Taxes are life’s largest expense. That’s a cold, hard fact. The tax rates bandied about by the IRS are only the beginning. By the time you throw in sales tax, gas tax, automobile tax, and every other little or large government fee that comes your way, you might be paying upwards of 70% of your income on kind of tax or another.
The point of this is the final entry on Jason’s 10 Commandments of Successful Investing – thou shalt invest in tax favored assets. All other things being equal, and they’re not but that’s a story for another day, why wouldn’t you take advantage of the incredible tax benefits available to property investors? There’s no other investment class that even comes close.
The majority of America’s wealthy citizens are large holders of real estate. That’s no coincidence. You can bet they know the trick to holding on to more of their money in order to create serious wealth is to keep Uncle Sam’s fingers from digging too deeply in the form of taxes.
Non-cash write-offs and other perfectly legitimate deductions (like the 1031 Exchange) are literally money in your pocket. Combine these advantages with the fact that real estate is historically proven to outperform stocks, bonds, and mutual funds to an alarming degree, especially if you’re a Wall Street brokerage firm, and you’ve got the makings for what could be called the perfect investment. Well, maybe not perfect but as close as it gets in this life.
