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Tom Wheelwright – Unveiling Tax Secrets: From ‘Tax Free Wealth’ to Writing Off a Bentley, & The Truth Behind Rich Dad’s $1.2 Billion Debt!

Tom Wheelwright, CPA is the visionary and best-selling author behind multiple companies that specialize in wealth and tax strategy.  Tom is also a leading expert and published author on partnerships and corporation tax strategies, a well-known platform speaker and a wealth education innovator.  Tom is a regular commentator and contributor to publications such as Forbes, The Huffington Post, ABC News, and more.  He’s also the best-selling author of the book “Tax Free Wealth.” We recently had Tom as a guest at our Greater PROPERTY Group Mastermind where he released his 3rd edition of that very popular book.  We talked about the new book and the following topics:    

  • Making Taxes Simple & Fun
  • Tax Free Wealth “3RD Edition”
  • Understanding The Tax Code
  • The Most Overlooked Tax Deductions 
  • Writing Off A Robert Kiyosaki’s Bentley 
  • Explaining Why ‘Rich Dad Poor Dad’ Author Is $1.2 Billion In Debt 
  • “Buy, Borrow, & Die” Concept 
  • Adapting To Changing Tax Laws

Following our enlightening session with Tom Wheelwright at the Greater PROPERTY Group Mastermind, delve deeper into Tom’s expertise by checking out his guest interview on the “THE WIN-WIN WEALTH STRATEGY” podcast.

Every week, the RUN GPG Podcast aims to provide inspirational stories from people who made a mark in entrepreneurship, entertainment, personal development, and the real estate industry. It is produced by the GREATER PROPERTY GROUP to help the audience grow and scale their business and their life.

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Excited to welcome our guest today, Tom Wheelwright. We’re welcoming him back today. Tom Wheelwright, CPA is the visionary and best selling author behind multiple companies that specialize in wealth and tax strategy. Tom is also a leading expert and published author on partnerships and corporation tax strategies.

A well known platform speaker and a wealth education innovator. Tom is a regular commentator and contributor to publications such as Forbes, the Huffington Post, ABC News, and more. He’s also the best selling author of the book Tax Free Wealth. And I’m excited to mention that Tom is actually releasing the third edition of that very popular book today, which we’ll be talking about in detail.

Tom, it’s really good to see you again. Welcome to the Greater Property Group Mastermind this week and also a live recording of the Run GPG podcast. Welcome here. It’s great. It’s great being with you guys. I always love it. Yeah. Yeah. Good to see you. So as I mentioned, third edition of tax free wealth released today.

Congratulations, Tom. Thank you. Thank you very much. It seems like we need to do, we have to do a new edition every five years cause we get so many changes to the tax laws. Yeah. Which we’ll be talking about here. How to build massive wealth by permanently lowering your taxes. that’s something we all want to know more about, obviously.

And that’s something, you know, how to do in detail and you talked about it in the new book, but before we get into some of the highlights and the actionable content for us, I wanted to mention your mission statement. Again, I always lead off with this cause I love it. You say that your goal in life is to make taxes fun, easy, and understandable.

I love that. It’s such a refreshing take on something that’s. daunting, right? Intimidating, right? A lot of people don’t like talking about taxes, and it’s not typical to think of taxes that way. So again, the question, Tom, how and why did you see a need to make taxes simple and fun? Well, you know, when Albert Einstein says that the most difficult thing in the world to understand is income tax, I’m going, well, that, that would be a worthy Subject to take on and, and make it simple.

That what’s really obvious is that the rich, you always hear which don’t pay tax and you go, why don’t they, are they cheating or what’s going on? And it’s really just because they have high price tax advisors like me who understand the tax law. But what about everybody else? Right, who doesn’t, who don’t have access to those high price tax advisors.

And so many years ago, I first wrote the book in 2011, released in 2012, Robert, Kiyosaki actually rich dad, poor dad, who’s a mentor of mine. he asked me to write. A book on taxes. And I said, great, but I want to, you know, I want a different take on taxes. There’s, there’s a lot of, you know, there’s big, huge, boring tax, you know, tax treatises out there that nobody wants to read.

I don’t even want to read them. And, why don’t we just take a different approach and look at what the tax law really does. And the tax law is really think about it. There’s one line says all incomes taxable unless we say it isn’t. There’s another line that says nothing’s deductible unless we say it is.

And the rest of the 6, 000 plus pages, and this is true, by the way, of course, Canada doesn’t have as big a tax law as the U. S. does. Canada’s tax law is about half the size of the U. S. tax law. By the way, Great Britain’s about twice the size of U. S. tax law. But really, the rest of it is all just a roadmap for reducing your taxes, and it’s just a guide.

And the average person doesn’t understand that the average person thinks, well, taxes are something to be afraid of. They’re too complicated. I can’t possibly do this. What I really need is a tax advisor. I can just turn things over to, and the reality is your tax advisor can’t reduce your taxes. All your tax advisor can do is tell you what you need to do to reduce your taxes.

And so the very most important thing you’ve got in a tax advisor is somebody that actually you understand what they’re saying, which is frankly, few and far between. So that’s why we launched a franchise to teach tax advisors how to communicate with their clients and really take a different approach.

But, honestly, if, if you, if you understand the basic principles of the tax law, it’s a pretty fun game. Frankly, I always thought of it as a game and it’s a pretty fun game and it’s one, we’re all playing whether we want to or not, and we just have to decide, do we play it passively or do we play it with a fervor and, do we play to win?

Well, you know, Tom, you know, through your books, you do make it a lot easier to digest. a couple of the key takeaways, from the new book mentioned that. Tax free wealth is not a myth. You can build substantial wealth over time by taking advantage of tax advantage strategies. The book empowers you to take control of your financial future by making informed tax decisions.

And, and the key there is to be informed, right? To take in the knowledge that’s, that’s the most important part. So. Let’s get into the meat of it, Tom, let’s, let’s tackle it right away. And I’m going to hit you with the, probably one of the most, daunting things that, we think about and that’s understanding tax codes.

You mentioned that they’re understanding tax codes. So, you know, there’s a lot of real estate agents on here, obviously entrepreneurs and small business owners, tax codes can be, complex. And as I said, overwhelming, how can they demystify the tax code and better understand its nuances to their advantage?

Well, I think the key is to look for the patterns in the tax law. That’s what we’ve done is looked at the patterns. You know, what is it that the tax law is trying to accomplish? And most people think it’s just trying to raise revenue for the government, which is far from the truth. I mean, if you look at, for example, I’ll bet every agent here talks about the tax deduction.

Or interest expense when you’re talking to a potential homeowner and that’s a tax incentive. That’s all that is because renters don’t get that only homeowners get that. And there are just legions of tax incentives in the tax law. So what you have to do is you start by changing the way you’re thinking about it.

When you do that and you actually say, well, wait a minute, I’m a partner with the government here. That’s, that’s effectively what’s going on. I’m a partner with the government. Everybody who, when you got your first paycheck. You go, who the heck is this FICA guy? They’re taking money out of my paycheck. And so you know you’re a partner with the government.

And you can be a passive partner or an active partner with the government. If you do the things the government wants done, you pay less tax. If you don’t do the things the government wants done, you pay more tax. And you really do have to distill it down, though, to those basic principles. And once you do that, I mean, like as small business owners, I mean, you know, I used to get asked all the time, is this deductible?

So is this mug deductible? And I finally got telling people, look, that’s the wrong question. The question is how do I make this mug deductible? Because a mug by itself isn’t deductible or not deductible. And the question is, what are you doing with a mug? You know, one of the things I always say is if you want to change your tax, you have to change your facts.

And, And again, you know, you have to understand a lot to know what facts you can change and what facts you want to change. You may not want to change your facts. You may be happy paying higher tax with tax free wealth. What you do is now you have a choice. Yeah. I love that. If you want to change the tax, you have to change the tax.

That’s takeaway. I’m writing that down. and you mentioned that deductions, I mean, that’s something that we always. Talk about is leveraging deductions, which you get asked about daily. I’m sure. What are some often overlooked deductions that let’s say small business owners, entrepreneurs can leverage to reduce their taxable incomes.

Like, can I deduct my vacation? I will tell you, I had a, Interesting experience a number of years ago with, Robert Kiyosaki in, in, Chile, we were in Santiago and he asked me the first day, he said, I want you to teach him how to deduct a Bentley because the Bentley Lamborghini dealer was the sponsor of the event.

And we had a Bentley on one side of the stage and a Lamborghini on the other side of the stage. And Robert at the time drove a Bentley and his wife, Kim drove a Lamborghini. So I go through, okay, here’s how you would deduct your car, right? Here’s the rules for creating any business deduction. And lunchtime, a tax attorney from Santiago comes up to me and he says, really love this really good.

You just can’t do that here. cars just aren’t deductible. And I said, okay, well, thank you. And, later that evening, I’m telling the story to Robert and the other, speakers and Robert just looks at me and just nods. Okay. Next morning, get up ready to go on stage. He says, okay, Tom, today, you’re going to teach him how to legally deduct a Bentley in Chile and trusting the process.

I’ve been doing this with Robert a long time, 20 some odd years. I said, okay, we’ll do it. And later that day, we actually showed how to deduct the cost of a Bentley in Chile, legally. And after the event, at the end, the same tax attorney came up to me. He said, Tom, I would never have thought. Of doing it that way, you could absolutely that would absolutely work here.

And so what that taught me was anything can be deductible anything. there are certain things that, you know, on their face, they’re not deductible, right? But that doesn’t mean that they, we can’t make them deductible. that that’s the lesson. So, so the first rule is just understand that, we do miss a lot of deductions.

I think the biggest ones we miss, I think travels one of them. I think, home office is a huge one because it limits how much we deduct on our car. Remember, if you don’t have a home office, then that first trip you take during the day to see a client and the last trip home is a commute. It’s not deductible frequently.

That makes up a big portion of your driving is the first and the last drive of the day. So if you have a home office, now all of a sudden your percentage of business use could go from 60 percent to 90 percent or 50 percent to 100%. It’s actually a big deal and I keep hearing people say, well, my accountant told me it’s not worth it.

I’m going, well, it’s not worth it to the accountant because accountant has to actually do some work on it. They tend to be lazy, but it’s worth it to you. Okay. So first thing is everybody should have a home office. Even if you have an office away from the home, you can set it up so you can do both.

Okay. That’s another fallacy is that you can’t have two offices. you just have to make your home office, your primary office. second of all, so automobile. is a big one that we miss. And then, and then to travel. Travel is, travel is actually pretty interesting. you know, the, the, the rule is your primary purpose for the travel has to be business.

And if you’re traveling within the continental United States, The rule is that more than basically more than 50 percent of your workday has to be spent doing work that you could only do there, right? So, for example, if you’re going to a conference, that counts. If you’re meeting with clients there, that counts.

If you’re just going and sitting on a laptop in your hotel room, that does not count. Okay? You could do that at home. So, it, it needs to be more than 50%, but that’s an eight hour workday. So that means four and a half hours a day. Okay, not the weekend, which means you could literally leave on Friday, work a little bit Friday when you get there, take the weekend off, work four and a half hours Monday through the next Friday, stay through the weekend, leave Sunday, come back, and the whole thing would be deductible.

So you can do it. Now, you know, the question really is why, why does the government allow that? And what happens is, is if you’re doing things there, if you’re doing business, you’re going to tend to see things. And see opportunities that you would not otherwise see. So let’s say you guys are all, you know, in real estate.

So let’s say you’re looking at houses to buy for yourself, you know, for investment properties, you’re all real estate professionals by definition. So, you get, you know, huge deductions for owning investment real estate. So you go out in your, you’re looking at these houses. If it weren’t for the tax benefit, you may never look at the houses.

While you’re there because you may be there because you know, you’re there with your family, but I want the tax deduction, right? So you start looking at houses and then you find these huge opportunities So not only do you find those opportunities, but remember the government shares in the economic benefit of those opportunities because they’re your partner So the government wins in my second book, the winning wealth strategy actually walked through several examples the government It’s not just the taxpayer wins.

It really is a win win strategy because you get the deduction, but the government, you know, if you could be partners with somebody by putting in 30 to 40 percent upfront and your partner could never get rid of you, they had to meet certain tests. They had, it had to be for profit. It had to be well documented.

It had to be well done. Okay. In order for them, in order for you to be a partner. And. I mean, every one of us would jump on that opportunity. The government just does it by mandate. So it’s a, it’s a pretty good deal for the government and it’s a good deal for us. I’ve, I’ve had clients that found a million dollars of profits just going because they wanted the tax benefit.

So it really, that’s the incentive. That’s the driver. Really interesting. You know, and I think that changes the perspective that people should have, which is you’re partnering with the government, you know, if they have a tax code or they have a deductions because they want. To have it, right? It benefits them, right?

And so that’s what we need to think about. And the other one is, meals and entertainment. people always ask about meals and entertainment dinner with my spouse. Can I write that off? Potentially. Yes. and this is one where, there’s an, an old, adage that, pigs are cute and hogs get slaughtered.

So don’t be hoggish about this. the reality is, is even if your spouse isn’t involved in your business, I find, I’ve found over my lifetime that. Typically, when I go to dinner with my spouse, at least once a week, I’m just talking about business and I’m getting feedback. And it’s a valuable business expense.

It really does help me. Now I have a spouse that’s actually involved in the same business I am. So we talk about taxes all the time, but we have very exciting dinner conversations, but, I think once a week, I think you’re probably safe. The once a week, you’re talking about business. You need to put down, what’d you talk about?

You know, who are you with, you know, you’ve got to make sure you got the date down where you are, et cetera, on the receipt and then scan the receipt. But, yeah, I, I think meals with your spouses. Absolutely can qualify. I mean, with for me, I have my kids involved. So meals with my kids are also deductible.

Yeah. Very interesting. Okay.

So, I mean, we’re all interested in, you know, tax efficient deductions, obviously here’s one in the context of real estate, how can entrepreneurs identify tax efficient investment strategies to grow their wealth? Wealth while minimizing tax liabilities That’s I can go for three days on that one. So, You know the real estate is so let’s talk about real estate.

So real estate is one of those um investment areas where every government Around the world incentivizes that through tax benefits and the benefits are, of course, it’s a business. So you get the business deductions, but also you get depreciation depreciations. It’s like in chapter seven of tax free wealth, I call it the magic of depreciation because it really is magic.

You’re getting a deduction for the. As if wear and tear on the property, whether or not there’s wear and tear. Now, it’s residential property, there’s absolutely wear and tear. Nobody has residential rental property that doesn’t have wear and tear on it. That’s why houses, residential property gets depreciated faster than commercial property.

There’s more wear and tear on a residential property. Property than there is on a commercial property. But the biggest thing there is we have to do a cost segregation. Cost segregation is a study that’s done by engineers and accountants, outside engineers and accountants. Don’t be trying this yourself.

Your CPA should not be doing this. This should be somebody that specializes in this area and they’re going to do an engineering analysis. And they’re going to say, okay, let’s break down the cost of this property between its components. Okay. How much, what, what’s the landscaping? What’s the outside outdoor lighting?

What’s the, what’s the parking structures? What, you know, what’s their value? What’s the proportion of the purchase price that’s attributed to them? The, the carpet, the flooring, the window coverings, all of those things. And then what happens is, is that we get different depreciation rates based on different categories.

So like a land lands, not deductible at all because it doesn’t wear out buildings are deductible over a long period of time, residential 27 and a half years in the U S faster in some other countries. But then you get into land improvements, they’re 15 years and then you get into, and that includes landscaping.

And of course, some of us know that. Our landscaping doesn’t last 15 years because we don’t have green thumbs. And so probably doesn’t last that long, 15 years. And then you have, the contents of the building, which are five to seven years under the current law. That’s those are subject to bonus depreciation, which means that, land improvements and contents you get, well, in 2023, it was 80 percent 2024.

It’s 60%. There is a bill in Congress right now to raise it back up to a hundred percent retroactive the beginning of 2023. So we’ll see. That they take that up this week. It’s actually supposed to be this week that they take it up and, we’ll see if, Congress can get their act together and actually pass this bill, but that would make it a hundred percent bonus all the way through 2026.

Wow. Yeah. And actually you’re, you’re, well, you’re touching on it. It was, I think it was in win win wealth strategy where you talked about, you know, the eight categories, right. The eight categories for, deductions, with home ownership. Yeah. Right. Right. And I did, I, in the new edition of Tax Free Wealth, I did a really good, I really like it.

I’m, partial, but, I did a really good example of bonus depreciation, and how that works in Tax Free Wealth in the new book, which I had not done before. And that, that was actually, that took, that was a pretty heavy lift, but it’s, it’s a really good example and it’s, I, I think you can walk through it and I think you’ll understand it.

Yeah, and I think I have the eight categories here and you guys will have to read the book to understand this in a little bit more detail but deductions as Tom was talking about depreciation as he was talking about tax credits, low tax on cash sales, deferred tax on installment sales, non taxable sales of real estate, non taxable debt and eliminating tax.

So I think those are the eight categories that you talk about in the book. So you’ll have to, you’ll have to read that. yeah. And then, you know, a question about government incentives on real estate development. There’s, there’s a lot of incentives when it comes to construction and development projects, correct?

There, there are, I mean, consider the, probably the biggest one that people don’t pay attention to is the low income housing tax credit, which can be, which can be up to 70 percent of the cost of the development over a period of years. Now you have to qualify, you have to go through all the paperwork and, and, and so on, but the tax credits are phenomenal.

On top of that, you’ve got other credits. If you do historic, you’ve got historic tax credits. If you do historic buildings, if you have, and there’s a lot of residential historic properties. So, you know, that’s one where you can do historic, I’ve seen historic conservation easements where you actually put an easement on it and you got a tax deduction charitable donation for, Protecting the property.

That can be a big tax benefit. certainly right now, solar and putting solar and here’s the advantage. So just one note on solar because I think solar is the biggest tax in the world. investment incentive that we have right now. not only do you get the 30 percent tax credit for the solar, but you also get bonus depreciation and you get bonus depreciation on 85%.

And so you have to do a haircut because of the credit, but what it ends up is the government pays anywhere from a half to two thirds of the cost of that, of that solar. And the result is that your return on investment on solar. In a, in a good market, you know, where you’ve got good sunshine and, utility rates, et cetera.

If, if you’re getting the retail benefit, in other words, solar farms don’t produce a whole lot of investment benefit, but solar on your properties, you either pass on the, the, you pass on the cost, you know, you’re, you’re charging your. Renters for the utilities, or you’re just saving, saving it. and then increasing the rent, the return on investment.

I put it on my office building this last year. And when we calculated the return on investment is right around 22 percent annual return on investment. And in Phoenix, we always have sun. So we’re not worried about, are we going to recover it? Right, right. That’s very interesting. the, and I will just mention like whether you’re in the United States or Canada, pay attention to the tax laws too.

So, you know, Tom may be referring to a certain percentage that applies in the U S not in Canada. So pay attention and take a look. and I know you do a lot of work when you look at the tax codes in different countries, you do that. So the books are universal, for sure in a lot of ways. So, you know, speaking of Tax efficient investments and liabilities.

I need to ask you about this. I think it’s a fun topic. your colleague, Robert Kiyosaki, someone you work with closely, right? He made headlines and went viral for saying he’s 1. 2 billion in debt. And quote, if I go bust. The bank goes bust. So I would love to get your breakdown, of this, if you don’t mind, because I think only you can explain this in a way that makes sense for the average observer.

I know you did this on social, but do you mind breaking down exactly what he did? I, I did a, I did a YouTube video that, we’ve had a lot of views of that YouTube video to break it down. So first of all, you know, Robert’s investing. He, you know, when you invest those kinds of dollars. You’ve got non recourse loans, and that means that if the bank can’t come after him, so if his properties go down, yeah, he loses his equity investment, but the bank loses all of the, they’re the ones who end up with the property.

they don’t, they can’t come after him because it’s non recourse. So, it’s very clearly, he’s absolutely right. They’re the ones that get hit the hardest. Now he does lose his equity, but he, he’s not on the hook for that debt. The properties are on the hook for the debt. Okay, because it’s non recourse.

if it were recourse, that’d be a whole different animal. but the great thing about debt is first of all, it’s not taxable. It increases the basis on which you get your depreciation. So if you put in 20 percent and the bank puts in 80%, you get a deduction For depreciation based on 100%, not just your 20%.

So you actually multiply your tax benefits, obviously, to the extent that your cap rate is higher than your interest rate and you multiply your returns. That’s very powerful when it’s done right in real estate. The way I explain it simply is, you know, the purpose of an asset is to create income over and over again.

That’s the purpose of an asset, and the purpose of a debt is to buy an asset. And so the only time that you’re afraid of debt is if you don’t trust the asset, because if you trust the asset to produce income over and over again, you would want as much debt as possible, because it’s going to continue to produce income.

But if you don’t trust the asset, first of all, I’m going to ask, if you don’t trust the asset, why are you putting your own money in it? Yeah, it makes sense. Yeah. It was crazy. Cause that, that clip, that, that quote went viral. It went everywhere. It did. It was wild. I loved it. Cause he was, he was spot on, you know, he never explains anything, right.

He just like throws it out there and, and these people, actually we were, we were watching a Reddit thread on this and, decided, you know what, we, we should respond to this. And so we responded to the Reddit thread and then put it on YouTube and our video went viral. So it’s, It’s, it’s pretty simple stuff.

You know, you guys who are used to debt, who are, you know, used to thinking about debt and particularly debt on a home. the thing is most people are fine with that on their own home, which doesn’t produce any income. It just takes money out of your pocket. And yet they would be scared to death, put money on investment property.

Cause they don’t understand the asset. Right. Yeah. So again, it’s all about knowledge. Knowledge is power. I do have a question, for the listeners here, it’s, it’s going to be really important to break down the question on capital gains and the buy, borrow, die concept. Capital gains, as you mentioned, your book often have lower tax rates worldwide.

in the original Tax Free Wealth, you introduced that concept of buy, borrow, and die regarding real estate. So can you explain how real estate investors can strategically defer and eventually eliminate capital gains taxes through that concept? Yeah, that’s something that I love. It’s something that I’ve not heard other people talk about, which is people always talk about, well, depreciation is just deferral, right?

And so I’m going to have to pay it at some time. And I’m going, why? Why, why are you going to have to pay it at some time? If you have to pay it at some date, that’s just because you don’t, aren’t being strategic about it and you don’t have good tax advice. so let’s just play Monopoly. We’ll just play Monopoly with it.

Okay. You start with four greenhouses, right? And then what you do is you do a 10 30 and you take. Bonus depreciation on it, you know, and then they go up in value. You know, you increase the, the, the cash lawn and you trade them in for a red hotel, right. Or an apartment building. And, then you do the same thing on that one.

Cause it’s gone up in value. So you actually can get more of hotel. you’ve done a 10 31 exchange and so you didn’t pay tax when you traded it. if you need money as it goes up in value, you borrow. Against it. So you use it as collateral. You do a line of credit, something like that. You borrow against it.

And then eventually you decide you want mailbox money. So you go put it into a triple net lease, like a Walgreens and you do another exchange and you exchange it into a Walgreens. Okay, well now you’re. You’ve taken all this depreciation, let’s say 10 million Walgreens and let’s say you’ve depreciated it down over the years because remember you got carryover basis from the, you know, the four greenhouses, the red hotel.

Now it’s, you’ve kept bringing that. The cost basis down. So if you sold that Walgreens, you’d have a huge capital gain, but then you decide, well, look, it’s just mailbox money. Why would I sell it? Instead you hold it until you die. When you die, your basis gets stepped up in the U S equal to, to the fair market value.

So that gain actually goes away permanently. Now in Canada, this does not happen. You guys have this weird little capital gains tax when you die, as if you’d sold it to your heirs. Canada doesn’t have this, step of baselets like this, but I’m convinced there’s having traveled around the world. There’s probably something you could do about it with the right tax advisor.

And so, even in Canada and in the U S. It means that you buy good assets, you build them up in value, when you need money, if you need money in excess of the cash flow, you use the equity as a collateral, and you borrow against it. You can do this by the way, you can do it in the stock market too, I mean, it’s just a margin loan, right, it’s the same thing, and you can do it really in any asset class, it’s just easier.

In real estate, it’s, it’s much easier in real estate. And in the stock market, you don’t have, you don’t have 1031 exchanges in the stock market. So it’s a little more difficult that way. but in the real estate you do, so you can exchange it. You just keep it until you die. You can change the nature of the real estate.

So that’s why you can go from single family homes to multifamily homes to a hotel to, you know, any kind of real estate can end up with trim net lease that has. Absolutely. You are completely passive and it’s completely mailbox money. So it’s the same as a bond, right? It’s very much like a bond. You know, people always say, well, what about when I sell my real estate, get out of real estate, I’m going, what do you do with the money?

When you get out of real estate, well, you’re going to put into a bond. Right? Well, why not just leave it in a bond called a Walgreens? That’s still a bond. Just a corporate bond backed by real estate. Why not? And, you know, Walgreens always pays. You know, they’re a better creditor than you are. So, you know, right now it’s been difficult because the cap rates are actually lower than interest rates right now on those triple net leases, but it’ll, it’ll, it’ll switch this year.

It’ll, it’ll switch as they lower the rates. You know, it’ll come down. It’ll, it’ll be different. So that’s the buy, borrow or die concept. Very interesting. and as you just said, get a good tax advisor, you know, to take a look at this, see if you can do it. okay. Optimizing business structures. How can entrepreneurs, small business owners structure their businesses to optimize tax benefits?

you know, especially, you know, like real estate professional, they are small business owners, you know, there’s various structures, you know, is there something we should be thinking of? Or something we have very, very, very important. when we, In our franchises, when we take on a new client, the very first thing we look at is their business structure because it’s the low hanging fruit.

so many small business owners don’t take advantage of the tax laws to get them better tax benefits. And they start out, for example, as a sole proprietor and it shows up on, and so they report their income on schedule C. If you want to guarantee an audit, have a schedule C. That’s rule number one.

Second of all, you pay Social security taxes, self employment taxes on a hundred percent of your income. Third, if you take a home office deduction, you actually have to fill out a form that says I have a home office and you have to put that on your tax return. But only if you’re a sole proprietor, if you do this through an S corporation or a limited partnership or regular corporation, guess what?

You don’t have, there’s nowhere to even to report the home office. Your chances of being audited are way less. In a partnership or an S corporation or a, or a C corporation than they are in on your personal with a home with a schedule C, which is the sole proprietor. So very first thing we look for is if you have a schedule C, you need a new tax advisor because you should not have a schedule C on your tax return.

Donald Trump, when his tax returns were released, and by the way, I don’t know if you saw, but they gave that guy five years in prison for releasing his tax return. Yeah, I did see that. Yeah, it was him and Elon Musk, right? I think he released There were 3, 000 released. Elon Musk, Jeff Bezos. There are a whole, there’s a whole bunch of rich people.

And, but if you looked at Donald Trump’s tax returns, he had five Schedule C’s. When they, they released them to the public, of course, wanted to look at them. By schedule sees I’m going, he needs a new tax advisor. He lost millions of dollars of tax benefits. You know, he didn’t pay any tax, but he could have done so much better if he’d had better tax advice, frankly, and he was paying his tax advisors over a million dollars a year.

So I’m gone. Even Donald Trump needs better tax advisors. But the point is, is that there’s just, the tax benefits are massive, you know, if you’re in real estate. Yeah. Well, I think we should, tag Tom on Donald Trump’s posts. From now on, we need to get Trump a new tax advisor. That would be wild.

Are you a new real estate agent or thinking about getting a real estate license? If so, you’re going to want to ask about the Greater Property Group’s Agent Scholarship Program. Why pay for the cost of the course yourself when the Greater Property Group will subsidize the cost for you? Make sure you reach out and get all the details on the Greater Property Group’s Agent Scholarship Program.

Very interesting though. you know, it all comes down to like, again, knowledge, knowledge is power and having the right understanding. I want to ask you about common tax pitfalls to avoid. So based on your experience, what are some common tax pitfalls that entrepreneurs, especially in real estate should be aware of?

Like what’s the biggest mistake or mistakes you see small business owners making outside of you know, your business structure, outside of that, I think the, the tendency to go after loopholes and listen to these promoters who promoting exotic tax benefit schemes. I, I think that’s the, I actually think that’s a huge issue right now because I’ll tell you as an example, I was at a mastermind group of mine the other day that I attend and I’d given everybody.

The new book, Tax Free Wealth, third edition, and, and they were saying, well, how do you do that? Would you, are you like investing in insurance? Are you investing in this vehicle and is it a specific type of investment? I’m going, no. And those are for the most part bogus. You don’t need it. Once you understand how the tax law works, it’s more methodical.

You know, there, I love baseball. And I love small ball and I love the national A cause you know, a lot of small ball, a lot of base stealing, a lot of, you know, good strategy, a lot of singles and doubles and, you know, stealing home, things like that. That’s how you win the tax game. It’s not the home runs.

Okay. It’s not swinging for the fans and people get in a lot of trouble, with these promoters that I mean, for example, when I’ve seen recently is deferred sales trust, which if you hear that term just run, because I, I told people years ago, it does not work. There’s no way the iris can allow it. And then.

This last year, the IRS came out and said, by the way, we’re going after a deferred sales trust. I’m going, okay, well, the IRS is usually a little late to the game. but of course they went after him. So you don’t need those things. You just don’t. if, if you’re truly understanding the law and you’re a consistent investor, one of the things that, People forget is that actually investing has to become an addiction.

You literally have to continue to do it. The minute you stop investing, you pay tax. So for example, 2023, I have clients that had never paid tax and they paid tax in 2023 because they didn’t want to invest in 20, 23 and they go, how come I’m paying all this tax? Well, because the rule is you have to be investing.

And if you’re not, if you stop investing, you pay tax. And that’s your, that’s fine if you stop investing, but, but you have to remember that any money that you save or spend personally is going to be taxed. Any money you invest is not going to be taxed. And so once you get that in your mindset, then you just go, okay, I can do this on a daily basis.

This is daily singles and doubles. These are not, I’m not trying to. You know, I’m not trying to look for loopholes. I’m not looking for the big, you know, the big, oh, you know, like PPLI and deferred DST. Somebody told me, you know what a DST is? I’m going, well, you need to tell me what you’re saying by that acronym.

and then we can talk about it because there are other things that work really well, especially in real estate. A Delaware A Delaware trust works really well for doing, for doing like kind of exchanges with a multifamily housing projects. So that’s also called a DST. So my point is just, you know, if you don’t understand it, bring it to your tax advisor.

If they don’t understand it, run away. It’s good advice. that’s great advice. And, you know, just a couple of questions to wrap up here. You know, we’ve been talking about it, the, the, the evolving nature of tax laws, right? How can entrepreneurs, small business owners stay nimble and adapt their wealth building strategies and staying ahead of changes that might impact their business?

Obviously read your books, but anything else we should keep in mind? Well, one thing you have to do is you have to understand that the principles don’t change much from year to year, so the basic principles don’t change. It’s only the details that change. And that’s where you, frankly, you need a good tax advisor who’s willing to share information with you on one of the problems with my profession is that we tend to kind of live in a black box.

We feel like, well, I, I know all this stuff. And, if I give it to you, you won’t need me anymore. And I, I’m sure there are hundreds of tax advisors that hate me for writing tax free wealth because I exposed what I think is basic information that everybody should know. And they’re going, wait a minute. I was selling that information.

You just gave it away for a 20 book. I’m going, yeah, because everybody should have it. Everybody should have that information, but the reality is, is that we, you know, we, we started a, a franchise. we have, franchised CPAs, tax advisors all over the, the US and that’s why, because people need a good, tax advisor who is focused on them and who understands how this all works.

Yeah, for sure. that’s great advice. resources for ongoing learning, resources for ongoing learning. What resources or tools do you recommend to stay updated and informed? Well, you know, I, I, I love podcasts. I love doing podcasts. You know, I, I love being on podcasts. I have my own podcast, wealth ability show.

we don’t just talk about tax. We talk about all types of wealth and business. And so I think there are some really good podcasts out there. I think, rich dad does a terrific job of. You know, Robert’s writing a new book every other year, and, I would, I would stay abreast of what he writes, sometimes, you know, he’s, he can be a little out there, you know, you just have to take the nuggets out, right?

And then, you know, I think things like this, you know, mastermind groups are fantastic for getting that information. And, and then also I think, I think your team, I actually think the biggest part is who’s on your team. And, brilliant book written a couple of years ago by Benjamin Hardy and Dan Sullivan called who not how, and it’s really about who’s on your team.

I’m in Dan’s strategic coach program. And Dan says, look, I’m trying to figure out how can I do the least amount of possible to get this done? I can get other people to do it. And so you’ve got to have, you just got to build a great team. Yeah. It makes sense. final question. Tom, where do you want the people to follow you and where can we get the book?

Where do, where do we go to get the book right now? right now you can go to Amazon. com. Barnes Noble anywhere. I mean, it’s a top 50 business book. So it’s been number one in its category for over 10 years. so you can get anywhere you can go to wealthability. com And if you and if you need any help with your taxes go to wealthability.

com. That’s my company And we’ll get you set up there. But and see one thing we’ll do for you if people want we’ll We’ll do a free second look at last year’s tax return. See if you’re missing anything. Fantastic. Listen, I can’t thank you enough for joining us today, even though you’re under the weather.

It was a very valuable call today. We appreciate your expertise, your experience, of course, and the actionable insights you offered us today. Thanks again, Tom. Always good to see you. Really appreciate your time. Absolutely. Thanks for having me. And thanks, everybody. Great to see everybody.

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