% of men's work hard whole life for and pay ALIMONY UNTIL SHE DIE (men are the one who sacrifice do the dirty jobs like fix house, repair bridge, invent pc, cars, missle or even die on wars; if feminist want EQUALITY, why NOT encourage female fix cars/house/bridge/pc/fight war + RESPECT+LOVE your men b/c she slept with 20 bf means SHE IS NOT KIND to future husband, but u cannot talk honest like that, they will protest u or almost ruin Judge Brett's whole family's life+reputation=SUCH WOMEN ARE NO LONGER LOVABLE/MARRY-ABLE/Adorable"... My friend, pls only answer the 27.5 yrs deprecation that part, the rest is sharing my TX white friends story:)! We can only change CA by start changing how Libs make those R.C./E.C laws=evil to hard workers.
@@alexl932 That is one long writing I though it was a book.
@@MichaelJohnson-xr4vg 1)HERE THE MATH IS *WRONG****! YOU STILL HAVE TO PAY TAX AFTER U DO DEEPER MATH b/c I was RICH/SMART/HONEST engineer and own SF libtard R.C./E.C. properties-it cost me over $11k to evict bad tenants, some landlord EVEN HAVE TO KILL TENANTS THEN COMMIT SUICIDE IN ORDER TO EVICT BAD TENANTS DUE TO ALL LAWS IN CA IS AGAINST LANDLORD (LL) so RENTAL BIZZ IS ONE OF THE WORST BUSINESS - as Rich Dad said ANY ONE TELL U BUY R.E. IS BEST ARE BANK/R.E. AGENT WHO WANTS TO EARN $COMMISSION or make more $ doing RUclips or sell their programs b/c R.E. IS SO EASY COMPARE TO ENGINEERING OR DESIGN CPU/ROBOT/ETC - it's the Libtards politicians/lawyers make those R.E. laws to complicate things! ...some landlord in SF has to pay tenants $400k or $1M to EVICT bad tenants, who said R.E. IS GOOD IT'S BECAUSE THEY BUY IN THE DEEP AFTER 2008 crashed and now R.E. GOES BACK so they profit big$ - but WATCH OUT, LET THE RICH, SMART, HONEST MILLIONAIRE ME OR MY BUDDY EDU U (MAYBE U SHOULD PAYPAY ME alawgd@**yahoo.com** (buy me coffee or lunch as Thand You LOL b/c ALL LAWS INCLUDE TAX LAWS ARE AGAINST LL=it takes 27.5 yrs to Depreciate R.E. but almost all OTHER BUSINESS TAKES 3-5-7-9 yrs to DEPRECITE=OFFSET INCOME MEANS PAY LESS TAX so even R.E. TAX LAW IS AGAINST LANDLORD U=take my advise u become rich+smart better than most GURU; even the king of R.E. is Trump but takes him DECADES TO BECOME $B RICH but invest in STOCK/other bizz takes FACEBOOK CEO only under 10 yrs to become 4x more RICH than TRUMP TAKES 40yrs to get rich=R.E. IS SLOW & all LAWS ARE *AGAINST* LL you! IF R.E IS SO GOOD, WHY APPLE/WALMART/MOST RETAIL STORES DON'T BUY THEIR RETAIL STORES BUT ONLY NNN RENT from investor like me/buddy?! R.E. IS WORST=all TAX CODES + R.C/E.C law says that!) TO MENTOR U edu u to change your life, way better than let those R.E. GURU BS sell programs to u LOL). I'm telling u what Rich Dad or my smart/rich/honest buddy or maybe u guys PAY ME TO mentor you b/c I"m a millionaire in SF - the true is RENTAL business IS 1 of the WORST business of all - WARREN BUFFETT don't spend $30B buy 30k building of $1M each then collect rents from 30k families with 30% are ILLEGALS, criminals, murder or turn your home into whorehouse, drug-house and face politicians + tenants Unions protests said GREEDY landlord causes poor tenants become homeless if lose jobs/senior=basic shelter is a basic human RIGHT=all news blame GREEDY landlord u, that's NO FUN to hire team of lawyers evict druggies/illegals/whorehouse and ONLY GET 10% or 7% cap rate return vs BUFFETT buys over $30B in APPLE/KO stocks earn 3.5% dividends then stock goes up 10x in last n yrs means now dividend is 3.5%*10=35% div EVRY YR=NO GREEDY LANDLORD PROTEST=NO CRAZY Rent Control(R.C)/Eviction Control(E.C) laws. AND PAY 15%-20% CAP GAIN. R.E. IS ALL ABOUT DEAL WITH PEOPLE, your apt is someones HOME, evict them force they CHANGE DMV, JOBS, welfare, ALL ADDRESSES, tenants love their home with tons of emotion living there, so sometimes they sue u or kill LL or eviction gone wrong kill tenants then commit suicide as an old NEWS=that's NO FUN than BUFFETT INVEST $30B DEAL WITH NO 30K FAMILIES with 30% druggies, illegals, gay or poor tenants share someone lose jobs, injured or govt shut down cannot pay rents with tons OF HEADACHE STORIES of LIFE IS A MISERABLE/crybabies; BUFFET EARNS 35% dividend rate when stock up 10x in n yrs=APPLE ALREADY UP 25% easily, pays LESS cap gain tax, TROUBLE FREE but sadly SCHOOLS DON'T TEACH EVERY KIDS HOW TO PICK STOCKS. ***R.E. IS *NOT ALWAYS GO UP FROM 2008-2019, those GURU buys at the BOTTOM now make big$ brag about how smart they're in R.E.=all bs! B/C LOOK AT JAPANESE ECON+R.E. DOES NOT GO UP 30 yrs=who tell u R.E. ALAWYS GO UP & R.E. IS GOOD are BS/lie! RENTAL BIZ=1 OF THE *WORST* BIZZ=U DEAL WITH MANY FAMILIES with their BASIC AFFORDABLE HOME AS BASIC HUMAN RIGHTS so they will PROTEST AGAINST U UP RENTS OR EVEN BRING IN POLITICIANS CHANGE LAWS HELP THEM B/C TENANTS ARE *OUTNUMBER* the few LANDLORDS we=so all laws will pass against LL! ... In fast detail without u pay me MENTOR u change your life, here is the fast math that GONE WRONG in his Video: 1) assume he buys $500k home earn 8%-10% cap rate, IF WITHOUT 10% CAP RATE THEN FORGET IT=BUFFETT BUYS COKE stock earn 3.5% div TROUBLE FREE if most guru asks u buy R.E. with 5% cap but borrow at 4.5% mortgage interest=that's MEANINGLESS IF CAP BELOW 8%, for me I want 10%, yrs ago I see 15% cap rate, JUST NOT IN CA. BUFFETT SAID WHEN EVRYBODY/GURU tells u GO BUY R.E., ITS PRICE GOES 2 HIGH=WE BE FEARFUL when guru/every one is stupidly believe R.E. IS GOOD=we run away from R.E. b/c all laws are against R.E.... anyway, assume u pay 100k down to buy $500k home, earns a 10% cap rate that INCLUDES ALL repair, prop tax, everything he listed in the VIDEO=500k*10%=50k/y NOI. Borrow $400k at 4.5% or 5% rate 30yrs. 2)SO mortgage interest is about -19k/YR offset; 3) but ONLY ABOUT 60% OF $500K home is IMPROVEMENT so $300k or in line with his video of $275k takes 27.5yrs Depr.=offset -$10k. Do the math, you still have to REPORT TAX ON NET INCOME adding 1)-3)=50k NOI - 19k - 10k=$21k/yr NET RENTAL income, then subtract other income/lose. SO THE TITLE IS WRONG, AT THE END YOU STILL HAVE TO PAY TAX ON $21K, probably 25% on $21k, WHO SAID PAYS NO TAX LEGALLY?! WHEN U HAVE SUPER BRAIN DO DETAIL MATH, THEN REALIZE ALMOST ALL RICH DAD or all R.E. guru said R.E. PAYS NO TAX LEGALLY are all b.s/lie - U REPORTS NO INCOME THEN U PAY $0 TAX, THE MORE REINVEST U EARN, THE MORE TAX U GETTA PAY; for that, sometimes PAY TAX IS GOOD B/C IT MEANS you earn $21k/home * 10home=$210k, such income reinvest as RICH DAD bs lie about buy more R..E pays no tax is lie= reinvest those $210k buy $1M home at the end U STILL HAVE TO PAY TAX b/c every reinvestment earns another 10% cap rate or more=more income means pays more tax, so smart buddy said IT'S OK TO PAY 25% TAX THEN KEEP 75% to self. UNLESS U R TOO RICH THEN HIRE YOUR RICH DADDY BILL GATES SR tax attorney to teach u put 90% of $ in his CHARITY to AVOID TAX LEGALLY and ONLY 15% Charity money MUST spend on real CHARITY work, leaving GATES reinvest 85% of his Charity $ to buy MANY STOCKS - you need to pay me to edu u to show u how the rich/smart/powerful (some or many are crooks/liar=Gates+Buffett SUPPORTS TAX THE RICH more but they themselves PUT 90% of their $ to Charity to avoid tax=they're hypocrites/Liberal Liars=want others pay more tax but they DO NOT!) hide their $ in cayman island or Charity then what stocks their HOLD using Charity $ and Google find out when Japan 3/11 biggest Quake or Haitidi Tsumani those worst diasters kill many, how much 10% of $30B or $80B of Gates Charity REALLY SPEND to help the poor?! MOSTLY ARE B.S. liars. OK, enough saying. I'm telling u MOST GURUS or rich are LIARS. For that time-consuming writing, maybe 1 day u can paypal me coffee/lunch for my effort shield a light/DIRECT u to change your life or becoming smarter/richer:). Good night:)!
Nice, the big picture gets even bigger. My buddy went over the depreciation and 1035 exchange with me a while back but now things are fitting together better.
Thanks again, you are an awesome you tube personality and natural teacher.
If I could only guarantee that my house would appreciate $500k every 2 years...
2Awesome Has grant Cardone did 1million. I’m still confused a bit
Every year
Straight line depreciation is actually over 29.5 years
Buy an expensive place, a sledgehammer, have appraisals every time you break something, repair, then break stuff again before the next appraisal, then that should do it LOL
@@lastelement99 rentals are 27.5
Love the subtleness of your classes and coaching plugs. 😁
;)
I'm in a class where everyone is talking about what netflix shows they watch while i'm watching a dude in his garage teach me how to legally evade taxes.
I'm in highschool btw
you're definitely on the right track my dude
Update?
Watching this even though I dont have any real estate YET.
I like the energy queen
Graham you the man! Teaching some real stuff that matters.
Hamza Mubashir he’s such a wealth of knowledge !
Thanks!!
Jeff Wybo undoubtedly! Your videos are no less buddy and it connects even more with me since I will be starting as an agent in Ottawa soon so I get to know about the canadian market through your videos. Keep up the good work man!
Hamza Mubashir much appreciated !!!
is it just me that enjoy Grahams videos or what.... A very fine and educating young man. fun to watch too! Keep up the good work sir
Thank you so much!
He used MY PHOTO in the thumbnail!!!!!
Then report it. Do you know how to report it? You simply hit the three dots on the upper right hand corner of the video screen and you will see a drop down list one of them says REPORT and from that drop down screen you will tap infringement copyright infringement
no one cares
2. House does depreciate, but likely slower than the figure from government (so it is still possible to lose money on that one)
6. Adds risk which can be larger than tax since market prices and rent fluctuate.
This is awesome now make a video on how to avoid paying taxes illegally 😂
Lol jks
Offshore
Step 1: Don't pay them
Still waiting on that video lol
Any cash you collect from tenants, it for some reason never made it into an account. Especially if the tenant happens to move out later in that year. "Man a tough year, house just sat vacant, damn." Just kidding. If you got audited, they could just find out through utility bill records who lived there. Better off just doing what I do and just play by the rules. Plus you look better to the banks for future loans with a legit hefty income you can prove!
Launder
the
MONEY
hands down #1 most valuable video I've ever watched on RUclips. 😎
Thanks!!
Just a question, do all these tax write offs have to be through a business or can they be personal writeoffs
Business.
Holy shit so if I stay under $100,000
By doing a medical directive thing or deferred compensation I can stay below $100,000 and get thousands of dollars in tax benefits. By claiming depreciation and losses on my rental property
Now I see how people are doing this I think I get it now
Damn this video was fire
SUBSCRIBEDDDDD
Some"half the picture" info going on here. For viewers, please learn the difference between passive and active income as the deductions from one cannot be used on another (IRS requires proof that you work around 40/week on the properties for active income status on rentals). Second, depreciation needs to be paid back when you sell the asset. Third, deductions are different for primary residences vs rental/investment properties. Fourth, rent prices are often similar to mortgage monthly payments, but maintenance and repair costs, as well as the time between renters is a huge expense unless you have many properties or another vocation to support these costs plus mortgage payments. This doesn't include other issues with non paying renters and litigation timelines.
There are reasons for rental properties, and there are tax deductions to help grow competition which helps lower rental prices, but it's not as simple as presented here. I'll end by saying, if you become a landlord, please treat your tenants like how you would want to be treated. From - a property manager.
And taking a HELOC out to pay yourself is expensive. Its a 7% loan that you are making payments on monthly. Plus 2-5% closing costs by the way. Might as well just pay the 15% capital gains tax and have all your money now and get to keep it.
Yeah, this video got a little bit real estate internet guru on us. Misleading.
@Kuuryo After 30 years you will have $300,000+ in equity on the rental. If you let it stay there in the house you will find that to be a terribly low ROI. You will make more if you take it out and put it to work.
Graham's angry faces are priceless. Most of all, this video was informative & it should serve as a foundation of getting your personal questions answered by qualified professionals who do this legally of course.
need a video on tracking eligible tax exemptions. At the end of the year im lost haha
Albert Calderon probably need a good sit down with your CPA and be sure to give him/her every receipt and they can sift through them and tell you what is eligible.
It makes perfect sense why you said you live in one of your own duplexes after hearing #4! Thanks! These tips are awesome!
You got it! Thanks for watching!
Can you do that depreciation loss on a house you live in, or only on the property i am renting out?
Renting out!
Always learning soooo much. Never was really interested in real estate till I came across your channel, thanks Graham
So happy it's helpful!
I wanna get rich to buy lots of niclas cage pillows :(
Hyun Ro wtf
This is awesome. I’m newer to REI (purchased my first duplex this month, first as well as flip project) Grants info lines up with everything my CPA, other investors, and mentors have been coaching me. As always, love the content.
The #1 thing they told me to do to avoid paying taxes is tO SMASH THAT LIKE BUTTON
Thumbnail game on point 👌
Haha thanks man!!
It took me a college quarter (10 weeks) of RE Finance to learn all this and you did it in 18mins!!
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Yo Graham! Your "Real Estate Investor Seeks Trainee" vid has 5k likes now 👌 Tryna expose those seminars?
Yep! Absolutely will. That video will take me a little while to plan out, film, and edit since I'll be basically needing a weekend off to get that done. But it'll happen!
@@GrahamStephan A man that sticks to his word. Love it. Can't wait for the video!
Graham Stephan
Undercover Graham. You better have a fedora and sunglasses on with a cigar out of your mouth
@@MichaelP-ke1tm Straight out of Jurassic Park
you just answered the question I've been searching for the whole day on the left over depreciation and how it works. Thank you so so much. Also, Im about to close on my first house hack for a $1.2M 4-plex in San Diego CA using the VA loan. It will cash flow AND I'm only putting 2.6k in closing costs.
Legally “Donald trump voice” as someone who studied accounting and worked as one there are ways to have 0 tax liability at the end of the year
But people often look for Tex breaks when it’s time to file but they should begin the year with there tax bill in mind to make every transaction something you can translate into a write off, depreciation, or even a possible credit clause!
FaceTank Entrepreneurs how would you go about doing this to achieve 0 tax liability if you claim 6 for the year
And certain deductions such as advertisement and research development expenses that has no cap on how much of your revenue can be dictated. These expense of reinvesting will grow your revenue potentially and as long as you place your revenue in non tax liable or tax deferred entities you can repeat this
I know I was going to make it short but I feel I should add this
Even if you have tax liability you can add tax credits to break even or even profit at the end of the tax year.
Let me add if you have a stock portfolio close your red positions at the end of the year even if you’re going long and re buy them at the start of the next fiscal tax season so you can report a capital loss for the year on something you’re holding long term either way
There’s a lot more but I already wrote a lot lol
Ice Ice this is A very loaded and complex thing to go in depth about.
So here’s the summary. First step is the transition your income sources out of pre taxed category such as w-2 income. You have to know what tax entities can serve as a refugee as tax free and tax deferred storage sanctuaries. Such as certain kind of annuities, 401k Roth and use these entities for portfolio lending since you can hedge these assets to leverage the money of others to acquire more assets and repeat along with reporting a loss. But you cannot report a loss consistently or us accountants will get flagged saying our client may be audited to prove there business actually has the intention of being profitable
So real estate is a good loss haven but business you can’t endlessly report a loss.
You can store your money in high deductible insurance account
Stock accounts and deferred income account but the goal is to leverage these account on your net worth to north money to increase overall revenue
If you approach it with a revenue mindset instead of profit you can tailor your cash flow to avoid showing active profit but it’s a lot of work so I say paying low amount of taxes consistently is more reasonable than paying 0 taxes
There’s a lot of information I can dump but this comment would be like a 10 page essay lmao
Lost internet connection not sure this was sent
@@FaceTank-z8g Fantastic points. Definitely makes sense you wouldn't want to report consistent losses. Well written. Thanks for the contribution!
Tax free income in Puerto Rico. Zero federal government scam.
This video should be the one with your most views. Incredible information given in this video.
Thanks!!
You now have another subscriber. Continue the great work, I might be looking for your guidance in the near future.
Love the shirt man !
Thanks!!
Hey Graham, you forgot #10. That is if you are retired on Social security you need to make sure your rental income is passive income, not a real estate professional so your SS will not be reduced.
These are the types of videos that should get millions of hits on the internet instead of some stupid rap video. Thanks for the extremely valuable information Graham.
Thank you so much!!
The part about being a real estate professional was a little misleading in my opinion but overall great video. I'm a big taxes nerd and loved it
hey Graham would u ever be willing to do a collaboration video?
Depends on the person and topic! I’m open but pretty picky about who I have on.
ohhh ok, let me know if you'd ever be willing to do a collaboration with me or do some kind of shoutout exchange. This is by far the best real estate channel on youtube! Keep up the great work man!
@@TheShortKing835 Finance Fantasy Don't think he's going to take on someone with 1) 35 subs or 2) videos telling you how to get free stuff from websites and eBay that are "totally legit"
Matthew Laughlin they actually are legit tho. I will pay you 20 bucks if u do it and it doesn’t work
But yea your right man :(
this is good info .. the only issue , which I am trying to resolve, is when I lower my taxes with the write off, it make my income low which makes it a little harder to qualify for a loan the next year on a house .. unless its an amazing deal,, like the one I close on Friday with 90k in equity ..
True. EXCEPT depreciation can be added back in. And most of the others won’t impact a loan qualification.
sweet video!
Thanks!!
So much value in this video! I'll have to watch it a couple of times to burn this knowledge in my head.
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Get paid cash
That was some great legal advice, I mean “entertainment”. I just bought my first house and am going to apply these techniques.
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How can I avoid taxes on e-commerce? *LEGALLY
Run your business out of Puerto Rico
Very true and valid information in this video Graham. I weighed those options (1031) heavily before selling my last rental. Didn't want to live in it for 2 years before selling, didn't want to exchange for another toilet cleaning property. The last tenant couldn't afford the property (carry back/installment sale not an option). Opportunity zone??? Ultimately, ended up selling and will suck it up and pay the taxes, depreciation recapture. Not looking forward to filing taxes next year. Some people need to think about when they get into rentals, what is their exit strategy 10-20 years down the line. Thanks for the video.
Smashed that liked
BOOM!! Thank you!!
This is my favorite kind of video!! Suuuuuper useful info!
Awesome!!
Can you do one involving UK tax laws?
Kind Regards
I don’t know them :(
Got, Damn, Graham! I appreciate the heavy help my man!!
How can I avoid paying taxes as a Realtor, like outta my sales income at the end of the year ?
Talk to a CPA and see if you can set up an entity to be taxed as an S-corp. Then the entity will pay you wages, which have income taxes and fica taxes, but you will also receive the profits from the entity as income. The profit income does not have fica, or self-employment taxes which are at the rate of 15.3% starting from $1 of earned income (wage income). Paying self-employment taxes also gives you a tax deduction against your gross income of 7.65%, so the effect self-employment tax is a bit less than 15.3%. The social security part of the SE tax also stops at around 108k of wage income, so the rate actually stops. This is all rather complicated, and you have to be sure the S-corp you create pays you a fair wage or else the IRS will sue you for the SE taxes you avoided.
*You DO have to pay back the "depreciation" if you sell the property and the value of the building do not depreciate so there is no point of being happy of not paying that 5,000 $ coz the taxes are not deleted but deferred*
Avoiding taxes is the legal term
“Evasion” is wrong 😁
Yes!!! Big distinction 😜
Really good content, worth every second of it. Thank u man for break it all down for us to understand it. Now i've homework to do ''legally of course''
shameless consulting services plug... i love you :)
Had to sneak that one in there lol
Learned a few new tips here, especially Capital Gains Exclusions which I was not aware of. Thanks Graham!
9:30 gets me everytime... LMAO :D
😜
I feel bad for people who miss your videos brother.
Children may be deductible - but they're still taxing.
Zing!
😂😂😂
If your property is paid off in the S-Corp, then buying money via a HELOC is quite stupid. Better to find another way to avoid taxes and keep 100% equity than add an extra interest expense to the income statement.
*Air is only tax free*
😬
Probably not for long 😂, new tax for breathing air and making cO2
Technically, but consider this: you've shoes, motor neurons and are technically a self-propelled motor vehicle. You breathe in air of varying quality for free, eat food that isn't usually taxed, drink water that is usually taxed and your body emits CO2 and other gasses, which could subject you to a tax if your emissions exceed maximum. Not sure why food isn't subject to fuel tax, even when people tend to walk/operate themselves on sidewalks. Just hope IRS never does anything THAT absurd...
UTKARSH PATEL for now 😏
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!
45 IRS agents disliked this video
LOL
The government wants to give the real estate pros more benefits through taxes since the investors have the money to make the neighborhoods look better.
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Damn. Didnt get any notifications
Nooooo really? I think they went out a little late.
Probably. I had to search your youtube channel to find the video
Amazing video Graham, thank you.
I also had a payed phone call with Graham, and I can vouch for how good of an investment it is. Highly recommended.
Heeyyy thanks so much man!!! Hope all is well!
I m gonna fool the government!!
Legally of course!!
;)
You're awesome Graham i include you in the big guy list like grant cardone and robert k ! you're a genius
But it’s wrong when Trump does it lol.
Wish you were from Canada and talked all about this from a Canadian perspective!! Love your content!
you got it!! matt mckeever and mike rosehart are my go to guys for canada!
When you gonna marry that bish and profit 500k becuz of it, just make damn sure you made her sign a prenup before hand! 🤣
;)
For step 7 when he discusses taxes paid for social security and Medicare the total is exactly half and not 6.2%. 6.2% is typically the employee contribution for social security and 1.45% is taken as employee contribution for Medicare. Typically an employer has to pay and match those percentages for s.s and medicare. Then if self employed since there is technically nobody to match your contribution you have to pay the whole 15.3% total that is typically split between employee and employer.
1st
BACK ON POINT!!
Great informative video. Going to need to watch this one more than once!
Awesome :)
This video is one of the most informative videos I've seen!! Thank you !!
Great job taking a complex subject and explaining it easily. Thanks!
All along hadn't really understood some of these things big up.. Graham
Amazing video! Answered so many questions that I have had regarding maximizing profits through tax savings.