Secrets of the Rich
In the past seven editions, we have covered the Seven Proven Steps that the rich use to make and grow their money. In the first edition, we covered the overview of the system and debuted the seven steps:
- Create a Business.
- Discover Your Hidden Business Deductions.
- Pay Your Taxes.
- What's Left Goes Into Real Estate.
- Real Estate Income Comes Out Tax-Free.
- Buy a House the Right Way.
- Make Your House Give You Money.
In Step Six we discussed some strategies for buying your principal residence so that it ultimately can put money in your pocket. The initial exit strategy that you determined in Step Six will be very important in what you do with Step Seven.
Real Life Homeloopholes™
Here are some homeloopholes™ that the team at DKA (D Kennedy & Assoc,, CPA) use:
Scott (my business partner) buys fixer-upper properties in up and coming neighborhoods. He lives there for two years while he fixes up the property. His current property shows a gain right now of about $150,000 and will likely be close to $250,000 by the time he sells it in two years from the date of purchase. That's a pretty good return – $250,000 tax free for two years of part-time supervision and the hassle of moving!
Marcia (Manager of DKA Programs) and her husband just bought a new home. Rather than sell their current home, they moved it into an LLC (limited liability company) and rented it out. What a simple way to add to your real estate portfolio – don't sell! Marcia's old house is now putting money in her pocket.
Amy (Office Manager) has a side business doing author support at seminars. She uses a portion of her home as a home office. This means that she now has a portion of mortgage interest, property tax, homeowner dues and utilities that directly reduce her business income.
Live there for Two Years
Scott was taking advantage of the homeloophole™ that allows him to live in a property for two of the previous five years and then sell it to take tax-free gain of $250,000 (as a single taxpayer.) A married couple filing jointly can take up to $500,000 of tax-free gain.
If you live in your property for less then two years and move due to "unforeseen circumstances", you can then exclude a pro-rata portion of the gain. For example, one of the unforeseen circumstances is "change in self-employment." If you started a new business that would be considered a "change in self-employment."
I received a question at www.taxloopholes.com regarding a gentleman who a rental property that had appreciated about $125,000. He wondered if he and his wife moved into the rental property for 6 months whether he could exclude this gain on sale. If he did legitimately move into the property and then had to sell due to a change in self-employment, he could then exclude a pro-rata portion. If he lived in the property for six months that would mean that he was there for 25% of the generally required 2 years. And, when you calculate 25% of $500,000 you get $125,000. The answer is "yes" – he can exclude the gain just by living in the home for 6 months.
Turn It Into a Rental
One strategy for your personal residence is to turn it into a rental property. In the past, one challenge with this strategy was that you then had to use the initial basis to calculate depreciation. Chances are your property has gone up in value and yet you're stuck with depreciating the basis back when you bought the property.
No more! There is a homeloophole™ that allows you to sell your personal residence into a controlled entity at the current fair market value. As long as you qualify for the tax-free gain exclusion, there would not be a taxable event upon the sale. The LLC (owned by you) then gets the higher value and has more depreciable basis. That means more deductions!
Home Office
The IRS gave us a huge gift December 2002 when they issued a Treasury Regulation that finally answered a question about home offices. The problem in the past had been that when you sold your home, and took the tax-free gain exclusion, you were forced to attribute part of the gain to the portion of your house that been used as a home office. For example, if 10% of your home had been used as a home office, then 10% of your gain was now income related to your business – and thus was taxable. In December 2002, the IRS said – no more! You can now exclude all of the gain attributable to the home office portion provided the office is part of the same "domicile."
Look at Your Home in a Different Light
These are just a few of the homeloopholes™ available for anyone who is willing to change their perspective on their home. Face it – you have to live somewhere. Wouldn't it be nice to have your home pay its own way?
Seven Steps
We've reached the end of the Seven Steps. My suggestion is that you go back through the process again and again -refining what you do. It doesn't have to be hard or difficult to create wealth. Often, it's just taking seven simple steps.
Diane Kennedy is a CPA/Tax Strategist and the author of the best-selling book Loopholes of the Rich: How the Rich Legally Make More Money and Pay Less Tax and co-author of the best-selling book
Real Estate Loopholes: Secrets of Successful Real Estate Investing. For more information on how to legally use the tax loopholes and make the IRS your partner, contact Diane's CPA firm, DKA, at 888-592-4769 or www.dkacpa.com. Tax law is constantly changing! Keep up to date for free by signing up for a free e-newsletter at www.taxloopholes.com
nice info
ivermectin cream uk – ivermectin 3 mg stromectol nz
cost of stromectol – stromectol ivermectin australia
stromectol price in india – stromectol 468342446 stromectol online canada
Have you ever heard of second life (sl for short). It is essentially a online game where you can do anything you want. SL is literally my second life (pun intended lol). If you want to see more you can see these Second Life articles and blogs
This was great! I would like you to clean up all this spam though
plavix 75 mg generic – plavix generic pill plavix 300 mg
clint eastwood vitality ed pill ingredients – can i get a doctor prescription online for erectile dysfunction is viagra the best pill for ed
I don’t know about you guys but I am obsessed with airplanes. I have a friend in highschool that loved airplanes, so here are some airplane related stuff I don’t know about you guys but I love airplanes. I had a friend in highschool that loved airplanes, so here are some airplane related stuff https://www.airlinereporter.com/2009/06/happy-fathers-day/
Have you ever heard of second life (sl for short). It is basically a game where you can do anything you want. SL is literally my second life (pun intended lol). If you want to see more you can see these sl authors and blogs
ed pills samples – ed pill images best selling over the counter ed pills
I don’t know about you guys but I am obsessed with airplanes. I have a friend in highschool that loves airplanes, so here are some airplane related stuff I don’t know about you guys but I love airplanes. I had a friend in highschool that loved airplanes, so here are some airplane related stuff https://www.airlinereporter.com/2009/06/airlines-are-cutting-flights-jobs-and-spoons/
welke stof zit in viagra – wat is het verschil tussen kamagra en viagra wat doet sildenafil voor mannen
Have you ever heard of second life (sl for short). It is basically a game where you can do anything you want. sl is literally my second life (pun intended lol). If you would like to see more you can see these Second Life authors and blogs
Have you ever heard of second life (sl for short). It is essentially a video game where you can do anything you want. SL is literally my second life (pun intended lol). If you would like to see more you can see these second life articles and blogs
venta de viagra online – viagra necesita receta precio viagra en farmacia
I don’t know about you all but I am obsessed with airplanes. I had a friend in highschool that loved airplanes, so here are some airplane related stuff I don’t know about you guys but I love airplanes. I had a friend in highschool that loved airplanes, so here are some airplane related stuff https://www.airlinereporter.com/2010/02/video-air-traffic-of-the-united-states/
Great work! This is the type of info that are meant to be shared across the web. Shame on the seek engines for now not positioning this put up upper! Come on over and seek advice from my web site . Thank you =)
buy bactrim ds – bactrim price canada how to get bactrim without a prescription
Have you ever heard of second life (sl for short). It is essentially a game where you can do anything you want. sl is literally my second life (pun intended lol). If you want to see more you can see these sl authors and blogs
cialis tab 10mg – cialis professional 20 mg reviews cialis without a preion
online pharmacy same day delivery – cialis super active generic silkroad online pharmacy
Have you ever heard of second life (sl for short). It is essentially a online game where you can do anything you want. Second life is literally my second life (pun intended lol). If you would like to see more you can see these Second Life authors and blogs
cymbalta 60 mg price canada – generic cymbalta 20 mg duloxetine
Have you ever heard of second life (sl for short). It is basically a video game where you can do anything you want. Second life is literally my second life (pun intended lol). If you want to see more you can see these Second Life websites and blogs
Have you ever heard of second life (sl for short). It is basically a video game where you can do anything you want. sl is literally my second life (pun intended lol). If you want to see more you can see these sl articles and blogs
where can you buy levothyroxine – generic synthroid without prescription levothyroxine tabs 75mcg
Have you ever heard of second life (sl for short). It is essentially a game where you can do anything you want. SL is literally my second life (pun intended lol). If you want to see more you can see these second life authors and blogs
amoxicillin 500 mg for sale in canada today – rx amoxicillin 500mg antibiotics without a doctor’s prescription
He is a salary of Shanghai and Shanghai.
Have you ever heard of second life (sl for short). It is basically a video game where you can do anything you want. Second life is literally my second life (pun intended lol). If you want to see more you can see these Second Life articles and blogs
purchase vardenafil online – vardenafil canada online vardenafil uk
vardenafil canada – generic vardenafil online vardenafil tablets 20 mg
This was great! I would like you to clean up all this spam though
pharmacy online – canadian pharmacy ltd. costco online pharmacy
where to purchase cialis online – generic cialis price comparison generic cialis online pharmacy canada
viagra nz over the counter – sildenafil online purchase how can you get viagra over the counter
This is the time to measure titanium dioxide, but it is very important.
buy generic vardenafil no prescription – vardenafil generic brand vardenafil non generic
what is vardenafil used for – vardenafil precio vardenafil pills
ivermectin cream 1% – ivermectin 9 mg ivermectin tablets for sale walmart