Paying to much in income taxes???

Question

I think it was Robert Kiyosaki who stated if you own rental properties and your paying taxes you are not doing it right.  Please Help me understand this better.  I basically use the brrrr strategy and use my local lenders to get my money back to buy again.  However, this thing they call the debt service coverage ratio keeps me paying a lot of taxes quarterly.  I have to show I make good money on my yearly taxes or they wont loan to me.  I tried a few times to take advantage of my write offs and pay less and the banks cut me off!  No more loans!  How do you write off so much to avoid taxes and when it shows you don't have income?????  I do have a good income and I pay a ton of taxes..  Any advice would be greatly appreciated..

Michael Plaks · Answer

@Brandon Reffett

Kiyosaki and many others who repeat this phrase are full of it, basically.

There're many investors who highly leverage their properties (meaning huge loans) and show zero or almost zero taxable income, due to accelerated depreciation and other tax strategies. They borrow based on their assets's (properties) values and their credit strength, not on income. Which means private or commercial lenders, not banks.

There're also many successful investors who have great cash flow that is not erased by depreciation, and they happily pay income tax on their positive income.

There's no one "right" way to do real estate investing.  Only for a salesman who is peddling his training.

Dennis M. · Answer

He sells books and programs . Don’t forget that Robert went bankrupt several times and his accountant is under investigation by the feds last I heard online

Steven Hamilton II · Answer

Brandon,

Its about claiming what you actually incur. You don't want to mis-represent your income to the bank either. However, I would weigh what the actual numbers look like to see how your business is actually performing. You may be incurring a great deal of other expenses that are weighing it down such as conferences & Memberships etc.

Looks like you're in the Pensacola area. I disagree 100% with Kiyosaki on that one. I have tons of clients who have a net profit because they bought well and keep their properties running lean.  Bullet proof them well to avoid massive maintenance issued.

I never tell a client to incur a $100 expense for a $42 deduction unless it has other savings that increase it over the $100 cost such as eligibility for a credit etc.

Brandon Reffett · Answer

thank you  Steven Hamilton..  good info.

Paying to much in income taxes???

Most Popular Reply