The Entrepreneur DNA - How to Keep More of Your Money: Active vs. Passive & Real Estate Truths | Neil Jesani | EP 90

Episode Date: September 15, 2025

In this episode, I sit down with finance pro Neil Jesani to cut through the noise on tax write-offs for entrepreneurs and investors. We break down active vs. passive income, what actually unlocks depreciation (cost seg, real estate professional (REP), short-term rental rules), why 461(l) caps W-2 offsets, and how business owners can do far more. We hit estate tax vs. income tax, the step-up in basis myth/truth, smart uses of §179/bonus depreciation (including equipment plays), audits & record-keeping, and practical setup for new founders (LLC → S-Corp). If you’re making money—or about to—this will help you keep more of it, legally.   About Neil: Neil Jesani is the founder of Neil Jesani Advisors, Inc., a national boutique tax, accounting, and financial advisory firm based in the Miami–Fort Lauderdale area. His in-house team includes CPAs, IRS Enrolled Agents, tax attorneys, and CFPs serving high-income individuals, entrepreneurs, and professional firms across the U.S., with a focus on advanced tax strategy, compliance, business performance, and legacy planning. The firm operates from a ~10,000 sq ft office and emphasizes research-driven, white-glove execution. Jesani also leads Neil Jesani Wealth, a multi-family office for ultra-high-net-worth families. Connect with Him: Website: neiljesani.com Services: services.neiljesani.com Neil Jesani Advisors, Inc.+1 Instagram: @neiljesani Instagram X (Twitter): @neiljesani X (formerly Twitter) LinkedIn: linkedin.com/in/neiljesani LinkedIn+1 Facebook: facebook.com/neiljesaniadvisors Facebook YouTube: Neil Jesani Advisors channel/videos YouTube+1 Email: [e-mail] Looking to hire smarter? ZipRecruiter uses powerful technology to match you with top talent fast — no more sifting through a stack of weak resumes. 4 out of 5 employers who post on ZipRecruiter get a quality candidate within the first day. Try it FREE at ZipRecruiter.com/WORK ZipRecruiter — the smartest way to hire.   About Justin: After investing in real estate for over 18 years and almost 3000 deals done, Justin has created a business that generates 7 figures in active income through wholesaling and fix and flipping as well as accumulating millions of dollars of rental properties including 5 apartment buildings, 50+ single family homes, and 1 storage facility Justins longevity in real estate is due to his ability to look around the corners, adapt to changing markets, perfecting Raising private capital, and focusing on lead generation which allows him to not just wholesale and fix & flip, but also accumulate wealth through long term holds. His success in real estate led him to start The Entrepreneur DNA podcast and The Science Of Flipping podcast and education company, and REI LIVE where he’s actively doing deals with members. He has coached and mentored thousands of aspiring and active investors over the last decade. Connect with Justin: Instagram: @thejustincolby YouTube: Justin Colby TikTok: @justincolbytsof LinkedIn: Justin Colby Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Yo, what is up, entrepreneur, DNA family. I am back with an incredible guest. If you are a business owner, or maybe you're an aspiring business owners, and you aren't totally aware of all the tax write-offs and the advantages that you can have as a business owner, whether it be an LLC, S Corporation, or otherwise, and you could use some help understanding how to keep more of that hard-earned money you have. This guest, Neil Jasani is going to talk about all the things that we can do. What's up, brother? Thank you for having me, Justin.

It's always great to be here. It's great. You and I are both newer to Miami, right? You moved six years ago, I think you said. Six years back from New Jersey. Yeah, I moved during COVID. So I was in Scotts, Arizona, and I moved during COVID in 2021. So I've been here four years. You've been here six. It's a great place. Great tax advantages. Oh, absolutely. No income tax. Absolutely. That's great. I think that that was one of the reason on top of some other reason, but that was also one of the very attraction to move to Miami. Yeah. So you run a financial firm, an accounting firm, and so this is your wheelhouse. We are going to talk taxes. We are going to talk financials. We're going to talk accounting. Talk to me a little bit about your decision. I know one of the reasons we just said, no income tax. That's big, right? So California, I was born and raised in California. I don't know if they have the worst. You might be able to tell me, but they have a terrible income tax law, right? Florida is great. You know, we as entrepreneurs, we have no income tax if we build our LLC and S corp and pay ourselves. talk a little bit about your decision to move here and some of the tax advantages here for Florians. So I think number one reason was the tax because, you know, once you reach at the certain stage in a life and where, you know, God has been kind and you are making lots of

money, then, you know, that you want to do whatever you can. So that actually one of the reason was the saving money in tax and, you know, it is actually substantial. So that was number one. number two, I'm 55 now. And at that time, I was just under, you know, I was just under, you know, 50. I used to work in, you know, New York City, reached to office every day, 7.30 in the morning, never left before 7.30. But now I go to New York City, you know, my hands hurts, you know, my ear gets cold and so on, so forth. So I thought, you know, I'm at these days.

It was great. Northeast is wonderful when you're young and when you're hustler. But once you pay your price, I thought it might be time to move to Florida. And when I came in over here, I wanted to do actually summer, winter. So I said, I'm going to, you know, put 183 days. I will become, you know, actually, Fordian. And so I don't need to pay to, you know, actually Governor Murphy, New Jersey. Yeah.

But I came in over here and, you know, actually COVID strike. And I was stuck over here. I thought the summer would be hot, but it was okay. And I don't think. This summer was pretty hot. This one, you know, but that I learned that the summer is a great time to go in the ocean, you know, that you can jump in the water. It is a wonderful, you know, actually temperature of the water. So I loved it and I never went back to D. Jersey.

So that's a big one. Now, it's funny because me and my wife were just talking about this, right? So before we moved here, we were in Scottsa, Arizona. She's from Florida. And so I was like, oh, great, no income tax. So I'll say 15% or so. Awesome. But then I get my property tax bill. And I'm like, this is triple what I'd be paying in Arizona. And health insurance is more. And I'm like, they're always going to get you. Like there's never like this amazing thing that I somehow win. Right. Like that hours won New York, New Jersey, there's also that actual property tax is very high in. In Jersey. Yeah. So so so so so that for me, you know, that was not a big even. And the only big thing I found is over here, you have to renew your, you know, that, yes, you know, yes, that actually insurance is insurance.

I spend almost 10 grand a year in fire, flood, wind, and property insurance. No, absolutely. It's insane. Yeah. So it is, in fact, car insurance, you know, actually, South Florida driving, it's crazy. I have no idea. There's people never give any signal, left, right, you know, I think there's nobody trained them, you know, that move or that give the signals. But anyway, yeah, so that was the other thing I found is it is small,

but in New Jersey, you can actually renew your car registration for four years or something like that one, only 20 bucks. Here, there are some 120 or 200 bucks, and that every year you have to renew. So obviously they are trying to make some money somewhere. Yeah. But still, honestly, Justin, lifestyle is wonderful. I would pay anything to stay here. Absolutely.

Absolutely. So I'm in real estate and I want to get into some of this tax stuff because I love real estate. I will always be in real estate. A lot of people look at real estate as a great tax shelter, a great tax advantage. Do we agree just the basic premise? Yes. I agree as well. This is why I'll always buy apartments and storage facilities, any type of commercial that I can have the most tax write off. However, I want to start this out a little more controversial. I want people to understand. Like, it's not as big and beautiful as a lot of people think, right? I've gone round and round in different investments and I own a big property in Houston. I own smaller properties in Alabama and I'm diversified. Sometimes I have a really large tax write-off and other times I don't, right? Where I can't get the cost segregation study to get enough value out of it to give me the bigger tax right-off. what are some misconceptions about tax write-offs, tax sheltering within the real estate, that people maybe make big assumptions because they see some of the, I don't know,

clickbait type of social media about it. Oh, buy real estate, you get tax write-offs. But what are some mis assumptions that they're making that you can advise us on? So I think the biggest one, and this is really big and nobody talks about, It's called active and passive. This is big, okay, so that most people don't understand. I have seen many clip online. They said, hey, if you're making $200,000, you know, you are actually W-2 employee.

You can buy $200,000 worth of real estate and, you know, that pays zero in taxes. Right. Not true at all. Not true. So I think that's where the biggest misconception, and that either it is unfortunately, it's not actually people's fault. There's so many misinformation out there. So that actually, let's go one by one in detail. So what happens is real estate IRS puts in two category, commercial and real estate.

Residential. Residential. So IRA says your residential real estate will be worthless in a 27 and a half. So you can depreciate over the 27 and a half. And your commercial would be 38 years. Okay, fine. So now that actually technically, let's say you buy $1 million worth of conduct. right, so that essentially you can write it off in 27.5. Now, you and I both know that I have

own many real estate as well, that your carpet does not last for 27 and a half, your faucet, so many things doesn't last for 27.5. So essentially, IRS allows you to do something called cost segregation study, which is actually an engineering study, and that allows you to accelerate the depreciation, basically. So generally, cost segregation study, when you do, that one is the land value obviously do not depreciate. So let's say there's a $1 million worth of condo, say $2,000, $200,000 is a land. So you're left with $800,000. And generally you will get anywhere between 25% of that value that you can depreciate now. So the 25% of the 800,000, which is another $200,000, so meaning you would be able to depreciate $200,000 now. And

with the bonus depreciation back in the new bill, obviously you can take the $200,000 as the depreciation. Now let's go in detail about active and passive. So generally, this is the depreciation. It's a passive depreciation, meaning it will offset your passive income. Now your W2, K-1s, all of that one, those are active income.

So you cannot offset your active income unless you convert your passive loss into active loss. Or if you're a real estate professional. Right, exactly. So me, I get to take that whole $200,000 immediate tax right off year one. Absolutely. So that is where I was going. Either you are in a business of real estate than that obviously you are in the business.

Or there's only two other ways you can convert your passive depreciation in active is one is RAPE. real estate professional status, right? And the second one is you buy short-term, Airbnb Lufel, as we say. There's only two ways. Now it's more of a business, right? And so now you're in the business. Exactly. Exactly.

So that's the other, how do you become REP or the real estate professional? So these are two main rule you have to look for. One is you need to give 750 hours a year managing your property or doing something with real estate. And the second one, which is very important, that 750 hours needs to be higher than any other activities you can do. So let's say if you're an engineer working for larger corporation, generally people work for 2,000 hours. So obviously it's not going to work for you. But if you're married and if you have your spouse and if your spouse is not working, obviously you can make them the real estate professional. Or you buy the short-term rental, which is less than seven days, you know,

Airbnb type, and that's where you need to provide 100 hours. So anybody can do the 100 hours. But there's a second condition is as long as nobody else puts more than 100 hours. Your 100 hours is higher than anybody else, then you're okay. So that Airbnb type, it is easily doable, but that other the real estate professional, if you're working full time, you cannot do that one. Second myth, which is also very, very important. Certain time people say, hey, you know, that I'm making two million.

I will buy, you know, maybe $10 million worth of real estate and I will get the $2 million in extra depreciation and I can wipe out my income zero. Not true again. There's a 461L limit. It's called the business loss limit. So if you're getting your income from a W2 sources, basically, then IRS allows you to offset only $6,000 in a year 2025 if you're married. If you're single, then only half, basically.

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get a quality candidate in the first day. So try it for free. ZipRecruiter.com forward slash work. ZipRecruiter.com forward slash work. It's the smartest way to hire. But you can still push that tax deduction forward. Next to you still, you still have a million six or whatever, a million four to be able to push next year and next year.

Absolutely. Now, what if you are an entrepreneur, same idea. Entrepreneur makes $2 million, but not real estate entrepreneur. Entrepreneur, a day trader. That's fine. It makes $2 million, buys $10 million with the real estate. Are they able to... Offset, entire $2 million.

Yes, right? Because when your income comes from a W-2, then-and-then-161L limit comes in enough. Got it. So that actually we do have a client. we do have a client who makes, you know, $10 million, $20 million, and we find a depreciation which is $10 million, $20 million. And we can literally make their income zero. Obviously, you don't want to go less than 20 person, you know, because that whenever you're

selling it, you are going to recapture it. That's right. So that actually you want to be careful because it's going to be, you know, actually long-term capital gain so that you don't want to be zero now and when you're selling, you're paying the extra 20 percent. So you don't want to go less than 20 percent. But yes, the entrepreneur, you can do that. Well, that's a little bit of the trap of real estate, right?

Right? To your whole point, if you won, so let's just say you take all two million today. Like, great, no taxes. But then you sell year five. Well, you may owe taxes. You might owe a million dollars in taxes now because you took two million, but you only got the, and now you're selling. So now you're like, okay, now I got to roll this over. Correct. So now you got to go buy more real estate. It's like the golden handcuffs of real estate. It's like. Now, also, if you don't sell it, then it's not a big deal. Who cares? Correct. But unless you become well. what do you mean okay so this is very interesting so whenever you hear people talk about real estate primarily we talk about income tax okay and if you're not wealthy only thing you need to worry about is income tax sure but once you get wealthy now you need to worry about estate tax you know that tax when you die that's right so that either you would have heard people saying that

hey you can hold the real estate until you die right you keep rolling hauling it, right? And you can hold it until you die. And when you die, you get something called stepped up in a basis. Right? So meaning you will get the fair market value. So let's say you bought the real estate for $2 million. When you die, the value is $30 million. Guess what? You don't need to worry about that one. When you die, you will get something called stepped up in a basis. By the way, both the party, Democrat and Republican, both were against the, you know, stepped up to a basis, but still it is there. So hopefully it's going to stay there, but that actually both the parties against.

But anyway, so that other, you know, actually, when you die, you get the stepped up in a basis. So meaning the fair market value that your beneficiary are getting, it is $30 million. They can sell it next day for $30 million, and they have to pay zero income tax. Sounds wonderful. But now, guess what? That for you to get the benefit of the stepped up in basis, you need to own the real estate. So either you own, your spouse own, or your revocable living trust, not irrevocable trust. You're revocable.

So meaning when the real estate is owned by yourself or your revocable living trust, it will include in your state. So when you die, your state will become subject to the state tax. And if it is $30 million, it will be added to your state. So if I own it with an LLC, it won't count. No, LLC, if you own the LLC, it will count yours. Okay, I will. So the same, you're either a revocable trust

or if I own an LLC. Correct. Single member. Right, yes. Single member. Now, what are LLC? LLC is owned by my S corporation. I own my S corporation.

Doesn't matter. It is still on. So only way you can circumvent this one, so that's why that's the other, once you're getting big in a real estate, what people start doing it is they will start transferring or gifting it into irrevocable trust.

when you do it in an irrevocable trust, now it is out of your state, basically. But then the irrevocable trust doesn't get the step-up basis. Bingo, yes. So when you push it to the error-ocabot trust, you will not get this stepped up in a basis. So why would someone do that? Right, because the income tax,

income tax rate is lower than a state tax. The state tax is 40% versus income tax is the 37 and the long term is half of that one. So that's what it is. And your growth, right? Because let's say if you push your real estate, you bought for $2 million. Value is now $10 million. Now you gift it to your irrevocable trust, basically, right?

And at your death, it's become $30 million, right? So that earlier that you are going to pay that state tax on the $30 million minus whatever exemption you get, which is somewhere around $14, $15 million, basically. versus over here you pushed it at the $10 million valuation now it is part of your irrevocable trust and still the value is still $30 million basically

but that you're not paying as much taxes. Well so for clarity purposes let's just say I was getting up in years and initially I have it in my irrevocable trust because I would pay less taxes in irrevocable and then I said all right I'm 69 years old.

I'm now going to take it from my irrevocable trust over my revocable trust because I may any day now kick the bucket. Would that be a smart move because now it gets a step up and basis that doesn't have to be taxed by my kids? It could be. And the smarter way to do that one is how you take it out from your irrevocable trust is you can take as a loan from your irrevocable trust. So you do take a loan.

But at the time, you are technically buying the real estate at the share market value. So, no, it would not be smart move. It would not work because, you know, at the time, share market value of that real estate is probably $29 million. Yes, right. You know, that doesn't really. Now, to your whole point, you can go just get a bank loan, tax free, throw it in the bank. They can sell it when they sell it. And now they're, they sell it for $30 million, but I got a $20 million loan.

So they're only getting taxed on $1 million. Right. If you do something like that one, that is fine. God, I love real estate. This fires me. There's so many ways to do it and only an hour worth of telling it all and there's so much more. So, by the way, make sure you are reaching out to Neil immediately. He's all over my Instagram or this episode's going to be out soon. Make sure you reach out to Neil to understand this stuff.

Let's get into something a little bit interesting because of what has happened with Trump. The big, beautiful bill passed. That is great. But you brought up something that I want to know more about as a financial advisor and an accounting firm. The right side and the left side in politics, how are they viewing the economics today? How are they viewing financials today? You just told me both sides do not like the step-up basis, right? Let's talk a little bit more about what they like and don't like because I look at myself as a Republican.

I'm socially more of a Democrat in terms of what I believe in how I feel and how I treat people and just that whole side of it. Fiscally, I'm more of a Republican and I'm not. not cheap. I like nice things and whatever, but I just look at money in a way more fiscally as a Republican. Talk about the differences right now as you see them given the seat that you sit in. And with all disclosure, my belief or my, you know, thinking is very similar. Somebody said to me earlier on when I came into this country, he said, you are, you know, fiscally conservative but socially liberal. So I guess, you know, it's the same same kind of category. I personally like it what is happening currently.

Only thing I don't like is the debt, you know, current debt of the U.S., you know, that is, you know, and that other, even most people talk about, you know, that actually $35 trillion and so on and so forth, but actually it is much more than that one. Of course it is. Because if that U.S. government were to be a public limited company, then according to the gap accounting stand. you also need to include all of your unfunded liabilities. So if you factor in the unfunded liability of the Social Security and, you know, actually Medicare and so on support, now you're talking about maybe $150 trillion and that other, if you look at 50% American do not pay any taxes, okay, 50% American do not pay any taxes, only 50%. 50%. Is that because they don't make enough to pay?

They don't make enough money. So, yeah, they don't make enough money. So they make like $38,000 a year or less or whatever it is. Correct. And that is what the other things we can talk, that we need to somehow bring this segment of the population of rice, basically. So you need to lift the bottom, right? We need to.

There's the one percenters, right? And we worked our face off to get where we're at and all that. And I have my own opinions on people's work ethic. but simple things like teachers, police officers, like the services, the people that are actually helping our community, it's crazy me at times. Like, I don't know the teacher national average of salaries across the nation. I have no idea. I can tell you what is drastically too small. Absolutely. I would guess Forex. I would four X all their income. And, and that I personally because I have seen the other part of the world, so many people and that are that, you know, if I may digress for a second,

most American, you know, and my kids are, you know, actually born over here, most American, when I say, they don't appreciate this country. This is, this is a wonderful country. I'm telling you, I have probably seen one third of the globe, you know, I travel and, you know, I take my children. And Americans are hardest working people, you know, Americans are the hardest.

Right. American, oh, shit. Right. All have thought that. All compared to Europe, even Asia, you know, Americans are hardest working. In fact, there is actually a study has been done. Most American do not take all of their PTO, pay time off.

That is actually employer provides American do not take, okay? Now, that other, I think the area of improvement is somehow nobody has stayed to this segment to save money. You know, I think that is where I see. Right, they're blowing it. Right. They get lost debt and they blow through it and their paycheck to paycheck. Absolutely. They make $300 grand a year, but they're like every month, they're like, oh, my God.

Absolutely. I think the lifestyle is the biggest rag. And they thought obviously inflation we've seen, you know, rent, you know, real estate, you know, they actually rent quite a bit up. So I think that's where you will see. But somehow you can still save some money. You don't need to say, you know, there's actually a great story if I may tell you over here. So that actually, when I started my first company, you know, that other one Friday I was living, Friday I leave office somewhere on 5 o'clock

and I'm getting a call, you know, from that other, you know, some business. Long story short, one of my employee, we used to do the payroll on Friday and that at the time we used to, you know, give a check, actually, yeah, it's a physical check. Back in the day. Right, you know, back in the day. So that woman went for the, you know, actually check cashing service and, you know, that person called me to actually verify that. sees your employees and he's working and so on so forth.

So, you know, I did confirm, and then I talked to this person on Monday, and I said, you know what, I'm in a really good mood. I'm planning to give you some race today. And she said, oh, Neil, that would be great. So I said, you know what? I'm going to start making payroll on Thursday rather than on Friday. So that from that point onward, we start doing payroll on Thursday before lunchtime. So this employee can go out on Thursday

at the lunchtime they can deposit their check in a bank and they can say whatever five, six person they were paying to the check cash company. And then I say to her that you can't wait for a day. Something is wrong over here, right?

You know, that actually whatever $800, 900 check you got, you can't wait for a day and you pay somebody to get that money right away. It means that we haven't. So I said that other let's, you know, actually from this point, onward, start saving, you know, it might be 30 bucks, it might be 40 bucks, it might be 50 bucks,

but let's start putting that one in the side. Yeah. And that after, you know, six month, year, you will start saying maybe $5,000 in your checking account, and you're going to feel great. So that actually coming back over here, somehow the only thing, you know, the big, beautiful bill worries me is the debt situation. It is that somehow that it is going to add unless, you know, that we grow the GDP and that so far it looks like that we will be. That's where, you know, Scott Besson is saying that 333, right, basically.

So as long as we grow the GDP, we grow the economy. And so far, honestly, when that actually Trump declared the tariff, you know, I went to my analyst in my office and I said, you know what, I'm feeling way more bullish in America now, you know, that other... So you just said how you feel about tariffs, but like, it's really hitting America pretty hard. Oh, and how long do you think it will hit? Like, he's, like, this is the ripping the Band-Aid off, in my opinion. I'm not political and I'm not an economist and I'm not a financial advisor. I just know some things and I interview some really smart people.

Sure. I feel like what he is doing with the tariffs is saying, saying it is either death by a million paper cuts or sever the arm. Choose. You get to die by a million pay cut or you cut your arm off and you live forever. And he's saying, I'm going to cut the arm off. Like, we are going to make this an issue. It's going to hurt a lot.

But then we will rebound. Do you, is that? I agree. No, that actually I agree with tariff, in fact, you know, that I'll give you a quick example. This is another story I think you're going to love. So I went to India in January of this year, 2020, 5. You know, I went for a few days. You know, my nephew owns the, you know, store for, you know, extra glasses.

So I wear reading glasses. And that he said, uncle, I can make something called, you know, extra progressive for you. I had no idea. Anyway, I bought three pairs of the glasses, you know, from him. He said, you know, he said it would take two weeks. I will ship it to, you know, actually, U.S. So I that came back, it was fine. I bought it for some $500 or something like that one, you know, actually U.S. dollar.

Yeah. Anyway, so that actually, he shipped the three glasses. It came in over here. All good. It is somewhere came in, you know, March or something like that one, February, March. Anyway, I tried and I did not like it because, you know, progressive is not that easy to get used to. Not at all. Yes, are progressive.

Oh, is it? It's hard. So under here I can read and then over here. Right. It starts to give you a headache. a little bit. Right, yeah, you know, somehow. So, you know, my nephew said that, uncle, I would like to fix it.

You know, these are very expensive glasses for you. Why don't you ship it back? And I said, no, don't worry. He said, no, no, no, ship it back. So, you know, actually, my wife goes and, you know, she ship it to, you know, India. So I that asked her, how much was that one? She said, no, it was some, you know, actually, 50, 60 bucks to ship to India.

Fine. Now the story begins. After a few days, she said, oh, somehow FedEx charged me some 300 and, I said, 360 bucks to ship to India. So they tell the C-Call FedEx. Guess what? India charged $300 tariff on a glasses, which I bought it from India. Sending it back to repair it.

They charge $300 tariff on it. Because it was entering the country. Entering the company. So that if you look at that one, I mean somehow, people across the globe, they have used and abused America, you know. So I think up to some extent that we need to level the plane full. Yeah. You know, actually, that's been said that you also need to be mindful. Even with no tariff and so on so forth, we are still number one country on the earth and we become number one so that whatever we have done up to some extent, it is right.

Whatever something broken, that's what we have to fix. And I think that that is where, that is Tariff might help up to some extent over there. That's been said, I guess, knowing President Trump, he's a very smart guy, he's an actual businessman. I particularly believe even though he shows that one he is an ego, but he has a no ego, he can walk back, he can be very flexible, he can be very nimble. So the appropriate opportunity come, he will make a deal with people

and, you know, make it work. So I'm personally very, very upbeat, you know, very bullish in America at the moment. I mean, that's great. I'm interested to see on all the different things that he's doing, right? I think between immigration and tariffs and, you know, listen, I'm even in construction, like the cost of things is insane. Insane right now, right? And so something has to be done because it's not COVID anymore.

The ships aren't lost at sea with all the products. Like, everything's landed. We shouldn't have material costs the way we are. It doesn't make any sense. It's hurting everybody. Everyone, even people who do financially well, you're like, why does this cost this much? I think up to some extent,

I personally believe that some of the upper middle class business owners took the advantage of the COVID. Of course. So, meaning they got the opportunity to raise the price of a menu. They got the opportunity to raise the price of their plumbing services, electric services, everybody raised a price, even though there was no need. And then COVID, you know, COVID is gone, but still they haven't lowered the price. So I think some people, so if you look at that one, you know, I'm in a business of money, right? I mean that the only time

I'm talking to somebody when they have a tax problem. I mean, we deal with people who makes more than $2 million, right? I see money. There's lots of money out there. There's so many people make lots of money. So I think that if you look at, you know, there's always some winners and losers, right? So that one, but obviously losers don't need us. Only the winners need us, right, basically. So I see that I can see that there's so many even the normal businesses, which you can't imagine, they are making tremendous amount of money. So I personally believe that these people did very, very well,

but it's, you know, actually bottom 50% is probably paying the, you know, extra price. Yeah, I mean, listen, yesterday I went to go get a, or it was Sunday, I went to go get just like a breakfast burrito is $21. For eggs, beans, rice, baking, you're like, it's a breakfast burrito. It's $21. I get, anyways. So given where you sit, knowing the amount of people that make money, and it could be real estate, what would be your number one tax write-off suggestion? And I don't care the vertical, whether they day trade or they do hair for a living. They do really well. Sure. Where would you typically suggest, what's your number one suggestion for tax write-offs? Sure. Is it real? Maybe it is, maybe it isn't. No, so that number one is actually depreciation

based strategy, basically. So it could be, it could be real estate. You could use actually, believe or not, and that we do quite a bit, you can use the equipment. Oh, yeah. And that's huge. Right. That one is huge. And why equipment? Because that other, let's take the same example of the $1 million condo. If you buy $1 million condo, that you get $200,000 rights off, right? With the cost segregation study. If you buy $1 million worth of equipment, you can write off 100%. So equipment's are way more efficient than real estate in terms of tax side. That's right. I'm not talking about investment. obviously like people will make money in oil and you buy a new oil rig is a 100% tax right correct so that the equipment so we do you know quite a bit you know equipment deal

basically so that's rare so that it is very similar like a managed services basically so somebody want to buy the equipment in a big equipment and you know you just create your LLC you buy inside your LLC they will manage it and they will pay you some you know that actually return on investment and you will get entire you know you will get entire you our tax rights off. So that would be one strategy. What would be a good piece of equipment? Because now people are probably thinking,

oh, I got to go buy equipment. What would you suggest? So that somehow we like actually heavy construction equipment. Those are very, very good. That's one truly holds the value. Yeah. You know, those kind of things. So I think that is one.

We like it quite a bit. And what we do even in that one is that actually some of the companies we deal with, they use the same IRS code. of Airbnb Lufo, right? Short-term rental, basically. So rent it for less than seven days, you can become active as long as you give 100 hours, and now you can offset your...

So I could go in and buy a bulldozer. Bingo. And start short-term renting it out to construction companies. I get 100% tax write-off for whatever they cost in whatever income that I'm producing, and maybe I don't even want to produce income, but I just don't want to have to sell it because if I do sell it just like real estate,

then I have to go... Recapiture it. Recapture the tax right off I got. Correct. And the good thing is about equipment is after five, six years, value of equipment is 50%. So even though you recapture, you are recapturing only 50% value. After five years. After five, six years.

Yeah. So that's actually, yeah, you know, so that one is actually wonderful. That's been said, real estate has always. It's a value because that other, I think, you know, that people talk much more about taxes about the real estate, but I think real estate has much more. more value in terms of investment as well. So I personally believe, and that I have invested quite, you know, maybe for the last 15, 16 years in the real estate.

And my primary logic is, is it makes sense from investment perspective. That's right. You know, tax is the additional benefit. Yes, I do factor in, but it's the investment. Does it make sense from the investment perspective? And that once it makes investment perspective, then you factor in the tax. So I think real estate has a much more other value that we are missing sometime and that when you only buy from tax perspective, that's where, you know, actually disappointment comes. But if you buy for a right reason, then you're going to stay in a game and you can really take a benefit.

Because I personally believe in that, you know, real estate way more than I am. But real estate is funny, you know, the real estate is not like a stock market, right? You know, Apple stock, you can be in America, you can be in Africa, you can be in Asia. it is still the same price. That's right. Real estate, even you go 10 miles and it's a whole together different ball game. Yeah, right? So real estate is, you know, they don't actually very, very different than any other investment.

So I personally believe there's always opportunity in real estate. You need to just find it. You know, you need to work hard. And sometimes people are lazy. They don't want to put in the efforts. You know, you need to, you know, you need to, you know, really, really work hard. It's, you know, this is one of my favorite subjects to the point I created this podcast because I want people to understand financial literacy.

I want them to understand the things that you know. Again, make sure you are reaching out to Neil. Before we end here, I want to know a little bit more about what you would advise someone starting. The new entrepreneur, I'm going for it, Neil, I'm ready, I'm hungry. what if you could grab that person, sit them down for a cup of coffee, and really give them the lessons financially, here's what to do, here's how you start, this is how you should be thinking, what would you suggest to that person?

So I would say three, you know, main area. So one is, you know, I'm not sure you know, chat homes, but, you know, should chat home past away now. But he's to say, anybody can make a good living by working half day and half day meaning 12 hours. Okay. So meaning number one is you need to work. Put in the work. You need to put the hour. So that's number one. Number two is being best at what you do. You want to know more than anybody else. I don't care if I know more than you about some sports or some other stuff. But whatever I do for living, I need to know more than anybody else. So being best at what you do, I guess, right? Third thing is also very, very important is your ethics. You know, you don't want to compromise your ethics. end of the day, you know, that actually when you don't have a lot more money,

you know, you think so money is the goal, but goal is not money. You know, goal is to be happy. And the happiness comes when you do it right way, right? Basically, so these are the three things, you know, that I personally believe diligence always pay. So you can be average person, and if you're putting

the efforts, you will, you know, outsmart the other smart people if they're lazy. Right. So that other, so coming back, the hard work being best at that direction, what you do, and, you know, being ethical. That's been said on the financial side, I would probably say, you know, create the single member LLC initially. You know, you don't need to go crazy, you know, do that one. Once you start seeing the traction, once you see the revenue, once you're 100,000 plus, then you can probably elect as the S-Corp or so.

If you're buying the other real estate for other reason, you can do that other means. many single member LLCs, and obviously your show has talked quite a bit, and I'm sure your viewers knows about that one, so I'm not going to go about jurisdiction and so on and so forth, basically. But yes, you know, those are things, but I would probably say,

don't worry about that money and taxes. First, worry about creating a problem of tax, meaning creating a problem of real revenue. That's very hard. You know, that one, you know, you understand that you're actually becoming successful in business, it's not easy. No. Takes a lot of work.

It is very good. And a lot of times you become an overnight success because you did all this work when no one saw you. And all of a sudden you became successful enough that you had got notoriety. And they're like, man, what an overnight success? And you're like, I've been eating shit for a decade. Bingo. And it's not that easy. The last one, I think this is a fun topic because everyone talks about it.

But talk to us about the tax ride off of the cars. What is the 176 or 179? Right. Yeah. So like I just bought a new Range Rover. Okay. Exactly. So it's over 6,000 pounds. But exactly how does that write off? Because some people have the misconception again. Let's just say my payment is $2,000. Do I get to write off all $2,000 every single one? Or is it just the interest of the principal? So are you buying or you are leasing? Right. Right. Right. So if you're buying, ideally, what you should do so that there, you know, if it is for 100% business purpose, right, basically. So you can take the, you're an actual 100%

right off, basically. No, that entire value, so that you bought it. So it doesn't matter how you're paying. You're paying cash or your financing. Let's say, value of a car is $150,000. You're taking rights off for the $150,000. Simple as that, because it is

for a business, basically. So that's what it is. Now that other people don't realize that if you're not utilizing for business, then there's issue basically right so that's where and this is the gray area we talked about before this is where the gray you prove it how many miles where did you go like now this is i go around around my accountant it only matters if you get audited correct correct if you so if you get caught if you're going to be pushing the lines like we were talking about off camera this thing over here might actually

catch you may not be the car thing but this thing that you did over here you can even think about Correct. Causes the red flag. The IRS says, hold on, so-and-so did this thing over here. Meanwhile, you're trying to push the lines over here. They don't catch it. But now they're going to go look at everything. Exactly.

In fact, if you look at that one, you know, that are the audit, you know, statistics. One of the high audit area is people who makes less than $140,000 and takes, you know, deduction on their Schedule C. Which is car, business travel, business mill. And we'll get $100,000 on Schedule C. Yeah, so you need to be very, very careful. So, actually, this is what I would say. Dable is in a detail. Give the record.

And that's where it gets harder. So when you are small, you can give the records. But once you are making lots of money, you don't have a time to get the receipt, you know, for the $200 dinner you had with your, you know, actually prospect, basically, right? You don't. Basically.

So that's where it. gets harder. But when you're, you know, that text is starting out, I would keep the receipt of everything. I would probably take, you know, actually, quick picture, you know, should write it down. But there's apps like, Expensify. Yeah, right. You know, sometimes I make it a little bit easier. Something. Yeah. Something like that one. As long as you have the detail, that's going to help you, basically. But that is what I would say. And that actually, we did talk, you know, off camera. There are so many legal strategies available. So, you know, you probably don't need to push to the area. You know, gray area.

Because if you can get it, you know, everything legally and ethically, why you need to go there? You know, basically, you know, you can do, you know, depreciation based strategy. You can do some, you know, citable based strategy that are also extra profound, you know, once you have some money, basically. So as you're in my community of all the guests, and most of my guests are high income earners, what would be, and this is where we'll leave it, last question, what would be your biggest tip for the higher income? earners making, let's just say, north of 500,000, most likely making it, what's the first thing you'd say, guys, you need to be looking at this if you weren't? So, so I would look at depreciation is the first, you know, now that as I mentioned, once you cross 600,000, you next to 26,000, so meaning if you're making $2 million, depreciation can only give you $626,000 if you are pure

W-2 earners, basically. If you are, if you're a business owner, you can get. get as much as you want, right? So then you stack on top of that one is some, you know, actually charitable strategy. Chatable strategy is very, very powerful. And that other, you feel good as well. Because, you know, that other you have been fortunate, you know, God has given you something. So by doing good, you are able to take some, you know, hefty deduction for yourself. So I believe.

Charitable deduction. So you write a check to whatever charity. What's the right offer? No, that actually, you can do so many other. way so many creative ways so that actually charitable donation can be say for example in a form of writing a check to charity directly right number two could be donor advice fund number three you can create a trust you know crats and cruts or you can create your own foundation right and the other one is you can also become part of some LLCs and you can get multiples of your money you buy at the

early stage you buy at the lower price when you're actually donating you're getting multiple of that one, it is very, very attractive. So there's so many wonderful strategies. I'm glad to be ended with, because this is a perfect reason for me to say, go get a hold of this man right now. There's just so many great strategies that like, because I come from real estate, it becomes always top of mind. But for people who are out there making money,

and even if you're about to make money, understand what you have in front of you. And so Neil, I really appreciate it. Make sure you follow Neil Jasani everywhere. What website can they go to if you want to push them to a website? They can go to Neiljassani. com, N-E-I-L-J-E-S-A-N-I dot com. I appreciate your brother. If this was helpful to you guys out there and you're like, wow, I didn't know that,

make sure you like this and make sure you share this episode with least two of your friends. We'll see you on the next episode. You are the best, Justin. Thank you.