You're listening to the Master Passive Income Podcast Network.

Welcome to the Master Passive Income show.

This is Dustin Heiner, and I'm here to help you create wealth, afford anything you want in life by investing in real estate and achieve financial freedom.

And in today's show, I'm going to share with you what the rich know that we don't.

Us poor and middle class, we don't know these things.

But I'm gonna share with you how you can get out of paying taxes legally and how you can use the tax code like the rich do, to make even more money.

All right, let's start the show.

Welcome to the Master Passive Income Podcast, where we talk about investing in real estate with a special focus on making enough money so you can quit your job and live the dream life.

And now, here is your host, Dustin Heiner.

What's up?

What's up?

Super blessed as always to have you.

Here with me on the show.

Now, I first gotta say that if it sounds echoey or my voice sounds echoey, it's because I'm in a hotel and I'm recording right now.

And the fun thing about why I'm in a hotel is because I flew back to Phoenix, so I'm literally in Phoenix, and I lived here for seven or eight years.

And in you guys, if you've been listening last couple episodes, you know, I've drove 1900 miles with my family, moved them from Phoenix all the way to Tennessee, right near Nashville.

We've been there for two weeks now.

But sadly or funny enough, we created the next Real Estate Wealth Builders Club here in Phoenix.

And so I'm back in Phoenix and the next Roop Club.

His Tuesday night, November 19th.

So it's going to be a monthly real estate investor meetup all about connecting you with other real estate investors.

And honestly, the reason why I created this, just like I created the Real Estate Wealth Brothers conference, was because there were so many people asking for this.

They said, Dustin, like, well, especially after Covid.

Covid made everybody just stay away from each other.

It's.

It's ingrained in us.

We know that God created us to have, like, want to be around other people.

If you're left alone, life gets horrible.

That's why they have solitary confinements in prison, is to keep you alone, and you go crazy.

We need to be around other people.

And that's what we do at the Real Estate Wealth Builders Club is get you around other people.

So we have the Charlotte Real Estate Wealth Builders Club.

Now we have the Phoenix Real Estate Wealth Builders Club and we have Rube Club coming in January in Denver.

We're also looking to create one in Salt Lake City as well as one in Akron, Ohio.

It might be Akron, might be Cleveland area, but we are creating these clubs because there's so many people that want to stay connected as real estate investors.

So if you want to check that out, check the link in the description rubecon.com you'll see information about the Rube clubs.

But we'd love to have you there.

I'm speaking tonight teaching people how to invest in real estate successfully.

But man, I there's two things in life that are guaranteed death and taxes.

I didn't create that quote.

That's a quote by somebody else.

I don't know who it is, I'm.

Not going to look it up.

But it's death and taxes.

Those are two things that are always going to hit you is that you're always going to die and you're always going to get taxed.

I think almost for like the history of the world.

I mean I've read the Bible literally every single day, multiple times a day.

And you hear about tax all the time.

And we know now we get taxed so many different ways.

Well, this episode that I have for you right now is I want to show you how you can utilize your real estate investing to get out of paying taxes legally.

Now if you think about this now I might say this again, but I have to say it right now.

If you are working a job, a dead end job, that just over broke job, you are literally working about half of the year.

Just think about that January till June, the entire six months of a year just to pay taxes.

Then the other six months you get to keep for yourself.

When you think about all the different.

Types of taxes and we'll get into in just a second of all the different types of taxes that are out there.

But all these taxes take money out of your pocket so you cannot invest.

You know what's really interesting?

I just really realized this recently that the tax code does two things.

Number one, it penalizes you for making money, quote unquote the wrong way.

And I'll get to it just a second.

Why it's the wrong way, but it also rewards you for making money the right way.

So the wrong way.

Let's get into the wrong way.

You are working for somebody else.

You're just making somebody else money.

You're not really producing a ton in society.

You're not really helping everybody in general.

Well, you get taxed really, really high I mean you get a high tax bracket, 40% probably.

Not to mention all the different types of taxes that we have from sales tax.

I mean your dog license is a tax, things like that.

Well, it also rewards you.

That's.

I mean, think about that for a second.

If you're going to work either way, if you work for somebody else or work for yourself or you invest money, why would you not go the one that's most beneficial to you?

And the tax code was written to benefit you.

If you do things that help society get better, if you're in a real estate investor, you get amazing tax breaks.

If you're a business owner, if you create great things for society, for know everybody that lives around you, you get great tax write off.

So everything that I'm gonna go through today, all these different things that we're gonna talk about for tax breaks and tax deductions, we're not gonna illegally.

When I say, I say illegally.

Sorry.

I'm gonna make sure I pronunciate.

We're not gonna illegally get out of taxes.

We're gonna legally use the tax code and the way that it's written to benefit us.

Because if you remember, the tax code's written by honestly rich people.

Rich people wrote the tax code and in writing the code they also know how to benefit themselves.

So they use a tax code to benefit themselves.

And because of the tax code, the way that it's written, you and I, we just need to learn how it's done, how it's written so that we can apply that to our lives.

And I'm really glad that in America our tax code is not written like, okay, these certain people get this tax code and these certain people get this tax code.

No, it's not like that.

The tax code is literally blanket for everybody.

If you learn how to apply the tax code to benefit you, how the rich do, that's why I call it.

He's like, this is how the rich, the rich know how to use a tax code to benefit themselves.

You need to be able to know these and apply these to your life so that you in the end will have more money in your pocket to invest and eventually have more money to grow and play the game of Monopoly in real life by buying single family homes and then growing into multifamily big apartment complexes.

In fact, I'm looking currently at a 70 unit apartment complex as built in 2021.

The sellers, they built it for $19 million.

It's a class A, which means the best property in the best area.

And we Might pick it up for 10, maybe $11 million.

So they're taking a huge bath, which means they're losing a lot of money on this property because they have other properties that they're losing on that they just need to get this off their quote unquote books is what they call it.

They just need it off their balance sheet.

They need to make it look like.

They don't own it anymore.

So they're going to lose all that money.

Lord willing, I'm going to be buying this property and this is also going to help me save more money in taxes.

I'm going to make a ton of money and then I'm also going to have a lot of money saved in taxes.

And honestly, because I've been doing Master Passive income for so long, I have so many people that want to invest with me in the deals that I do personally.

Not a syndicator.

These are literally my deals.

And if you want to invest with me in these deals that I've done.

We did a 355 unit apartment complex in Nashville.

We're looking at this one in Columbus, Ohio.

And if you want to invest with me, the link will be in description.

You go to masterpassiveincome.com invest.

The link will be in the podcast Show Notes.

Give me your information.

We'd love to chat with you and see if there's a way that we can connect and hopefully invest together in these multifamily properties.

And I want to pause for a quick second and share that honestly, I really want you to invest in real estate.

Now.

My new goal is to help 1 million people invest in real estate.

So two things I would ask from you.

Number one, if you get anything out of this episode, please share it with somebody else.

Just say, hey, you know, check out Dustin and Master Passive Income.

He really wants to help a million people to invest in real estate.

That's number one.

Number two, I want to get you to invest in real estate.

Get my real estate investing course absolutely for free.

Text the word rental R E N T A L 233777 rental to 33777.

I'll literally give you my course, show you how to find the area of the country to invest, how to build the business first.

You know, I always talk about that and how to find the right properties, how to make sure you're getting experts do the work for you and scale the business to where you're making $250 or more in passive income.

Scale it up to quit your job.

I'll literally get to you.

Or go to masterpassiveincome.com freecourse.

Obviously it'll be in the description, but I really, really want you to invest in real estate because the more that actual normal, everyday people own real estate that are good landlords, the better everybody's life gets.

And you guys will always hear me tell you about the six different ways that you make money investing in real estate.

And one of them is your tax benefits.

I kid you not.

I am so.

I love real estate so much for many different reasons.

And tax benefits is just another huge, amazing, huge blessing on top of everything else about real estate.

And what I want to talk to you guys about today is taxes.

Because right now, this is towards the end of the year and we're going to be going through taxes sometime soon.

But I want to walk you through all the different tax benefits, tax breaks, and all that sort of stuff that you can actually get when you buy just one rental property.

I kid you not, you get one rental property, the IRS sees it as a business, and then you have so many expenses to write off.

And as we're thinking about our business, what we're going to be doing is building it bigger and bigger and utilizing this as a way to generate wealth as well as generate generational.

Generate generational, but to make generational wealth for us and our families.

And in this episode, I'm going to be going through so many great things, but here's the biggest thing that you must take away from this.

I'm not an accountant.

I'm absolutely not an accountant.

I hate accounting.

I actually failed.

I went to Fresno State in California and there was accounting 4A and counting 4B, I literally failed accounting 4A.

And big reason why is I was so bored out of my mind and I didn't do any of the work.

So obviously you're not going to do very well in your classes.

So I failed 4A and then I had to take it over again, passed that, and then got 4B, had to pass that because I was a business entrepreneurship major.

And as I was finishing that, I was like, there's no way I'm ever going to do any accounting for myself.

I am absolutely going to make enough money to pay somebody else to do this.

And so everything that I'm relaying to you is what I've heard from my accountants and what they've told me and what they're doing for me.

So I'm just relaying this onto you.

So make sure you talk to your accountant, because no matter what Everything that I say doesn't really matter as long as the IRS is okay with it.

So go with your accountant, because they know the irs, the rules and regulations and all that sort of stuff, and the tax code.

So follow what they say.

Now, I definitely want you to buy your first property.

Everything that I do at Master Passive Income is to get you to realize that you absolutely can't do it.

Now, what's interesting is I can teach anybody, literally anybody, how to invest in real estate.

And I have hundreds and hundreds of people, hundreds and hundreds of students actually have learned how to invest in real estate.

I can do that.

But what I can't do is to get you over that hurdle, that fear, that worry, or that analysis paralysis.

You're not going to buy that first property.

So everything I do at Master Passive Income, the podcast, my YouTube channel, everything that I have is just to get you to understand that you can do it.

How as a real estate investor, you can actually pay so much less in taxes.

Now, we're not breaking the law.

Like, we're not skipping out on taxes and just not paying our taxes.

No, we're actually utilizing the laws that are currently written for us as real estate investors, almost like they wrote them just for us.

Well, in fact, I believe the people that wrote the laws were real estate investors, so they wrote them to benefit us.

Now, take a quick thought of how much you pay in taxes right now.

I don't think anybody likes paying taxes.

In fact, there are two things that are certain in life, death and taxes.

It's actually going to happen.

But if you think about how much you actually pay in taxes, well, your normal paycheck has a couple different taxes.

Let's just go with a couple of the bigger ones, the federal income tax and the state income tax.

You have federal.

It's probably going to be about 30%, 25 to 35% income tax, depending on your tax bracket.

You can get up to like the 40 and 45%.

You also have state income tax, which is probably going to be another 7, 8, 9, 10% on top of that.

So let's just say 35% in federal taxes.

Then you have state taxes.

Let's just lower that one down a little bit, say 5%.

Well, 35 plus 5% is 40% in taxes.

Well, what about sales tax?

You.

Whenever you buy anything, you're penalized for buying things from the government.

You get taxed on that as well.

Well, let's say in my area, it's like 9% in tax.

We'll add another 9%.

So that's 49% in tax.

Well, what about property taxes?

That's going to be another, at least like 2 or 3%.

Let's add that.

That's, let's say it's 42% in taxes.

Now on top of that, think of other taxes you got to pay for.

What about if you go fishing, you got to buy a license, that's a tax.

If you have a dog, you got to pay a tax on that.

If you have a car, you pay a tax on that.

There's so many different taxes out there.

But let me show you exactly how you can utilize your real estate investing to benefit you to pay even less in taxes.

There are so many great ways and reasons why.

The first amazing tax benefit you have is all of the business expenses.

You can deduct all of the business expenses that you have for your properties.

Now get this, if you buy just one property, just one property, you now can write off a lot of things in expenses.

Now I will say big caveat.

I'm not an accountant.

I'm just kind of relaying what I've learned from my accountants.

But I give them all my numbers and they make sure I'm complying with the law.

So talk to your accountant on all this.

But when you do have one property, that property is seen as a business.

As you go about running your business, like if you're driving from property to property, you're spending gas, wear and tear in your car, that's a write off.

Like how much you spend on that.

Now I don't know the exact numbers, but talk to your accountant, give them all the numbers and they'll be able to deduct, deduct how much in taxes that you can pay.

If you have a cell phone because you're calling up on sellers or realtors or property managers, a portion of that can be written off.

If you work out of your home, your home can actually that portion of the house.

I don't know how they do it, but they do it where a portion of your house.

What if you have a mortgage or you're paying rent, that is also a tax write off.

So whatever you make in money from your business, you lower the amount that you have to pay in taxes because of these business expenses.

And as you grow your business, if you even travel like I love investing all over the country, not just in one state, in fact many different states.

All of my students, we invest all over the country.

And if I'm flying to an area to look at properties, to interview property Managers to check on my properties.

Now, let's say it costs $1,000 to fly to, let's say, Florida.

If I want to invest in Florida, and I'm driving around looking at properties, talking to realtors, using my phone, doing and getting hotels and paying for food, that's a business trip to find properties and build the business.

Remember, we always build the business first.

That's $1,000.

So if we made $100,000 in our business, $1,000 will be knocked off.

So it looked like we only made $99,000 instead of 1,000.

So we tax on 99,000.

That's just one little bit of amazing things about taxes that lower and lower and lower and lower all your taxes so your business expenses can be written off.

There's a laundry list of things.

Think about anything that you do in your business, even getting your car's oil changed, that can be written off if you're using that for your business.

Another great thing, here's a pro tip I'll give you.

If you are utilizing your children to, let's say, lick envelopes and stuff them and, you know, mail them out, you can pay them a wage.

That wage is going to them.

They're going to make money.

You are actually going to have lower in taxes because you're having an expense like an employee.

And again, talk to your accountant on how to actually do that.

But all these business expenses, this is what you will absolutely be able to do.

If you're going to buy a new computer or a monitor or anything that helps your business, you're going to be able to have a tax write off.

Now, the second way that you have amazing tax benefits is depreciation.

Depreciation is phenomenal.

I love depreciation.

In fact, the more properties that I buy, the more depreciation I have.

And it looks like I make less in money.

Now, here is the broad overview of what depreciation is.

Basically, if you buy a house for $100,000, well, that $100,000 can be written off over 27.5 years.

I don't know where they got the number.

27.5 years.

They allow us, the IRS allows us to write off basically deduct a portion of that $100,000 every single year for 27.5 years until it's basically worth zero.

But we know, we're investors.

We invest in rental properties that buy and hold long term.

Now, with that one property that you had that you bought for $100,000, well, that $100,000 will be deducted.

Over 27 and a half years, out of all the profit that you make from your all your properties and all your business, you're able to deduct every bit of that over the 27.5 years.

So every year, a little bit's taken off.

Now, if you have 10 properties, that's all 10 properties having depreciation, showing that you're making less in money when you're actually making more and you're appreciating.

Imagine if you had 20 or 30 properties.

It really like, you might think, man, I'm not paying nearly as much in tax as I thought I would.

It's because of depreciation.

Now, there is one caveat with depreciation.

When you actually go and sell it, there's a little bit of things that the IRS are going to have to do.

Probably try to recoup that.

I'm not sure exactly how that works out.

Talk to your accountant, but that's something you got to watch out for.

But over the time, as you're building your business, you have more money in your account so that you can actually buy more properties.

Now, the fourth thing is a 1031 exchange.

This is brilliant.

It's basically deferring, basically putting off paying taxes almost indefinitely.

This is really how a 1031 exchange works out.

If you buy a house and then after 10 years, like monopoly, you sell it, you move up to, like, you know, two houses or three houses.

You basically keep trading up properties.

You buy a house for $100,000, then you sell it for $150,000, and you buy a $200,000 house.

Well, what's great is you normally you would have to from that $150,000.

If you did not do a 1031 exchange, you would actually have to pay taxes on that gain that you made that $50,000 extra.

Remember, you bought it for 100, you sold it for 150.

That extra $50,000 you'd have to pay taxes on.

But instead of doing that, you put all that money.

You don't touch it.

You can't touch it.

That's the way 1031 exchange works.

I actually have a video check in the description for that video on everything about 1031 exchange, explaining everything out.

But you basically take that $50,000 and the beginning money that you paid the $150,000, and you put it into a new property.

You don't pay taxes.

You utilize that profit that you gain from that one property, put it into that second property.

Now, get this.

You could do this again and you could do this again.

And you can do it over and over and over and over and over again until you get million dollar properties, basically big apartment complex.

And keep rolling that tax that you would normally have paid back, then rolling that into the next property.

Now eventually once you completely cash out, once you completely sell, then it's all going to catch up to you.

It's not going to be like every single property that you sold, you have to pay tax.

Pay tax, pay tax.

No, it's just on this last property.

So it's rolled over.

The 1031 exchange is awesome, but there are a little bit of nuances that you have to learn.

So again, watch that video.

Check the description for the 1031 exchange video as well.

Now, the fifth thing is when you buy a house, you're going to have property taxes.

Well, every bit of those property taxes that you pay to the government is a write off.

It's a write off basically because let's say you made $10,000 on one property in one year.

I know it's a lot, but let's just round it for round numbers.

You made $10,000, but you paid $2,000 in taxes.

Well, instead of making $10,000, you're only making $8,000.

So you're taxed on $8,000.

So YOU'RE having a lower amount of money that the government's going to say, hey, let me take that money from this guy.

So the property taxes, whatever you spend out of your pocket, just like a business expense, is also accounted for.

Now the sixth thing is also your mortgage.

If you have a mortgage on a property, it's going to be an expense that's deducted from your income.

Now let's say you had a property that made you $1,000 a month, but your mortgage payment's $400.

Well, it only shows $600 in profit because that $400 is paid out.

And on top of that expense there's another great thing.

It's the mortgage interest deduction.

So basically every penny that you put into and all the interest that you paid, that's also a deduction.

And with that mortgage interest deduction, what you're going to be able to do is even lower the amount of money that you're showing the IRS or the government that you've made.

So you have less in income even though it's helping to pay off the property.

And the seventh thing is that you are no longer taxed as an employee as well as you're not going to be having the self employment Tax.

Now if you start a regular business that's not an investment business, like a rental property business like we have, you start a brick and mortar business like let's just say a convenience store and you work in it yourself.

Well, you are self employed, you're still employed, you're self employed.

The government charges you a tax just to be self employed.

It's so horrible that you just get taxed left and right.

So with the self employment tax, it's gone.

When you are an actual investor, your new classification, instead of being employed or self employed, you're a real estate investor.

Now there is also a caveat that you actually have to be an investor, meaning you have to actually spend I think like 50% of your time doing investing or something like that.

Talk to your accountant, they'll be able to make sure you get that done right.

But you will save a ton of money not having a self employment tax.

So all these taxes rounded up, you're going to be saving thousands and thousands of dollars.

Because what you have is a property, just one property that legally not.

I'm not saying it's illegal, it's absolutely legal because all of these things are in the tax code right now to benefit you.

So once you buy that first property, talk to your accountant, make sure you're accounting for all your expenses, making sure that you're doing the 1031 exchange, you're accounting for all your property taxes.

You're not paying self employment tax.

Once you have enough properties to show that you're an actual investor, you are going to save so much money.

When I had a regular business that I was paying self employment tax, it was a lot of money.

I can't remember exactly how much it was, maybe like 500 bucks a year.

But it's a lot of money that you're going to be paying out in self employment tax.

Imagine that not getting paid out.

And the eighth thing is super awesome is you do not have to pay Social Security, you don't have to pay Social Security because you're not an employee.

Now there are caveats where you might have to and you might not have to talk to your accountant, but as an investor, you're classified as an investor.

You're not paying into Social Security anymore.

You can opt out.

That's something that's super amazing that you absolutely need to check and do with your accountant.

And again, you guys, I am not an accountant.

So do not take anything that I say as like, you know, tax law or anything like that.

Just literally talk to your own accountant.

I'M getting you down the trail so that you can invest in real estate.

Don't forget my free real estate investing course.

Get it absolutely for free.

Text the word rental to 33777.

R E N T A L to 33777.

Get that absolutely for free.

Get started.

You absolutely can do this.

Change your life.

Don't let another year of your life go by without making that change.

Because trust me, once you do, your life will be amazing.

All right, guys, you guys have a great Christmas and I will.

See you guys.

See ya.

And that is it for today.

Go ahead and get my free real estate investing course.

Text award rental to 33777.

R E N T A L to 33777.

You can also join my real estate estate wealth builders group coaching.

Get all my courses.

All right, guys, we'll see you in the next show.

See ya.