Epic Real Estate Investing - How to Write Off Hundreds of Thousands of Dollars THIS Year | 527

Episode Date: November 27, 2018

Today we are focusing on a specific provision of the tax code that can write off hundreds of thousands of dollars on your tax returns. Learn what the 179 deduction is, how you can benefit from it, and how to minimize your tax liability in creative ways.  Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Did you know that up to 50% of your lifetime income will be wiped out by taxes? What if you could stop this madness? Isn't it about time you play on a level playing field with the wealthiest 1%? Now you can. Tim Berry, attorney at law, shares here each and every week current tactics and strategies that anyone can implement to hack the tax code. Protect your assets and keep what's rightfully yours.

It's time. for Tax Hacker Tuesday. Hello, and welcome to the Epic Real Estate Investing Show. It is Tax Hacker Tuesday with my attorney and friend, Mr. Tim Berry. On Mondays here at Epic, we show you new and creative ways as well as time-honored ways of making money using real estate. And on Tuesdays, Tim shows you how to keep it. Hello, Tim. Hey, Matt.

How are you doing? Very good. Thank you, sir. We've got a boring episode for everybody today, leaving off of last week. But no, it's actually really exciting. So we're talking about the different types of things that we can do here in the fourth quarter and prepare to mitigate your tax bill in next year for 2019. Or it's 2018 taxes that you paid in 2019 is what I'm trying to say. And so we kind of went over some general stuff, all about the concept of just lowering your income in increasing deductions, pre-paying expenses.

Let's get more detailed, I guess, today, right? What are we going to talk about today? Sure. Today, what we want to talk about it, and a lot of people are internet experts on this stuff, is something called the 179 deduction. And that's a provision of the tax code that says you can write off hundreds of thousands of dollars on your tax return so long as you put tangible equipment into operation for your business before December 31st of the year. Okay. And that's it. We're done with the show.

All right. Well, that was fantastic. So that means go out and buy office equipment or business equipment? That's what it means. Go out and buy equipment for your business. And by the way, I said tangible business equipment. Software. Software can meet that definition as well under some nuances of Congress's idea of what tangible business equipment is.

But software meets that requirement. Other one that we've talked about before, but I think it's just fantastic, is mobile homes. Mobile homes are tangible business equipment if you're going to use them in an Airbnb, a VRBO type setting. So gosh, you could go out and buy a few hundred thousand dollars worth of mobile homes. Everybody's dream come true. You don't have to pay actual cash for them. You can rack them up on the credit card. You can buy them an installment note, whatever. And now you're able to write off 100% of the expense of those mobile homes. So that's kind of neat and exciting, I think. Okay, so there's the distinction because we have its own little code, this 179 deduction. It's writing off 100%. So is it a dollar for dollar? A dollar for dollar.

If you rack up $200,000 worth of equipment, cool. You can write off $200,000 of equipment. There's not a minimum. I don't have to do $200,000, right? Nope, don't have to do $200,000. You could do $20. That is awesome. And the other cool thing about this that makes it even more awesome is

you don't even have to pay out of pocket this year. 2018, you can go out there, you know, 1158 at night on December 31st, your local mobile home store and say, hey, mobile home people, I'd love to buy a couple hundred thousand dollars worth of mobile homes. Here's my promissory note. Cool. So now you just sign a promissory note. You're not even cash out of pocket, and bam, you can get that tax deduction. That's fantastic.

Okay, so here's another thing. If you put it on a credit card, could you take the whole? whole deduction this year. Not only can you take the whole deduction, but then you can also get the air miles. So why the hell wouldn't you do that? That's exactly where I was going with this. How do we get more air miles? Yeah, yeah. That's what it's all about, isn't it? Yeah, totally. So you bought $10,000 of new computers for your office on a credit card and didn't make any payments until 2019. You can still take all the deduction in 2018. You can still take all the deductions in 2018. and the reasoning is you are liable for those payments.

You've already signed, you know, your life away to saying, yes, I will pay this $10,000. And so you're liable. So therefore, it's a valid expense for 2018. That's awesome. My computer is about to die anyway. Well, there you go. And you know what? Let me be a little bit ADD here and bounce off to another topic.

We're just talking about air miles. And this one isn't so much 179, but this is one of the funniest ideas I've ever heard. And this was at an attendee at an event and a very bright person came up and said, You know, Tim, I know somebody who talks about what they do is they like to go to important business conferences in Dubai and they fly first class. So they'll buy their tickets in 2018 for their event as the first class tickets, I don't know, or 10,000, 15,000, 20,000, whatever. And now that's a valid business expense. That's pretty cool, isn't it? It is very cool.

That's not 100% deduction. the right. Oh yeah, it's probably 100%. So long as the primary purposes for business, it's probably going to be fully deducted. That's just like the office equipment? Just like the office equipment. Holy smokes. Okay, can you do this? Can you take the credit card to buy the computers, take the air miles? Can you write off the air miles if they're free? No, you can't. That's the challenge. So we don't want to use air miles on that Dubai ticket. We want to pay cash out and rack up some more air miles. Okay. Got it. I was trying. I hear you. I hear you. And you know, even worse, though, and I shouldn't even mention this. I've heard some people, and this is distasteful.

It's repugnant, and I've just disappointed people do this. But I've heard some people, whenever they rack up those Dubai tickets, and they take that deduction in 2018, they changed their mind in 2019, and they ask for a refund. That is disgusting. It really is. It's not as it. It's Absolutely repugnant. I can't even spell the word, but it is that. I can't even believe someone would do that. I have a friend that did something very, this has nothing to do with taxes. This is kind of repugnant too, but I was pretty impressed by his ingenuity. It was something on one of these coupon apps, like a deal-of-the-day type app.

And if you bought something, then you got a certain amount of Uber credits. and so he just kept on buying this certain something over and over and over again and kept on asking for a refund. But he found the loophole was they wouldn't take back the Uber credits. So he kept, he bought this thing like a hundred times. And I don't know, he got like, I don't know, 10 bucks of Uber credit every time you bought it. So he had like $1,000 of Uber credits and then didn't ever actually buy the thing. See, that's simply disgusting, isn't it? It's terrible.

I can't believe people even do that. but I was impressed by the ingenuity. I don't even have the capacity in my brain to think of something like that. Well, you know, since we're already down this road, this rabbit trail. All right. It's one-up or Tuesday. It is, isn't it? I'm going to one up you on this one.

Maybe too. Somebody did the same thing who I know. They were racking up air miles. And if they could get a rental car, and I forget how it worked, the rental cars were only six or seven bucks a day. And each one they rented, they got. a thousand air miles. And I think it's a two cents per air miles.

So that was 20 bucks. And so he would just go out. He just sat at the counter one day and just racked up running cars, running cars, running cars, never used them. But he was paying a seven bucks a day for 20 bucks worth of air miles. It was just interesting.

Like I said, boy, if all of these creative criminal behavior could be directed towards something good, just think what people could accomplish. Well, you know, in my mind, I don't want to use the word criminal. It's just arbitrage. I mean, like the guy with the cars, if he was only paying out seven bucks and he was getting $20 worth of benefit, he'd be an idiot not to do it. I mean, it was probably wasn't violating the rules.

He was probably playing the game by the rules. But, you know, those guys set up the rules and now he was playing the game, might be in redundant here. And that's going to kind of line us up for next week's episode because all this stuff, about tax planning. Some people are going to say, oh my gosh, I can't believe you would do that. Oh, my gosh, that's awful. And in my viewpoint, if Congress implemented the laws and they said, you're allowed to do this. Okay, cool. I'm going to take them with their word. I'm going to do whatever I can to minimize my taxes or to minimize my client's taxes so long as I'm not doing violating any law or doing anything illegal, I'm going to push it as far as I possibly can for the

client. Hell, that's what they pay me for. So, and other thing, too, is all these laws are written by special interest groups. I'd love to tell you guys that you're a congressman or your congresswoman or your senator's a genius. We all know that's not the truth. They're all owned by the special interest groups and they implement these laws for the special interest groups. Why should we let the special interest groups have all the fun? Why shouldn't we take advantage of these rules ourselves and start saving money for our families as well? Yeah.

Don't hate the player. Hate the game. There you go. There you go. And don't even hate the game. Enjoy the game. man to play. Yeah, right. I love it. I think. I have to process this. But hey, the tax code, it's laid out there. It's for all of us to follow. It's for all of us to play that game that they

gave us to play. And if you're better at playing it, then you should play better. Absolutely. You should reap the reward of being a better player. There you go. Perfectly said. So, yeah, it's the fourth quarter. So if you want to take advantage of what we've been talking about or we've been talking about all year, make sure you minimize your tax liability by lowering your income in creative ways by increasing your deductions and prepaying your expenses. You make sure you do it all right because you could do it wrong and be like that damn Tim Barry. People say it never anyways. They probably say it anyway, right? So whenever you're ready to have Tim customize a tax hacker blueprint for you and it would include all of this and advice on

what there is for you to do in this fourth quarter, go to tax hacker.com, answer a few questions. is about your situation. Tell Tim what you'd like to have happen. And his team will take it from there. And he'll even give you a copy of his free book all around Trump's new tax plan, specifically what the press isn't telling you. So go to tax hacker.com and we'll see you right here next week. And we've got another exciting episode. Tim dangled the little carrot out there. And we'll see you next Tuesday. All right, Tim, take care. Okay, you too, Matt. Thank you much. Bye. Bye. That's it for today. As we dream of a tax system that works just for you.

But until then, you have Tim Berry. See you next Tuesday for another episode of Tax Hacker Tuesday. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.