Interesting list I've seen a few times, and thought I would post here. The Author is a RE Lawyer. However he is a practicing LL with a huge RE empire. Please don't take these thoughts as accurate based on me posting it here. I've never even considered half of these, much less done them.
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WHY I LOVE REAL ESTATE
By Howard E. Spiva
1) DOES GOOD: Real Estate provides housing for families. Families need housing in good times and bad.
2) USEFUL: You can live in it yourself.
3) TAX BENEFITS TO LANDLORDS: The government knows they do not do a good job at providing housing. We all have seen failed government projects. The government provides special tax benefits to individuals to provide housing. The government, based on their experience, realizes private investors are more efficient and more effective and just better at providing houses to families. Example is “section 8”. People will always need housing. Over the years some of the benefits have been lessened (i.e. longer depreciation). IMHO, real estate ownership is still the best deal going.
4) TAX FREE INCOME: If you live in a house 2 out of 5 years you can sell it for tax-free income up to $250,000 per person and $500,000 per couple. (121 exclusion - IRC) You can do this every 2 years for life!
5) INCOME: It can be rented for income.
6) INCOME: It can be sold for profit.
7) TANGIBLE: Stock ownership is an entry on a computer in a big building somewhere. Real Estate is tangible. You can drive by and see it.
8) TAX DEFERRED: You can trade real estate (1031 tax deferred exchange) for another property and pay no taxes.
9) TAX FREE LOANS: You can trade Real Estate and then borrow on the new property and pay no taxes. The tenant will pay the new loan payments.
10) GOOD FOR THE LITTLE GUY: It is too “local” to be controlled by corporations like Wal-Mart and Sears.
11) GET RICH: Real Estate is not a get rich “quick” scheme but it is a get rich “eventually” plan
12) LEVERAGE IS GOOD: $10,000.00 can only buy $10,000.00 to $20,000.00 worth of stock. $10,000.00 can buy $100,000.00 in real estate with a 90% loan to value. At best a stock broker will give high rollers a 50% LTV on stocks. Stocks are too risky for them. They are happy to loan on Real Estate.
13) BANKS LOVE REAL ESTATE: Banks love to loan money on real estate. Try and ask for money to buy stocks. Ever get an offer in the mail to loan you money on stocks? Daily offers come in the mail (and email) to loan money on real estate.
14) BETTER INTEREST RATE: The interest rate on real estate is lower than business loans, credit cards, car loans, RV loans or purchases at department stores? Why? Because it’s a safer risk.
15) REAL ESTATE IS STABLE: Stocks can drop in value by 50% over night. Companies can be formed, merged, bankrupt or even obsolete overnight (Buggy whips vs. cars, cassettes vs. 8 tracks cell phones vs. satellite, cable vs. fiber optics, film vs. digital). Prices of digital watches, calculators and computers can decrease rapidly. Houses are more stable. Imagine a company surviving with the same product since 1959. We just bought a sought after house built in 1959! A large drop in value is unlikely with real estate absent a disaster. Actually disasters like hurricanes and floods can increase demand and real estate values.
16) REAL ESTATE IS PREDICTABLE: 500 stocks can go up in value and not affect one other one. If you have 500 houses that go up 10% in one-year chances are real good all those around it will to. Houses are much more predictable.
17) LEVERAGE IS KING: If you invest $100,000 in stocks and they go up 10% that’s $10,000.00 or 10% return on your money. If you invest $100,000 in real estate at 90 LTV and it goes up 10% that’s $100,000 or 100% return! You have to sell the stock to get profit and the income would be taxable as capital gains. You could mortgage the real estate and get the money tax-free.
18) PROFIT CAN BE THERE: If you buy stocks and want to sell it the next day it is probably near the same value. You can buy real estate and sell it for a profit on the same day.
19) YOU HAVE CONTROL: We have control over the value of Real estate. With stocks you are a spectator.
20) SAVANNAH IS SAFE: Real Estate Balloon? Average house in Savannah = $260,000.000 vs some houses in California, Fla , NY etc at $600,000.00. Some areas have their appreciation ahead of them.
21) YOU HAVE LOTS OF CONTROL: With real estate you can increase value and income with efforts such as an update, improve, paint, (ladies like yellow kitchens) landscape, new appliances, new fixtures, clean the carpet, plant bushes, new door knobs, add an alarm (free), hang mirrors, enclose a garage or attic, add a deck or porch. Put cinnamon in water on the stove or bake chocolate cookies when showing it. Open the curtains for light. Play nice music. Paint the house yellow with dark green shutters. You can subdivide the property to get higher rent. With stocks you can pray.
22) NEAR THE WATER IS GOOD: Real estate value is controlled mostly by location. Baby boomers retiring will be the greatest wealth transfer in history. I suggest buying properties in locations where they may like to retire (near water) or work (with internet you can work from anywhere now). I suggest you buy properties in a town with stable warm climates. People like to buy in locations of towns, near interstates. Cities having a good economic base such as: airports, historic districts, tourism, golf courses, intercostal water ways, military base, beaches, ocean frontage, universities, marshes, industries, technical colleges, forests, near vacation destinations (like Hilton Head). Know any places like that? (Savannah Georgia) Such a place may exceed the national average on demand and appreciation.
23) WEEKLY RENT: Change rent to weekly to increase revenue. You get 4 extra weeks rent. Even biweekly increases your cash flow.
24) BANK DEBIT: You can collect rent by bank account debit, payroll deduction or credit card. Your tenant never pays a late fee and you can sleep later.
25) EXTRA INCOME: Rent tenant a washer and dryer, ceiling fan, storage shed, or other item that some landlords don’t charge for. How about a TV, stereo or computer?
26) LEVEL FIELD: Billionaires can trade stocks when the market is closed and we can’t. Real Estate is fairer.
27) SOMEONE BUYS YOU A HOUSE: With real estate someone else, the tenant pays your mortgage off for you.
RUN YOUR BUSINESS LIKE A BUSINESS!!!!!!!!!!!!!!!
28) LOWER TAXES: With real estate rent you pay lower taxes (its unearned income- even if you manage it yourself) than “earned income” like for a salary or a job.
29) MORE DEDUCTIONS: Income from real estate can deduct more things than income from a job.
30) PHONE PERKS: Real estate as a business can pay for you a cell phone or a pager.
31) TRUCK PERKS: Real estate as a business can pay for you a truck.
32) TOY(S) PERKS: Real estate as a business can pay for a lawn mower, a riding lawn mower or a tractor.
33) COMPUTER PERKS: Real estate as a business can pay for you a computer.
34) TOOL PERKS: Real Estate can pay for tools, pressure washer, a rake, a shovel.
35) SOLVE RENTAL HEADACHES: With real estate you can deduct the costs of a maintenance man, a book keeper and a property manager. Hire out the headaches.
36) LOTS OF OPTIONS: With real estate you can rent out bedrooms, you can rent the land for crops or storage or horses. You can rent large rooms and space for churches, clubs, organizations, weddings, receptions, parties, (Melaluca, Prepaid Legal, Tupperware, Amway) meetings.
37) CREATIVE WITH DOCK: You can buy a dock near 48 homes. Rent dock to them for $100 each? Maybe just 10 at $200.00? $2000 month? How about $24,000.00 a year as a side income? Water rentals are seasonal and most won’t even use the dock. Like a gym membership.
38) TAX FREE INCOME: You can rent your home for 14 days a year and it is 100% tax-free. Even at $1000 a day!!!!!!!
39) TAX FREE INCOME: A business (including a real estate business) can deduct a reasonable cost of providing social or recreational parties for employees, year end holiday parties or a summer employee outing for employees and their families. This is 100% deductible to the company. You of course must invite all of the employees. (IRC 274 (e)(4)). Let these events be at your home. Your business deducts the party and rent, any you get the money tax free (14 days a year). Is $500.00 to $1,000 a day reasonable rental for a great location for a party?
40) TAX FREE INCOME: You can rent your home to relatives who visit on business; they can deduct it and its tax free income to you.
41) TAX DEDUCTIBLE TRAVEL: You can deduct the travel to your out of town rental property.
42) DEDUCT TRAVEL TO VISIT COLLEGE CHILDREN: Your out of town rental property can be in the town where your child is going to college. You can hire your child to manage that property and you can deduct that salary.
Your child can use this tax-free income to pay for college. Your child can rent out rooms for additional income. You can deduct the depreciation interest and taxes and insurance.
You can sell the property at its appreciated value in 4 years when your child finishes college. Put all this information in the “for sale” ad for the next college student’s parents.
43) TAX FREE INCOME TO CHILDREN: In your real estate business, wages from a parent to a child under age 18 are exempt from Social security, Medicare and unemployment taxes. This exemption does not apply to incorporated businesses, only sole proprietors.
44) INCOME TO YOUR CHILDREN TAX FREE PAY FOR PRIVATE SCHOOL, COLLEGE, WEDDINGS AND THEIR RETIREMENT: Your real estate company can deduct monies to your children. For example, in 2002, $4,700 earned income is tax free to a child. You or the child may take the standard $3,000 exemption. Amounts over the exemption, up to an additional $6,000 are only taxed at 10%. In addition, your child could put away $3,000 into an IRA.
If this were a Roth IRA, the interest and appreciation would be tax free.
Your business by hiring your child allows your uncle (Sam) to finance your child’s education and private schools, college, weddings, etc.
There is a tax court case that has held you may hire a child who is at least 7 years of age. Tax planners have been known to recommend that a business owner use their child’s photograph in their marketing and pay the child a modeling fee. This theory has not been tested in the Courts.
There is a ”reasonableness” standard as to your child’s pay (pay history of employee, comparison of salary with business income, duties performed, volume of work, type and amount of responsibility, complexity of work, general cost of living in the area, amount of time required for work, ability and achievements of the employee). A Great example in Savannah is O.C. Welch car commercials has his son Chip as VP, (I bet it pays for his college)
45)YOUR BUSINESS CAN PAY YOU TAX FREE: Your business or company can deduct payment to rent your home for a corporate meeting or employee retreat or party for up to 14 days per year and your business can deduct it. It is tax-free income to you.
46) HOME OFFICE: Your Company can pay the pro-rata share of taxes, utilities, mortgage (rent), and upkeep for the portion of your home your business uses as an office. Rental income is deducible for your company and “unearned income” for you.
47) ZONING CAN MAKE YOU MONEY: A home subdivision can become a commercial zoned area and sell for multiple times the residential value. Or you can rent the commercial house out for a daycare, or office or beauty shop for a much higher rent than a house.
48) DEFER TAXES WITH PAYMENTS: If you invest in real estate (not quick turn), you can sell a property and if you finance it for the buyer you only pay taxes in the year you receive the payments. Plus you receive interest income. If they fail to pay you, you get the house back and you can keep the down payment.
49) MORE ON HIRE YOUR CHILD: You can hire your child to work on your real estate. You can deduct the child’s salary. The child will pay no income. The children can pay for their own food and clothes or school. The child can start a retirement plan. The child can start a Roth IRA with the money and never pay taxes on the growth. The child can mow the lawn, empty the trash, organize checks, do light filing, make copies, clean your office, clean your rentals, help with maintenance (and learn).
a) Keep a written job description. b) Keep track of work hours. c) Pay a reasonable wage. It’s a good idea to have an employment contract. Always be honest. How about pay your child to model in an ad? (See also number.
AVOID ALLOWANCES: The alternative is paying allowance, tuition, weddings and other expenses with after tax money (at your higher tax rate).
Note: The Kiddie tax only applies to investment income (over $1,500) such as capital gains, dividends, royalties and rents, but not earned income.
50) ROTH IRA CAN OWN REAL ESTATE: Real estate can be owned by a Roth IRA, the growth will NEVER be taxed. Or ROTH can just do options.
A Roth IRA can own real estate. It is funded with after tax dollars so the contributions are after tax. This contribution could be tax free (tax free for a child) (or lower tax level grand parents)
If your income is over $100K you can't contribute to a Roth that year.
But good news there is a new 401K Roth!
The growth of a ROTH is also tax free.
It can own or option real estate and the profits are tax free.
You must own Roth for 5 years and until age 59 1/2
51) 401K CAN OWN REAL ESTATE: Real Estate can be owned by a 401K, the growth will not be taxed until the profit is drawn out.
52) MANY WAYS TO BUY REAL ESTATE: Real Estate can be bought in many ways. Bank loan, mortgage company, trade a car for down payment, qualify to assume mortgage, assume mortgage “subject to”, private lender, partner, rent to own, owner financing, lease option, 1031 trade, or “sweat equity”. Get creative.
53) REAL ESTATE USUALLY GOES UP: Real estate almost always increases in value. Average appreciation for the last 35 years has been 6%. It is “area sensitive”, 5% to 35%.
54) LAND CAN BE USED: If you own real estate and you have no money you can always plant vegetables. If you have a lot of land you can hunt or fish. You should always eat your vegetables.
55) GREAT WAY TO BUILD WEALTH: Can you save $1M in 20 years from your paycheck? $20,000 with a 90 Loan to Value in real estate with a loan interest rate of 7% and an appreciation rate of 5% can be turned into $1,000,000.00 in 20 years.
56) LEASE LAND FOR 100% TAX DEDUCTIONS: Generally, on investment property you depreciate the building but not the land. If you divide the title of the land (in a trust) and the building (owned by you), you lease the land from the trust (owned by your kids) you get to depreciate the building and your business gets to deduct the land rent. 100% deduction of your purchase price!!!
57) REAL ESTATE BUY YOU A CAR: Your real estate company can own a vehicle and deduct the purchase price, insurance, repairs, tolls, interests, tag, taxes, and parking or you can own the vehicle and your company can pay you mileage. Mileage is deductible to your company and tax free to you. You are limited to the price of the vehicle under the luxury limits unless it has a gross vehicle weight over 6,000 pounds. If it is beyond the weight limits or is a truck, van, SUV, ambulance, Hearse, taxicab or limo you can deduct the entire amount up to the IRC 179 limit. Otherwise you have to depreciate it over time. If you have to depreciate it, no big deal, just finance it for the same period so the payments and deductions are a wash.
I know an investor at age 24 had zero. From 1983 to 1993 built $200K in equity. From 1993 to 1999 had $1M equity. Now the growth is over $1M year!!!! Real estate is great!
58) TAX FREE DAY CARE: Your Company can provide daycare tax free to all employees up to $5,000 per year, per employee. This is deductible to the company, but not taxable to the employee.
59) GYM?: The IRS no longer allows a deduction for gym memberships; however, your company can deduct the cost of exercise equipment and a gym if it is on the company’s premises or premises leased by the employer. The gym must be substantially used by the employees of the company, their spouses, and their dependent children. This (deductible) gym can not be in your home. A gym includes exercise equipment, swimming pools, and golf courses.
60) EMPLOYEE BENEFITS: Other employee benefits worthy of mention are educational assistance programs, tuition plans and some company provided transportation, qualified parking, cafeteria plans (medical insurance, long term care insurance, disability insurance, term life insurance, dependent care assistance, pension plans, profit sharing plans, adoption assistance, and qualified legal services). Tax free lodging and “on premise” meals are deductible under certain circumstances.
61) LAWS FAVOR REAL ESTATE: The laws of the United States were shaped by real estate owners and developers. Originally only land owners could vote. Over 50% of wealth in America is in Real Estate.
62) OPPORTUNITY IS EVERY WHERE: Help folks in trouble and make money.
There are many types of property bargains or deals: For Sale By owner, Owner financing, For Sale by Agent (split commission) (like a toll bridge you get paid every time someone goes by); Foreclosure, Poor health, bad luck, Divorce, Pre-bankruptcy, Bankruptcy, Tax sale, Marriage (too or two many houses) Military or job transfer.
63) DIVORCE: People getting divorce often don’t like each other; they want to get way fast and may sell for lower prices.
64) UNDER PRICED: Some sellers don’t want to waste their money on an appraisal or commission to a real estate agent, sometimes their property might be worth more than they think it is.
65) RETIRING FOLKS WILL OWNER FINANCE: The fastest growing population is baby boomers. Baby boomers are retiring at the rate of 1000s per day. Retired people often will owner finance their property for a retirement income. Owner financing has no credit check, no origination fees, no loan costs and is usually at a lower interest rate than the banks or mortgage companies. Help elderly folks live better and you make a profit, all aboard!
66) SOMETHING FOR EVERYONE: There are many types of real estate: Single family residential, multifamily, offices, commercial, land, mobile homes, cabins, and rental rooms.
67) MANY WAYS TO SELL: You can do “quick-turn” or flips, Rehab and sell, rehab and keep, lease options (sell or buy or both), sandwich leases, sell on a note, “subject to”, assumptions.
68) NO BOSS: As a property owner you can be self employed with lower taxes and more deductions.
69) DEAL WITH PEOPLE: Unlike stocks in front of a computer it’s a people business. If people like you they will help you.
70) GIVE YOURSELF A RAISE: You can own many units, raise rent $10 X the # of units. Tenants usually won’t move over $10 to $25. Instant money.
71) ESTATES WILL DISCOUNT: You buying from an estate? find out how many heirs. If there are 10 heirs, any lower offer is only 1/10 movement to the main person or administrator.
72) EXEMPT: In most states you have a homestead exemption for your home in a bankruptcy. i.e. Georgia $125,000.00, Florida is over $1M (may be unlimited) (ask OJ Simpson to be sure). He moved to Florida to search for his wife’s killer.
73) EASY TO RESEARCH: Real Estate can be researched on computer at all hours. I.e. SAGIS, MLS (multi list), google earth.com, local .live .com, tax records, newspaper ads, on line ads, real estate agent web sites.
74) HOW TO LOWER PRICE: You can make an offer “subject to” or contingent on an inspection. Inspectors always find needed repair. Report can help you negotiate price.
75) ALWAYS GOOD DEALS: There are always good deals. Someone is always moving, transferring, marrying, divorcing, dying, or going bankrupt.
76) HELP THEM TO HELP YOU: Tenants are building your net worth.
77) LOWER TAXES – NO SOCIAL SECURITY OR MEDICARE TAXES: Rent is “unearned” income.
78) LOTS OF LOOP HOLES: IRS has many loop holes for real estate owners.
79) LESS TAXES: Unearned income is 15.3% lower than earned income. (7.65% + 7.65%)
80) LOW OR NO TAXES?: Unearned income after depreciation (phantom loses) is deducted can be low or zero!
81) UP TO $25,000 IN LOSES: Real estate losses (ie depreciation) up to $25,000 can be written off on your income. Until you have $100,000.00 in income.
82) UNLIMITED LOSSES: If you or your spouse are a “real estate professional” you have no limit on the losses that you can write off.
Real Estate professional: 1) more than ½ your time in qualified real estate activities and 2) more than 750 hours per year. Keep a diary or time records. Qualified activities are develop, redevelop, construction, reconstruct, acquire, convert, rent, operate, manage, lease or sell.
83) TAX DEFERRED: 2 great ways to have tax deferred income is 1031 exchange and contribution to 401K.
84) TAX FREE: 4 ways to have tax-free income is Roth IRA, New Roth 401K, rent your home for 14 days a year and the sale of Principal residence. (here is a 5th way ... mileage reimbursement)
85) 1031 FOREVER: To avoid taxes, maybe forever, you can keep 1031 exchanging properties and then do a CRT or installment loan or leave it to heirs at a stepped up basis.
Again you can always borrow the money out tax-free. The rent can pay the loan payments.
86) FINANCIALLY FREE: Once your net rental income exceeds your personal monthly living expenses you are financially free.
87) OWN YOUR OWN BUSINESS: Real Estate allows you to have your own business. The IRS is vague on deductions for businesses. Deductions lower your taxable income. The standard is “Ordinary and necessary”. Keep good records. Use a pocket calendar (example at lunch write down who you were with, where you ate, what you talked about) (Use a free Spiva Law Group pocket Calendar).
Look up items on IRS. gov web page. Show all income. Never hide income!
88) WARNING: You recapture depreciation on a sale of rental property at higher tax rate (25%) (instead of current 2006 maximum capital gains of 15%). At worst consider it a tax-free loan (if you are at same tax level as when you bought it). It can be avoided with a 1031 exchange.
89) MORE LEVERAGE: Depreciation can be leveraged here too. For example you pay 10% down but you get to depreciate 100% of the building. You depreciate residential at 27.5 years and commercial property at 39 years.
90) FASTER WRITE OFFS: Personal property and improvements can be depreciated faster 5, 7 or 15 years, for more write off and higher tax savings. Have an accountant inventory all items and break it down for accelerated depreciation.
91) NOT OLD RULES: If you sell your home under a 121 exclusion and make $250K to $500K profit, not only is it tax free, you do not have to reinvest or buy a more expensive property.
92) GET PAID TAX FREE TO DRIVE: If you have a home office you can deduct mileage when you leave home for a job site. Normally mileage is only deductible from the office. Mileage expense is deductible to your company and tax free to you.
93) COMMERCIAL PROPERTY IS NICE: Commercial tenants usually fix up the property so their business will look nice. Because they spend money advertising they usually want to stay. The law doesn’t protect commercial tenants like residential tenant’s “homes”. Commercial tenants usually pay rent and “triple net” (that means they pay all taxes and insurance and repairs). Some commercial tenants pay additional rents based on income.
I love commercial tenants.
94) OPM IS GOOD: Real Estate debt is good debt. You are leveraging the bank's money.
95) HIGHER RENT: You can charge more rent by simply adding a fence or a carport or a deck.
96) MORE DEDUCTIONS: Individuals have about half of a page of deductions from their taxes. A company has around 300 deductions.
97) LOWER AUDITS WITH A COMPANY: Individuals are much more likely to be audited than a Company.
98) HERE IS ONE WAY: Get a friend to help you with the down payment, move in the house, rent out rooms. Sell the house for a $10,000 profit and live there for free as part of the rent while you finish college.
99) TRUE STORY: You can buy a house for $52,000, pay a small down payment to the seller, owner finance the difference, rent it out and 5 years later you can sell it for $250,000.00.
100) MAKE IT TAX FREE: Trade that $250,000 into a bigger deal and borrow it all out tax-free.
Go to New Orleans for Mardi Gras. If there is a seminar there, deduct the trip.
101) TRAVEL: Even if a class or course is offered in your home town, the fact is that you are allowed deductions for travel to and from educational facilities, meetings, seminars, and conventions that improve your business-regardless of where the events are held (IRC 274(h)(1)).
102) FUN SEMINAR WITH SPOUSE: Go to a real estate seminar in Colorado and snow ski. Or Las Vegas. Take your partner, I mean spouse.
103) FUN SEMINAR WITH KIDS: Go to a Real Estate Seminar in Orlando Florida next to Disney world. Take your kids, I mean your employees.
104) DEDUCTIBLE TRAVEL: When traveling to business seminars transportation to and from the destination, including airfare, car costs and taxi are deductible. On the road expenses include all costs necessary to sustain life while on your trip, such as lodging, meals, laundry, dry cleaning and similar expenses. On the road expenses are 100% deductible (IRC 162(a) (2) and 62(2) (B)) and meals are 50% deductible. (IRC 274
(1). Keep in mind, not only can you deduct your dry cleaning and laundry while on the trip however, you can also deduct the cost of the first laundry and dry cleaning expense you incur when you get home. If you accidentally soil a tie and have to replace it while on business travel, that tie is deductible. You may not deduct the cost of entertainment where there is no business motive, such as if you went to a movie alone. One final point, the IRS has stated that they don’t need receipts for travel if the expenditure is less than $75.00. You would need to document these small expenses in a diary or tax organizer.
105) PAY FRIENDS: When on business travel you can stay with a friend or relative. You can pay them a fair price for lodging (tax free 14 days a year to them). Your business can deduct the lodging. An example is you could pay a relative $700 for a week’s stay. You deduct the money and they pay no taxes. Since you can only deduct ½ your meals ask your relative to feed you with their rent.
106) MEALS: Self employed tax payers, such as landlords, can use per diem rates for meals and incidental expenses without having to keep receipts. This varies between $39 and $49 per day depending on the location. Under $75 never requires a receipt.
107) LEARN AND FUN: Private studies (by me) have proven that you learn much more at seminars that are on cruises than on land. The salt air does something to the brain when you mix it with excessive food and alcohol causing it to absorb more knowledge. Seriously, seminars and conventions on cruises are deductible up to $2,000.00 per year for you and $2,000.00 for your spouse, if it is directly related to your business, if you meet four requirements. 1) Ship is a registered US vessel, 2) all ports of call are in the US or US possessions, 3) you submit supporting statements with your tax returns giving days of transportation, number of hours of trip and program of scheduled business activities. You will need a statement signed by an official of the course or ship showing hours attended, 4) more than 50% of your total days are spent on business. Note: Travel days are counted as business days. (IRC 274(h) (2)).
108) DEDUCT 100% OF MEDICALS: If you own a real estate company for the purpose of owning, buying, selling, or managing real estate you get the same benefits as any other company business.
Instead of ONLY being able to deduct amounts of medicals over 7.5% of your adjusted gross income, you can deduct 100% of ALL medicals. (example an individual who earns $100,000.00 and has $7,501.00 in medical expenses usually can only "write off" $1 !!!)
Hire your spouse and there is a way you can deduct all of your medical expenses including premiums.
You can create a "self insured" medical plan with your own company that pays, in addition to your medical insurance premiums, it can cover holes that your insurance company does not cover, such as deductibles, co-insurance, braces, dental, mileage to and from doctor, hearing aides and even non traditional forms of medicine such as chiropractic and acupuncture.
You also can cover heating pads, Band-Aids, aspirin. Anything your "plan" says you can.
This is called a "medical reimbursement plan". You can cover other items not covered by insurance such as preexisting conditions, psychiatric, routine physicals, and co-pay.
These are employee fringe benefits deductible to your company but not taxable to the employee (you and your spouse). You cannot discriminate between employees.
Don't be afraid, It's just pieces of paper !!!!!!!!!!!!
109) FOR SALE NOT-BY-OWNER: You can put a contract on a house with a garage apartment, rent them out for $1,100.00 a month for 3 months, collect $3,300 in rent, and sell the contract for $10,000.00. You made $13,300.00 and you never actually owned the house. True story!
110) ONE GOOD CONDO EFFECTS THE WHOLE BUNCH: Buy a few condos rehab and clean one and raise the rents. For income properties, higher rents mean higher values. Sell the condo for a $10,000 profit. Buy 10 and sell them. Make $100,000.00. This works on houses too.
Tax defer exchange that profit into another deal. Go find some more condos. Smile a lot.
111) FIX IT AND SELL IT: Buy a house “subject to the loan”. Put $5,000 down payment on a credit card and owner finance $20,000 of the down payment. Clean up the house and sell it for a $40,000 profit. Owner finance some of the profit to avoid taxes. Divert some of the profits to another company (that you own) to lower your capital gains.
112) ANYTHING CAN BE A DOWN PAYMENT: You can trade a van or a car for a down payment.
113) MOBILE HOMES ARE EASY: Buy a mobile home. Clean it up. Rent it for more than the payment. Pay less taxes. Go shopping.
114) RENT ROOMS: You can buy a house and rent out rooms to pay the mortgage and live free.
115) OLD HOUSES WITH GARAGE APARTMENTS ARE NICE: You can buy a house for $80,000 and if it has two garage apartments you can rent all 3 units and have an income of over $2,000 per month. $24,000.00. That 21% per year return on all cash purchase. If bank financed and you paid 10% down or $8,000 that’s a 300% return per year on your cash. All this plus depreciation, plus appreciation, plus unearned income. That’s better than the 4% or $26.67 per month interest the bank will pay on your $8,000.00.
116) DISCOUNT NOTES: You can buy a property and owner finance $100,000.00. Six months later, when seller needs money, the seller can discount to $75,000.00 and get $25,000.00 off the price to get you to pay off the $100K 2nd mortgage he financed for you.
117) CELL TOWERS ARE NICE: You can rent land to a cell tower for $2,000.00 per month. If the cell company wants more space for a generator and they offer you $300.00 more a month, you can charge another $1,000.00 per month for the land. $1000.00 is more than $300.
118) BUSINESSES GROW: You can look for houses, which are near businesses. When the business grows they will pay more than a homeowner would for the house.
119) GARAGES HOLD MORE THAN CARS: You can buy a house, even if it is a break even, you can close in the garage and raise the rent by over $500.00 per month. $500 X 12 months = $6,000.00.
Do that with 10 houses = $60,000.00.
120) ADD A MOTHER IN LAW SUIT FOR HIGHER RENT: You can wall up a door of a den, add a bathroom and small kitchen and collect $600 more a month forever. $600 X 12 = $7,200.00 per year.
10 houses? $72,000.00.
121) SAVE $11,000: On $72,000 rent, since its unearned, you would pay 15.3% less in taxes than if you worked for it or $11,016.00 per year in savings.
122) MAKE YOUR OWN MONEY OUT OF THE AIR: With real estate you can create income out of the air. You can rent an old washer and dryer that you bought used 10 years ago or that the last tenant gave to you, for $25 per month for 3 years, = $900.00.
Tell the tenant at the end of the lease they can have it (if they aren’t ever late on rent). Since it will become theirs they have to repair it if it breaks. They will take better care of it.
What if you did that with 100 houses? $90,000.00 over 3 years, that’s $30,000 per year in free income.
123 YOU REAL BRAVE????DEDUCT A DOG? Buy a dog that protects your office. If he is a security dog feed him with pre-tax dollars. Love your dog, he is a man’s best friend. If you are a woman name your dog "diamond", a diamond is a girl’s best friend.
124) LAND IS GRAND: If you have a lot of land, you can have a ranch. Ranches, when run as a business, are deductible. Ranches have lots of fun toys. Buy a cow.
125) BOY TOYS: Some Real Estate businesses can buy or lease and deduct 4 wheelers, golf carts, boats, RVs, helicopter, airplanes and jets.
126) FUN AND LEARN: If you are in the real estate business you can go to seminars on laws and taxes and deduct the trip. You learn faster in fun places. Cruises are fun.
127) PAY YOURSELF A COMMISSION: If you have a real estate license you can collect part of the real estate commission on your own deals. You can never have too much money. Malls are everywhere. There is lots of stuff to buy.
128) LIVE OFF LOANS: You can follow John Adams seven year itch or Robert Allen’s ten year plan. You buy a house each year for seven to ten years and refinance the oldest house each year. You increase rents to cover mortgages. You live off the tax free loans.
129) CHANGE RENTALS TO HOME AND SELL TAX FREE: You can convert a rental house to your personal residence and later sell it tax free (under IRC 121 exclusion).
Warning: If you acquired the rental property under a 1031 exchange, Congress has extended the previous rule of two years to now require that you hold the property for five years. I am not positive that the IRS won’t interpret this as five years plus two years. It seems to me that if the rental house was not acquired under a 1031, that you could sell it after two years, tax free under a 121 exclusion. In any event, you can always 1031 the rental house. Confused yet? Ask a tax advisor.
130) REAL ESTATE IS GREAT: Real Estate is lucrative and simple. Once you “get it” no one can ever stop you from success. You can do real estate deals anywhere in the world.
131) REAL ESTATE IS REALLY GREAT: Real Estate is not just as good as other investments - it’s 100 times better!
132) REAL ESTATE IS JUST A TOOL: Real Estate is just a tool to get where you want to go. You can use real estate to help your friends and family. You can teach real estate investing to your children and grand children so they can be financially self sufficient.
Real Estate, you either love it or hate it.
The key to investing is to get moving and take action.
Well, now is the time. Today is someday.
We each must find the passion in our own lives.
Only we can take charge and responsibilities of our own destinies. Only I can create my own life of substance and truly begin to live my dreams.
One day we will be dead forever.
Every day counts.
Everyone in your life matters.
Enjoy life to the fullest. Don’t sleep or watch too much TV.
Decide your goals and dreams and then accomplish them.
Have fun. Make things fun- you control your attitude. If it’s not fun do something else.
Be passionate. Be honest. Work hard. Fight hard.
Real Estate deals are everywhere. If you can think of it you can do it. START TODAY!!!
I find that most people expect too little of life, they grumble and they settle for less.
Success and abundance is not finite, opportunities are limitless, and far too many people come to the fountain of life with a teaspoon instead of a glass.
Me? I prefer a tank car.
Live with Passion; always tell the truth and fight to win.
MAKE IT A GREAT DAY!!!
Howard
RealEstateOVVned
