Using tax deductions on renovations costs. This will actually reduce taxes for the coming 10 years of an amount that is equal to 80% fo the renovation cost (yes you got it... the cost in the end is only 20%). This is possible in Italy.
Taxes on commissions are at 20% here in Zambia, but once I prove that the business is below a threshold annual turnover of $80,000 i get to pay up to only 4%! I do this for multiple businesses and earn upto 16% excess cash flow
Funny how the accounting classes I took in college don't even come close enough to teach you about the possibility of financial freedom. They only apply scenarios where you learn how to balance someone's else's business. Just prepping you to be an employee...Wow....
I remember in high school we had a substitute for a month. Everyday he read to us rich Dad poor Dad and made us write notes while everyone was talking I was listening. He did mention you’ll thank me later for reading this, and boy was he right. They should be showing this video to all these kids in economics class. People always complaining why wealthy people get tax breaks but never take the time to research as to why they get them. Knowledge is power! Invest in yourselves first.
I’m 15, trying to learn about taxes before I start my own business. Everyone can start there own. Just think of the things you use in your daily life .✌️🙏
I attended a seminar you held over 10 years ago. I took and paid for a 1000 tax course that has been priceless. I take deductions from my rental properties, business lunches, travel to and from my rentals, repair costs for my computer, charitable donations, and a few others. #priceless 💯💯💯
Hi, Tom... Im new in town (I just moved to USA 6 months ago). I going to pay taxes for first time. I´m self employee, How do you recommend me to pay less?
@@djjohannp i am a newbie in this (a student rn) but i would say that you should start your own freelance business. If it's Registered to be a corporate business, then you will pay a lot less tax. You should ask an accountant
@@djjohannp invest most of the profits into assets for the business every mile you drive on your car is a tax break . Keep receipts of everything good luck to you
My question is, where do you first even get money to buy into major investments? If you have a 9 to 5 and make 45000 a year. How and where do you even start?
I actually do recommend you to keep watching and reading things like this, when i watched this video for the first few times i didn't understand a great deal of it but i understand quite a bit of it now and i am still learning. You may want to watch videos done by Ken as they helped me a lot, repetition is key.
Try watching other videos similar to this that rk teaches. It's an advanced class for a reason. Alot of things he says will go right over most of our heads. Commitment and research is key.
If you've been following this guy, you'll know that one of the most important lessons he preaches is to never stop learning, and that's what has stood out to me. In school, we're taught that our education ends after college, or an internship. "You already know all that you need to", and, "You are just wasting your time on useless pursuits". Actually, education should never end. Because not only does it "corrode" your mind(the way muscles get weak due to lack of exercise), it also stops you from adapting. It teaches you that learning is a sign of inferiority, rather than a virtue. We often say, "knowledge is power". But we never really understand the significance of this phrase, rather repeating it like parrots. Amazing work, Rich Dad! Keep it up!!
Robert and Tom did a good introducing the whole tax savings concept. Good job. The more you look into this topic, the more you realize just how many avenues there are to minimize taxes in the US. I actually did a video on this very topic that might give you even more ideas and help you out.
Amortization: the action or process of gradually writing off the initial cost of an asset or the repayment of a loan principal over time. Appreciation: an increase in the value of an asset over time. Depreciation: a reduction in the value of an asset over time, due in particular to wear and tear.
@@seven7hsine you use the debt that you acquired from the bank to make your depreciation amount higher then the depreciation takes away from your gross income thus lowering your taxes
Let’s take an exemple , you have a hotel as a business real estate when you get 6% of amortization (patents, goodwill, trademarks...) it’s means that you’ll decrease your taxes so you can save some money from your expenses you used to pay to the government ... it means that this money you saved from the taxes you used to pay to the government you can pay with the debts on the 3/4 of capital to the bank
Would it be possible to make a video in future showing the examples with numbers. Just to show how it all works, depreciation and appreciation. I believe it would show the importance of this even more. And also Tom mentioned that it's possible for an employee to take benefit of depreciation, but didn't explain how. It would be interesting to know that too. Thanks for your work, very much appreciated.
Depreciation is the government's way of saying we know your tenants are going to contribute to the wear and tear of your rental properties. Wear and tear is an expense so your taxable income is lower.
I am an engineer with 0% understanding of finance. But I am learning alot from Robert. Unfortunately, I haven't understand depreciation ... Make more videos like this...
The business can avoid paying taxes but when you want to transfer the earnings from the business to yourself via a draw, or paycheck or dividend you will eventually have to pay taxes. (trying to pay as little as possible is the goal)
Not if you set you business as a trust first from the start. Should cost you in today’s economic no more than 95k which is then a write off on your taxes lol
I refer to Robert Kiyosaki as my "Rich Dad". I found his Rich Dad, Poor Dad book by chance at a yard sale, and since reading it, I've never looked back.
I had to watch it twice to understand depreciation... Is it just me or Robert explanation is hard to understand?... Anyways, please correct me if I'm wrong. When your investment property depreciates, you pay less in taxes therefore you keep more cash in your pocket, correct?
I'm trying hard to understand I'll have to watch a few times but if your creating debt for a write off your also loosing Net?? I dont see the big upside but I will rewatch as many times as I have to
For those who are wondering how Depreciation, here it goes. Purchase price of the house: $500,000. I put down 100k on a rental real estate Debt (aka Mortgage): $400,000 Business perspective: Annual Rental Income: $60,000 Annual Rental Expenses (includes, Mortgage, taxes, insurance, repairs, HOA utilities, etc.): $40,000 Annual Rental Net Income: $20,000 positive cash flow. With my mortgage, I can buy a $500,000 property (mostly using the bank's money) and my rental property increases 5% per year in market value (APPRECIATION) Tax Return perspective(Keep in mind that the goal is to minimize income and to maximize expenses, more income you show on tax return, the more taxes you pay) Annual Rental Income: $60,000 Annual Rental Expenses (includes, Mortgage, taxes, insurance, repairs, HOA utilities, etc.): $40,000 Annual Rental Net Income: $20,000 positive cash flow. BUT dont forget the Depreciation (AKA freebie expense/phantom expense): Let's say it's $19,000 per year. This means you're paying taxes on $1000 worth of income OUT OF the $60,000 that you really got from the rental property. Meaning you're paying virtually NO taxes. If you're a W-2 earner, you receive $60,000 and you're taxed around 25% right off the bat, meaning you pay $15,000 before you even get the money. You also have to shoulder the mortgage payments, taxes, insurance, sales taxes, daily expenses in addition to the taxes that you've already paid. Hope this helps.
Holly crap, this was the most educative video I've ever seen. I had to watch the depreciation part twice, but after I've understood I can never look at investments and taxes the same again.
To be honest this is accounting and taxation 101. Its news to me that people even today dont even know about this. Education system is a failure globally
I had so many tax write offs/deductions for my duplex i bought and am living in that i had taxable losses and didnt owe anything to uncle sam on my rental income. It was awesome
So essentially, when you take debt to pay off say a house that you loaned, the appreciation (increase in value over time), is also yours but you essentially bought it with the banks money . Is that what the video meant? Also how does amortization come to effect in this?and how does it affect taxes? I am 16 ,don't know too much about financial stuff but this piqued my curiosity.
For that we have to understand first what taxes actually are and what are the phenomena on which the govt pay taxes ..!! Then only u ll understand this
Can the next video be a STEP TO STEP video to starting out buying your first ASSET house? If I'm purchasing my first to rent out to create passive income, where do I start? What key things do I have to do/watch out for in the process? What are all of the things that go into recognizing a house will be a good investment? Thanks!!!
One of the keys, as I'm learning to understand it, is to obtain a quality real estate agent by calling them and find one who works with investors! From here, obtain at least 3 recently (usually within 90 days) of comparable *sold* (not listed! The sold price!) properties that have the same number of bedrooms and bathrooms ( i.e. 3 bedrooms, 2 bathrooms, or 3/2 as short form) and similar interior square footage (i.e. plus or minus 10%-20%)! Appreciate your patience with this! Feel free to read this more than once! It took me a while myself to get my head around this and it is still ongoing learning for me! :) Use this to determine the maximum all-in offer price! Some investors call this the "After Repair Value" (ARV). Factor in all repairs expected and about 5%-10% lower than that to have room for counter offers! It is also important to know the potential rent! In terms of what "works" at a minimum, target 1% of the purchase price in gross monthly rent, *or better*! For example, if the all-in cost is $100,000 and the gross monthly rent is $1,000 / month that meets the 1% rule which is often acceptable to most banks for mortgaging. Again, though, 1% is the minimum and getting better is even better because we need to have a cash reserve and unexpected issues can come up! Getting better than 1% helps because ongoing property maintenance and repairs can be costly! We can discuss more items about this as you may be interested! Thanks for your patience with me! There is a lot in here and it is taking me a while to get my head around all this though I know this works! :)
Just by looking at this chart it proves how this country can give you the opportunity to make the necessary moves to get ahead in life. Sounds like there are similar ways of economic opportunity in other countries as well. Not a lot of people are willing to or understand how some of these things work that’s why it is so important to think for yourself, use critical thinking skills, self educate and take up some form of responsibility in life. Keep persevering and stay resilient. Everyone can enjoy pleasure in life but not everyone is willing to take on the responsibility to truly living their own life the way they want. I am glad and aware of how fortunate I am to live where I live with these opportunities and have this sense of awareness. The choice really is ours to depict what kind of life we want.
So this video is just teaching young people to not pay taxes. Although, taxes as a whole helps society. Not only does taxes give the funding for things like healthcare or social welfare or road infrastructure or access to electricity or water. So if everyone just paid less taxes, this could really damage a nation as the country wouldn't have funds to do anything.
Long read, but I'd say its worth it if you'd like a different perspective and enjoy being educated about our side of things: To not pay insane amounts of taxes in order to continue investing and growth which stimulates economic growth. For example as a small business with a pass through tax liability set up. We owe $2500 instantly because I am a business owner. Let's say the business makes $100k profit after expenses based on LLC pass through tax liability. I would owe upwards of $20k between state and federal taxes if not a touch more. Keep in mind, this profit you're seeing isn't after paying myself either. Because its a pass through If I paid myself $30k and left $70k for the business I'd still owe taxes for the $100k. If I can mitigate this by around $6-$8k and lets say $12k still goes in to the government by filing as an s corp I now have an additional $8k I can and will spend; locally, towards growth therefore stimulating the economy and more jobs etc as the list continues with this concept. Now let's say I don't pay taxes on any of it because I can mitigate all those taxes. As a business owner who set out to build a business based on culture and to take care of their people as if they were family. I'd want to continue reinvesting in growth, pass these savings into raises, profit sharing, help an employee out in a tough situation, send them out for education etc. Or, I could (as I plan to) use some of that $20k in savings to start the other business I am working on. This means I will be spending money, being taxed on it as well goes towards payroll for another businesses employees as well gives them business they wouldn't of gotten with me without that additional $20k as I will still need to add about $40k into what I want to do. Now I've been incentivized to create another business, pay others wages via purchases and stimulating the economical growth cycle. These are the things that you're missing that happens with this money. Does it always, no it don't. But what's the benefit of the risk as well as the sacrifices many of us have made to get here? My son is 6 and daughter is 3, and it kills me to say this. I am a present father, but not as present as I could be due to obligations to a business that many don't understand or see in the backend as an employee. I've dealt with depression, and often times thoughts of shutting down to go get a 9-5 so I can clock in and clock out without any additionally thoughts or concerns like the regular employed forces get to have while they have faith in the business and owner to keep bringing in money to support them when they come into work. Surely this is a decision I've made for myself and family. Surely I've put my self into this situation. But you know what, If it wasn't for me many wouldn't have the job with the pay they do. Many respond with the "you get what you asked for" mentality. Its true though, yet those same people are entitled thinking they're owed something from me and many others. So where is the benefit to me doing this? How much is the time I've lost with my family truly worth and why can't I place a wage or number on it if others can do the same with expectations of their wage with me?
You don't actually pocket the money from appreciation unless you sell or refinance it. Otherwise it's just an increase in the book value of the asset but it's not actual money in your pocket. There are rules that limit how much depreciation you can claim and when you sell the asset if you make a profit there is something called depreciation recapture. Investopedia has a good write up on it.
The more I watch these videos, the more I wonder as to how much more there is to learn and how blind was I before getting into this for not realizing how the world really works. Every video teaches me something new. Thankyou Rich dad.
Man a lot of comments not really understanding the point , people complaining it’s just he showing his business not teaching people to get rich . First of all , his videos and books are not Get Instant Rich schemes it’s a process , a process of how to begin and how to excel money . Anyone watching his random video and coming to conclusion is already rushing that’s what most do . I came to this video while I was reading his book and it is the foundation of how you grow it doesn’t have to be real estate it can be anything it’s just you got to know the rules and follow creating a strong foundation ! Taxes it’s not easy but it is what it is you gotta learn and learn until you keep taxes under your control .
Great video. Question: so depreciation works on investment properties but does not work for your personal residence. What if you buy a 4-Plex, live in one of the units, and are renting out the other three? Does it apply to that property then? Or would you get 75% of the depreciation value instead of 100%?
I love these videos, I do plan on buying 2 investment properties this year. I have been reading on real estate and about to attend some seminars to increase my knowledge and my network.
I love the way Robert explains... Very simple and makes sure to dumb it down for everyone to understand. Even interrupts to re-explain if he feels it's not simply put
I don't understand, how do I as a salary employee apply this advice. My tax gets taken out of my paycheck every month before I see it. What can I do to pay less in tax
Adam V I was waiting for someone to finally mention this “small” little nugget of truth that can have a huge impact on the end user profit...be it yourself in old age or maybe your living kin after you pass
@@marcusaplin71 After you pass, the cost basis for the property is reset to current market value. Therefore, the next of kin will owe no taxes on the gains that occurred in your lifetime. They won't have to pay back the depreciation you claimed either. It's one of the greatest tax breaks that exists for investors, except you have to die to take advantage.
I don't appreciate how this channel treats the audience like they are a child with no patience, I don't need some girl telling me they found the video long or boring or they almost fell asleep
if you go into the "B" or "I" quadrant, don't you have to have some amount of money and good credit score to begin with? I'd imagine at least $100,000 or even $200,000? So you have to be in the "E" or "S" quadrant first?
I don't understand the video. It says how rich save taxes. 1. If I am rich I don't need to see this. I already know how rich(me) save taxes. 2. If I am salaried then I have to resign my job and start business and become rich to save taxes like rich. How a salaried employee can save taxes?
I totally agree with Pamela, very confusing. Robert's other videos tell me I should quit my job, search the world for investors who are willing to give me unsecured money; then I go to a bank to get a really large loan in order to buy an apartment complex (this is all according to his other video with his real estate guru). So I have to ask, what's in it for the investor while I'm having to pay the bank off and run an apartment building...just sounds like I'm going to come out on the losing end...I foresee the bank foreclosing, Robert stepping in to pick up the apartment building as a foreclosure and I still have no place to live. According to Robert, As an entrepreneur you don't need money, just assets. But I've got to have some money to pay for a place to live, a vehicle, food, etc while I'm going around begging investors to give me money. Unfortunately, Robert doesn't tell you in detail how to acquire all of these assets...his examples assume you have a burger business paying for an apartment complex. Lastly, I saw his marketing video promoting his How to Find Capital seminar. Costs $5000 to attend. Well, if I have no job or money how do I get into the seminar. ALL of his videos simply promote his seminars which cost you money. He comes out the winner.
There are general principles you can apply and work towards. I'm an employee and specialist in training but looking now to grow my assets and cash flow and harness my creativity to produce assets. It doesn't require resigning your job, but it _does_ require spending free time more carefully or more on finances (e.g. studying the IRS tax code instead of watching Netflix/CZcams comedians).
This video is about how the rich get richer. Not how to get rich. This is a game only the wealthy people can play. In other videos he says if you are in the E and S quadrant, then you need to try to put money into assets and pay off your bad debt like credit card debt. Let the assets build up. Kill your bad debt and get good debt.
Just out of curiosity, how can you pay millions in taxes if all your capital gains are stuck in your stock brokerage account and the withdrawal limit prevents you from withdrawing enough money to cover your taxes?
I’m 16 I understand everything except slightly the depreciation. So it means that expanses I pay on my business or the real estate I buy is lowered so I keep that money I would’ve payed in my pockets while the government pay? Can someone simplify it for me.
Depreciation is decrease in the value of your assets (i.e real estate) suppose you bought a. Building for 100k and its now worth 90k that 10k reduction in its value is depriciation and you can show depriciation as an expence to get tax benifit.
Say you bought a 100k rental property on a 30 year fixed. You rent the property for 1,000 per month. That 1,000 covers your $500 amortization payment plus expenses. The rest is cash flow in your pocket. Also, houses and land tend to appreciate in value. So 10 years from now your property is worth 120k. You earned 20k in equity (120k-100k) tax free. Also, the income from the 1,000 per month is taxable, but you get to deduct Depreciation expense from that income every year, therefore money saved is money earned. To take it one step further, inflation means that the money you borrowed today isn't worth as much in the future, so the value of the money you pay back on the loan is worth less than the money you borrowed. Win, win, win, win.
Accounts as a degree is garbage, balance sheets and what not, more garbage to over sell that skill, just follow Kiyosaki's quadrant and your set for life, no wonder AI bots are now filing financial statements and what not, for companies.
Aaron, I agree and I'm a CPA. Some of it made no sense. I just people do a little due diligence google and read the reviews. Google Kiyosaki, bankruptcy.
I will explain to clarify. They're many subjects here. Tax law, accountanting, and bank policies. Let's start with the easiest: -amortization it's paying for your loan and tax free for companies -when you buy the real state you have to register that at it's cost value. Also every year in the net income balance of the company you register the depreciation. So let's say I buy a condo and for the accounting registration I take the cost/50 years...so every year you are putting and expense and you have less income to be tax. The real objective of the depreciation is that you're "saving" a bit every year so when the times comes you can rebuilt it or rebuy it. You have to do that with many goods that depreciate over time like a computers, machines, etc. It's has to deal with accounting.... it's not a real expense but you have it in your income statement and it's allowed by tax laws as well. -The real state is in the balance sheet at its cost (price you paid) and it doesn't matter for taxing or accounting if it appreciate its value (unless you sell it) but you can have benefits with the bank because the mortgage was for a less value propiety so with more value you can negotiate the terms or borrow more money That's it. Easy peacy haha
Am I the only one who thinks it's annoying when she says 10 minutes and 30 seconds is long? Really? That's a 6 year old attention span . A real seminar about making money usually over an hour long! In any case, Robert and his experts give great advice.
This does not apply in many other countries as tax laws are different, for example they are placing restrictions on depreciation in Australia and Opposition Govt in Australia wants to place more restrictions....
You have to Transition to the right side of the quadrant. Those who don’t, tax reform and the $10k maximum deduction will be painful. I did it with Toms help years ago, you can learn more about how I did it here. www.genalofton.com
Depreciation helps a real estate asset in taxes look like it’s operating at a loss and takes the biggest portion compared to debt interest or other write off expenses but realistically it’s only a small fraction of the tax savings you receive. All the deductions a real estate asset receives are deducted from the income the property is generating. If you are not at a loss you don’t get a tax deduction as your gain will then be thrown back into your regular income depending on how you structure your entity. All real estate gurus talk about the benefit of real estate deductions but don’t mention the need to be operating at a loss to save on taxes...
Depreciation is great but if you decide to sell the property you my find that you may have to pay back some percent of the depreciation $$$ you saved in taxes over a period of time.
so how would you apply this knowledge, what would be teh first thing to do? 1.register a new company as... 2. how do you link your current cash inn,? 3. how do you link your current DIVIDENDS monthly income from a company? 4. how is yous income is tax free? 5. how do i transfer money to buy more of my "asset" that gives me income "dividends", ( do you use credit card)?
what KIND of debt? how is a business paying for say personal debt? lets say in this scenario I have a hamburger business, then I guess I am paying off business debt without paying tax on it?
I thought a lot of time, for rental property or hotel, if you have to pay $500,000 of mortgage interest to the bank, and your rental income or hotel income is about $500,000, they already cancel each other out, and so you don't need to pay taxes... so why do you need the "depreciation cost" so that you pay no taxes? I can see that it is useful only when your rental income is greater than your mortgage interest expenses. In some parts of the world, your monthly mortgage payment is $30,000 and the rental income per month is $20,000 so you don't need the depreciation cost... but I guess if your mortgage payment is $3000 and you can take in rental income of $3500, then depreciation cost can help, especially after 10 or 15 years, when your mortgage interest expenses keep on dropping, while the rental income keep on rising
Well, what I understood that, it is simply as taking debts, having assets and after time you pay the bank but you still have a source of income right? 2:35
Guys I work tax and understand the content, however, I can't help but say you could have articulated your points better using a different object lesson. Marker boards are so yesterday.
It's an incentive, not a loophole. The word 'loophole' assumes (wrongly) that taxes are something that everyone should be paying. Rather, tax is something owed only under a certain set of circumstances, and the government uses credits, deductions, etc. as incentive and tax as disincentive to encourage certain behaviors from residents.
Wish he also explains the risk of taking a loan. It’s good when things are appreciating and that’s what people did back in 2006-7. When the economy hits the fan, the asset value tank and a job loss which result in losing your property to the bank or keep paying interests on the property that is worth way less. I understand that Everyone has a different level of risk tolerance. It’s paramount to know your risk tolerance level and act accordingly.
This is based on employee debt. Not as a business or investor. There's much more to the "economy hits the fan" logic you're applying here. The economy hit the fan for far worse things than loans and bad financial decisions. The banks sold junk bonds as good AAA bonds. This would be something I feel you'd find pleasure in researching further as I had as well.
Taxes are a necessary evil in not only paying for things like roads, health care, social security, etc, but it also frees up money so it can go back into circulation. Saving hoards of money (like the rich do) and not spending it hurts the economy because then the government has to print more money, which lessens its value, which spikes prices, etc.
@@johns3491 the public roads are garbage. I pay for my own healthcare, social security is a scam. public school is garbage. "frees up money so it can go back into circulation" might be one of the dumbest excuses i've ever heard...
@@moondog573 Money is like blood; it works when it moves. When it stays put for long periods of time, it kills the economy. This is why we need poor folks in a society, because if you give them money, they will spend it, which will in turn support jobs and businesses. Taxes free up that money folks at the top are hoarding away, so it can go back into circulation to be spent on goods and services without having to print more of it. As for your other asinine points: just about all roads are public roads, so I guess you don't like getting around anywhere by car. "I pay for my own healthcare" - either the business you work for pays for it, you don't have any major health problems yet, or you're already rich. If you're in one of the first 2 pools, just wait until you get cancer or into a serious car accident, and we'll see how well you can afford to help yourself. Social security is sustainable, but it does not necessarily guarantee retirees a paid-for future. It's supplemental income; not absolute.
@@johns3491 Tax and Interest are blood money. Blood sucked from the poor and given to the rich. There is a reason so many people hate most western governments.
John S You wrote all of that to rebuttal but didn’t prove anything. If you understood history and actually researched you’d understand that taxes are theft because CITIZENS are forced to pay them without being able to make a decision in where they go. I don’t want my taxes being used to create bombs to kill poor people in other countries. I don’t want my money being used to bail out big business that commit fraud and embezzlement. Taxes = Extortion
Depreciation lowers your cost base of the asset so you’ll pay a higher capital gains tax once you sell the property. You’re simply deferring the taxes.
I'm still not sure that I understand depreciation and how it works exactly to your benefit. Especially, when you have no money to pull from. Take me for example, I am currently on #disability I have no true income to invest my own money & as far as I know, I don't have OPM. Where can I look for the OPM in my case. I thought maybe doing it through a 1st time home buyers program, but that still seems like just my money. So, now, I'm confused on where to find the OPM. Am I just being more stupid or am I not looking in the right place?
I’m so happy I made productive decisions about my finances that changed my life forever. I’m a single mother living in Melbourne Australia, bought my second house in September and hoping to retire next year at 50 if things keep going smoothly for me.....
Sorry for late reply sweetie, I used the FIRE movement to put my finances in order. Then lnvested in stocks, cryptocurencies and reaI estates though the assistance of an lnvestment Pro who helped me make it this big...
exactlly hon, listen again, and again, it will make sense....Thats the only way to get out from this rat race!! Think Asset, Cash Flow and other people money : credit card, loan (good debt)
I watched this video about a year ago and it did not make much sense then but I got a copy of his audiobook Tax Free Wealth and I now understand big time!
Say you bought a 100k rental property on a 30 year fixed. You rent the property for 1,000 per month. That 1,000 covers your $500 amortization payment plus expenses. The rest of cash flow in your pocket. Also, houses and land tend to appreciate in value. So 10 years from now your property is worth 120k. You earned 20k in equity (120k-100k) tax free. Also, the income from the 1,000 per month is taxable, but you get to deduct Depreciation expense from that income every year, therefore money saved is money earned. To take it one step further, inflation means that the money you borrowed today isn't worth as much in the future, so the value of the money you pay back on the loan is worth less than the money you borrowed. Win, win, win, win.
lol!!!! Nah, it helps show that he is trying to teach a new generation. I hear what you are saying, but it is good that she (or any millennial) is in the videos.
Hello Robert! I have a question on this topic. Can we I always be taxed free or only for an unpaid real estate building? For example, I will get a loan from the bank a 1 million dollars to be invested on real estates. Then, after 3 years, I paid it. Then, I will get another loan to be invested on real estates. When does tax free be applicable? Am I tax free as long as I have loan? or should I pay the tax after paying my loan for the specific real estate? Like, I am paid for my first real estates, then I have loan for my second building. Should I pay tax for my first real estate or am I free of tax as long as I have loan? And if I am free from tax as long as I have loan, I think this is good to do same process until reaching more buildings with tax free. I hope you will answer my question. Thank you.
Businesses can basically deduct interest on debt, rent, utilities, maintenance, etc. from their taxable income. The government get second dibs. Individuals pay taxes before they pay those expenses. The government get first dibs. So it helps to learn how to legally set yourself up as a business, so you get the deductions of a business.
so when i heard correctly: Your tax that you have to pay from your cashflow, goes into depreciation, because you borrow more money from the bank and because you buy real estate. So the taxes, turning from taxes into a check from the government to support you to buy real estate and pay off your debt faster, while you are paying your debt off with your cashflow from the asset (real estate). Am i right ??? Please Correct me if im wrong
What are some of your tax strategies to pay less in taxes this year?
Using tax deductions on renovations costs. This will actually reduce taxes for the coming 10 years of an amount that is equal to 80% fo the renovation cost (yes you got it... the cost in the end is only 20%). This is possible in Italy.
Does the depreciation reduce your basis thus increase your gain when you sell it later?
Taxes on commissions are at 20% here in Zambia, but once I prove that the business is below a threshold annual turnover of $80,000 i get to pay up to only 4%! I do this for multiple businesses and earn upto 16% excess cash flow
The Rich Dad Channel I’m curious of you’ve got any insight to the Canadian demographic?
Juan Ortoo you are so dumb
Funny how the accounting classes I took in college don't even come close enough to teach you about the possibility of financial freedom. They only apply scenarios where you learn how to balance someone's else's business. Just prepping you to be an employee...Wow....
Not really if you are buying Stocks than its important to read the Balance sheet
They could be training you to balance your own business!
@@discflinger7675 its a starting point
@@uknasa007
No it's not. School is for the fool, and I'm way too cool for school.
@@mannicolas-rosburn601 yup
It is never too late ! I am 71 and I gotta do this !
We'll keep going
I have business in Ghana. Come let's do it. Or invest
@@philipahotor1930 hey Philip davidacard.d@gmail.com it's my mail id contact me
Amen you got this
Wtf
I remember in high school we had a substitute for a month. Everyday he read to us rich Dad poor Dad and made us write notes while everyone was talking I was listening. He did mention you’ll thank me later for reading this, and boy was he right. They should be showing this video to all these kids in economics class. People always complaining why wealthy people get tax breaks but never take the time to research as to why they get them. Knowledge is power! Invest in yourselves first.
For example, right now average people are complaining why trump paid 750 🤦🏽♂️
Exactly!!! Heard about that this morning
I’m 15, trying to learn about taxes before I start my own business. Everyone can start there own. Just think of the things you use in your daily life .✌️🙏
im 15 too
@@healtheffect3054 I’m 14
Im 19 bro, its too late for me😭😭
@@tonyp.1463 Hi you can tell me your business plan and I can help You possibly
@@tonyp.1463 in managing the business
I attended a seminar you held over 10 years ago. I took and paid for a 1000 tax course that has been priceless.
I take deductions from my rental properties, business lunches, travel to and from my rentals, repair costs for my computer, charitable donations, and a few others.
#priceless 💯💯💯
Hi, Tom... Im new in town (I just moved to USA 6 months ago). I going to pay taxes for first time. I´m self employee, How do you recommend me to pay less?
@@djjohannp i am a newbie in this (a student rn) but i would say that you should start your own freelance business. If it's Registered to be a corporate business, then you will pay a lot less tax. You should ask an accountant
@@KR-ln5qw I didn't take any. May you recommend me one to start to learn?
@@djjohannp invest most of the profits into assets for the business every mile you drive on your car is a tax break . Keep receipts of everything good luck to you
My question is, where do you first even get money to buy into major investments? If you have a 9 to 5 and make 45000 a year. How and where do you even start?
This is like Greek to me. I hear you... but I don't hear you. But I'll keep playing this video till I get it. won't give up.
That's the spirit. Keep at it. Some of us get it because we've read it in school. Don't give up and feel free to ask questions.
keep at it!
I actually do recommend you to keep watching and reading things like this, when i watched this video for the first few times i didn't understand a great deal of it but i understand quite a bit of it now and i am still learning. You may want to watch videos done by Ken as they helped me a lot, repetition is key.
Thanks everyone
Try watching other videos similar to this that rk teaches. It's an advanced class for a reason. Alot of things he says will go right over most of our heads. Commitment and research is key.
If you've been following this guy, you'll know that one of the most important lessons he preaches is to never stop learning, and that's what has stood out to me.
In school, we're taught that our education ends after college, or an internship. "You already know all that you need to", and, "You are just wasting your time on useless pursuits". Actually, education should never end.
Because not only does it "corrode" your mind(the way muscles get weak due to lack of exercise), it also stops you from adapting. It teaches you that learning is a sign of inferiority, rather than a virtue.
We often say, "knowledge is power". But we never really understand the significance of this phrase, rather repeating it like parrots.
Amazing work, Rich Dad! Keep it up!!
Robert and Tom did a good introducing the whole tax savings concept. Good job. The more you look into this topic, the more you realize just how many avenues there are to minimize taxes in the US. I actually did a video on this very topic that might give you even more ideas and help you out.
Amortization: the action or process of gradually writing off the initial cost of an asset or the repayment of a loan principal over time.
Appreciation: an increase in the value of an asset over time.
Depreciation: a reduction in the value of an asset over time, due in particular to wear and tear.
How does one write off debt?
@@seven7hsine yes i want to know that too
@@seven7hsine you use the debt that you acquired from the bank to make your depreciation amount higher then the depreciation takes away from your gross income thus lowering your taxes
Let’s take an exemple , you have a hotel as a business real estate when you get 6% of amortization (patents, goodwill, trademarks...) it’s means that you’ll decrease your taxes so you can save some money from your expenses you used to pay to the government ... it means that this money you saved from the taxes you used to pay to the government you can pay with the debts on the 3/4 of capital to the bank
Amortization for intangible assets and depreciation for tangible asset
Someone give this man a bigger white board. I want to learn this notion more in depth
Would it be possible to make a video in future showing the examples with numbers. Just to show how it all works, depreciation and appreciation. I believe it would show the importance of this even more. And also Tom mentioned that it's possible for an employee to take benefit of depreciation, but didn't explain how. It would be interesting to know that too. Thanks for your work, very much appreciated.
Why? Being an employee sucks
Mrs kathy is legit and her method works like magic I keep earning every single week with her new strategy
Wow I'm shock someone mentioned and recommended expert Mrs kathy I thought I'm the only one trading with her
She helped me recover what I lost trying to trade for my self
Yes I'm a living testimony of expert Mrs kathy
Mrs kathy has changed my financial status for the best, all tanks to my aunty who introduced her to me
I think she is the best broker I have ever seen
Depreciation is the government's way of saying we know your tenants are going to contribute to the wear and tear of your rental properties. Wear and tear is an expense so your taxable income is lower.
Rex Erection you get rich because you pay less taxes
I am an engineer with 0% understanding of finance. But I am learning alot from Robert. Unfortunately, I haven't understand depreciation ...
Make more videos like this...
Do you understand it now?
@@MasterAcquisition yah but I keep on learning also
A.B.E = Always Be Educating. Happy to hear others are continually learning! Keep it up
@@shahmirjadoon1322 Hi im an newbke engineer too. Did u discover any good methods to evade tax as an engineer？
The business can avoid paying taxes but when you want to transfer the earnings from the business to yourself via a draw, or paycheck or dividend you will eventually have to pay taxes. (trying to pay as little as possible is the goal)
Not if you set you business as a trust first from the start. Should cost you in today’s economic no more than 95k which is then a write off on your taxes lol
I refer to Robert Kiyosaki as my "Rich Dad". I found his Rich Dad, Poor Dad book by chance at a yard sale, and since reading it, I've never looked back.
He’s a conman.
I had to watch it twice to understand depreciation... Is it just me or Robert explanation is hard to understand?... Anyways, please correct me if I'm wrong. When your investment property depreciates, you pay less in taxes therefore you keep more cash in your pocket, correct?
Yeah
Agree
He gives an easier explanation in rich dad poor dad
I'm trying hard to understand I'll have to watch a few times but if your creating debt for a write off your also loosing Net?? I dont see the big upside but I will rewatch as many times as I have to
Depreciation is an expense, which lowers taxable income (so yes, allows you to keep more in your pocket)
For those who are wondering how Depreciation, here it goes.
Purchase price of the house: $500,000.
I put down 100k on a rental real estate
Debt (aka Mortgage): $400,000
Business perspective:
Annual Rental Income: $60,000
Annual Rental Expenses (includes, Mortgage, taxes, insurance, repairs, HOA utilities, etc.): $40,000
Annual Rental Net Income: $20,000 positive cash flow.
With my mortgage, I can buy a $500,000 property (mostly using the bank's money) and my rental property increases 5% per year in market value (APPRECIATION)
Tax Return perspective(Keep in mind that the goal is to minimize income and to maximize expenses, more income you show on tax return, the more taxes you pay)
Annual Rental Income: $60,000
Annual Rental Expenses (includes, Mortgage, taxes, insurance, repairs, HOA utilities, etc.): $40,000
Annual Rental Net Income: $20,000 positive cash flow.
BUT dont forget the Depreciation (AKA freebie expense/phantom expense): Let's say it's $19,000 per year.
This means you're paying taxes on $1000 worth of income OUT OF the $60,000 that you really got from the rental property. Meaning you're paying virtually NO taxes.
If you're a W-2 earner, you receive $60,000 and you're taxed around 25% right off the bat, meaning you pay $15,000 before you even get the money. You also have to shoulder the mortgage payments, taxes, insurance, sales taxes, daily expenses in addition to the taxes that you've already paid.
Hope this helps.
Holly crap, this was the most educative video I've ever seen. I had to watch the depreciation part twice, but after I've understood I can never look at investments and taxes the same again.
Can u explain the depreciation part to me?
Hopes Sky yeah same
This is not an educational video. It's a video explains about how hard working people are becoming more poorer
@@nature6717 exactly. So work smart not hard. Invest in opportunities make your money work for you instead of you working for money aka job
To be honest this is accounting and taxation 101. Its news to me that people even today dont even know about this. Education system is a failure globally
I had so many tax write offs/deductions for my duplex i bought and am living in that i had taxable losses and didnt owe anything to uncle sam on my rental income. It was awesome
I need your advice
@@helenrivera8197 whatever advice i could give would all be answered by Matt Mckeever's youtube channel. His is basically where i learned everything
i need ur help with this tax stuff as well
also the money making part
and the debt part
and the other part i forgot the name of
I love the bloopers at the end! It's refreshing to see a "real" person on youtube :) Also, the lessons are incredible
Robert Kiyosaki is great! 🙌🏻
So are you!!!
I wish they had asked more questions rather than just saying "Yes I understand."
Hi Robert, I really appreciate what you're doing. And I hope to learn as much as I can to start my business.
So essentially, when you take debt to pay off say a house that you loaned, the appreciation (increase in value over time), is also yours but you essentially bought it with the banks money .
Is that what the video meant?
Also how does amortization come to effect in this?and how does it affect taxes?
I am 16 ,don't know too much about financial stuff but this piqued my curiosity.
They forgot inflation, the value of the debt will decrease at the same time amortization, appreciation and depreciation take place.
Is inflation bad?
Great video Thanks to Mr. KIYOSAKI AND TOM for breaking it down in simple terms. This is valued content that I'm grateful for !!
I’m 18 I want to keep watching this video till I understand it completely
Same here bud, same here
For that we have to understand first what taxes actually are and what are the phenomena on which the govt pay taxes ..!! Then only u ll understand this
Read his book lol
Negotiation is an important asset in personal skills I would love to see a video on the art of Negotiation please
Can the next video be a STEP TO STEP video to starting out buying your first ASSET house? If I'm purchasing my first to rent out to create passive income, where do I start? What key things do I have to do/watch out for in the process? What are all of the things that go into recognizing a house will be a good investment? Thanks!!!
One of the keys, as I'm learning to understand it, is to obtain a quality real estate agent by calling them and find one who works with investors! From here, obtain at least 3 recently (usually within 90 days) of comparable *sold* (not listed! The sold price!) properties that have the same number of bedrooms and bathrooms ( i.e. 3 bedrooms, 2 bathrooms, or 3/2 as short form) and similar interior square footage (i.e. plus or minus 10%-20%)!
Appreciate your patience with this! Feel free to read this more than once! It took me a while myself to get my head around this and it is still ongoing learning for me! :)
Use this to determine the maximum all-in offer price! Some investors call this the "After Repair Value" (ARV).
Factor in all repairs expected and about 5%-10% lower than that to have room for counter offers! It is also important to know the potential rent! In terms of what "works" at a minimum, target 1% of the purchase price in gross monthly rent, *or better*!
For example, if the all-in cost is $100,000 and the gross monthly rent is $1,000 / month that meets the 1% rule which is often acceptable to most banks for mortgaging. Again, though, 1% is the minimum and getting better is even better because we need to have a cash reserve and unexpected issues can come up! Getting better than 1% helps because ongoing property maintenance and repairs can be costly!
We can discuss more items about this as you may be interested! Thanks for your patience with me! There is a lot in here and it is taking me a while to get my head around all this though I know this works! :)
7:00 glad Robert pointed that out...
What did Amazon pay in tax last year? Close to 0?
All I need to hear
Robert Kiyosaki is a genius. Would love to meet you in person one day!!
I was thinking the same thing listen to him all day today. An the day is not over yet. 🙃
Get it done....call him and ask him. You have nothing to loose!
He lives in Scottsdale AZ
Just by looking at this chart it proves how this country can give you the opportunity to make the necessary moves to get ahead in life. Sounds like there are similar ways of economic opportunity in other countries as well. Not a lot of people are willing to or understand how some of these things work that’s why it is so important to think for yourself, use critical thinking skills, self educate and take up some form of responsibility in life. Keep persevering and stay resilient. Everyone can enjoy pleasure in life but not everyone is willing to take on the responsibility to truly living their own life the way they want. I am glad and aware of how fortunate I am to live where I live with these opportunities and have this sense of awareness. The choice really is ours to depict what kind of life we want.
All facts it might seem discouraging bc it’s a lot to learn
So this video is just teaching young people to not pay taxes. Although, taxes as a whole helps society. Not only does taxes give the funding for things like healthcare or social welfare or road infrastructure or access to electricity or water. So if everyone just paid less taxes, this could really damage a nation as the country wouldn't have funds to do anything.
Long read, but I'd say its worth it if you'd like a different perspective and enjoy being educated about our side of things:
To not pay insane amounts of taxes in order to continue investing and growth which stimulates economic growth.
For example as a small business with a pass through tax liability set up. We owe $2500 instantly because I am a business owner. Let's say the business makes $100k profit after expenses based on LLC pass through tax liability. I would owe upwards of $20k between state and federal taxes if not a touch more. Keep in mind, this profit you're seeing isn't after paying myself either. Because its a pass through If I paid myself $30k and left $70k for the business I'd still owe taxes for the $100k. If I can mitigate this by around $6-$8k and lets say $12k still goes in to the government by filing as an s corp I now have an additional $8k I can and will spend; locally, towards growth therefore stimulating the economy and more jobs etc as the list continues with this concept.
Now let's say I don't pay taxes on any of it because I can mitigate all those taxes. As a business owner who set out to build a business based on culture and to take care of their people as if they were family. I'd want to continue reinvesting in growth, pass these savings into raises, profit sharing, help an employee out in a tough situation, send them out for education etc. Or, I could (as I plan to) use some of that $20k in savings to start the other business I am working on. This means I will be spending money, being taxed on it as well goes towards payroll for another businesses employees as well gives them business they wouldn't of gotten with me without that additional $20k as I will still need to add about $40k into what I want to do. Now I've been incentivized to create another business, pay others wages via purchases and stimulating the economical growth cycle.
These are the things that you're missing that happens with this money. Does it always, no it don't. But what's the benefit of the risk as well as the sacrifices many of us have made to get here? My son is 6 and daughter is 3, and it kills me to say this. I am a present father, but not as present as I could be due to obligations to a business that many don't understand or see in the backend as an employee. I've dealt with depression, and often times thoughts of shutting down to go get a 9-5 so I can clock in and clock out without any additionally thoughts or concerns like the regular employed forces get to have while they have faith in the business and owner to keep bringing in money to support them when they come into work. Surely this is a decision I've made for myself and family. Surely I've put my self into this situation. But you know what, If it wasn't for me many wouldn't have the job with the pay they do. Many respond with the "you get what you asked for" mentality. Its true though, yet those same people are entitled thinking they're owed something from me and many others. So where is the benefit to me doing this? How much is the time I've lost with my family truly worth and why can't I place a wage or number on it if others can do the same with expectations of their wage with me?
Zakat is better 😊
Depreciation still makes no sense to me. How can you claim that a property is depreciating while you're pocketing money from appreciation??
You don't actually pocket the money from appreciation unless you sell or refinance it. Otherwise it's just an increase in the book value of the asset but it's not actual money in your pocket. There are rules that limit how much depreciation you can claim and when you sell the asset if you make a profit there is something called depreciation recapture. Investopedia has a good write up on it.
The more I watch these videos, the more I wonder as to how much more there is to learn and how blind was I before getting into this for not realizing how the world really works. Every video teaches me something new. Thankyou Rich dad.
Man a lot of comments not really understanding the point , people complaining it’s just he showing his business not teaching people to get rich . First of all , his videos and books are not Get Instant Rich schemes it’s a process , a process of how to begin and how to excel money . Anyone watching his random video and coming to conclusion is already rushing that’s what most do . I came to this video while I was reading his book and it is the foundation of how you grow it doesn’t have to be real estate it can be anything it’s just you got to know the rules and follow creating a strong foundation ! Taxes it’s not easy but it is what it is you gotta learn and learn until you keep taxes under your control .
Great video. Question: so depreciation works on investment properties but does not work for your personal residence. What if you buy a 4-Plex, live in one of the units, and are renting out the other three? Does it apply to that property then? Or would you get 75% of the depreciation value instead of 100%?
Separate units should qualify.
I am just 15 from India. I had to watch it 5 times but I finally understood. Thanks 🙏 to Robert Sir and Tom Sir.
I love these videos, I do plan on buying 2 investment properties this year. I have been reading on real estate and about to attend some seminars to increase my knowledge and my network.
John Guillory kudos to you! How did it turn out? Just do it!
Just get a whiteboard Mr. Kiyosaki!
He likes to use the paper and consider it business expenses 😂
Don’t tell him how to live his life!! Haha
@@NinaBabyTV he is saving that money to invest in the next apartment complex 😂
That would be an expense which is "money out of his pocket" XD
Classic robert!
Thanks a lot for the imp info.
The only thing is, How can I read the last part with the ads covering half of it?
I love the way Robert explains... Very simple and makes sure to dumb it down for everyone to understand. Even interrupts to re-explain if he feels it's not simply put
After watching you gies I realize how much I still have to learn.
I don't understand, how do I as a salary employee apply this advice. My tax gets taken out of my paycheck every month before I see it. What can I do to pay less in tax
I donate sometimes
Good video Robert.
So how do you actually bring about depreciation and appreciation to benefit you??
Depreciation lowers the income tax you have to pay. Appreciation puts profits in your pocket when you sell the property.
When you sell, the appreciation and depreciation become a tax burden. It has to be recaptured.
Adam V I was waiting for someone to finally mention this “small” little nugget of truth that can have a huge impact on the end user profit...be it yourself in old age or maybe your living kin after you pass
@@marcusaplin71 After you pass, the cost basis for the property is reset to current market value. Therefore, the next of kin will owe no taxes on the gains that occurred in your lifetime. They won't have to pay back the depreciation you claimed either. It's one of the greatest tax breaks that exists for investors, except you have to die to take advantage.
I have to watch this again. And not just cos i'm full of rum.
I don't appreciate how this channel treats the audience like they are a child with no patience, I don't need some girl telling me they found the video long or boring or they almost fell asleep
Just make sure your passive income is large enough to pay all your taxes and live an awesome life.🤑🤑
if you go into the "B" or "I" quadrant, don't you have to have some amount of money and good credit score to begin with? I'd imagine at least $100,000 or even $200,000? So you have to be in the "E" or "S" quadrant first?
I don't understand the video. It says how rich save taxes.
1. If I am rich I don't need to see this. I already know how rich(me) save taxes.
2. If I am salaried then I have to resign my job and start business and become rich to save taxes like rich.
How a salaried employee can save taxes?
I totally agree with Pamela, very confusing. Robert's other videos tell me I should quit my job, search the world for investors who are willing to give me unsecured money; then I go to a bank to get a really large loan in order to buy an apartment complex (this is all according to his other video with his real estate guru). So I have to ask, what's in it for the investor while I'm having to pay the bank off and run an apartment building...just sounds like I'm going to come out on the losing end...I foresee the bank foreclosing, Robert stepping in to pick up the apartment building as a foreclosure and I still have no place to live. According to Robert, As an entrepreneur you don't need money, just assets. But I've got to have some money to pay for a place to live, a vehicle, food, etc while I'm going around begging investors to give me money. Unfortunately, Robert doesn't tell you in detail how to acquire all of these assets...his examples assume you have a burger business paying for an apartment complex. Lastly, I saw his marketing video promoting his How to Find Capital seminar. Costs $5000 to attend. Well, if I have no job or money how do I get into the seminar. ALL of his videos simply promote his seminars which cost you money. He comes out the winner.
There are general principles you can apply and work towards. I'm an employee and specialist in training but looking now to grow my assets and cash flow and harness my creativity to produce assets. It doesn't require resigning your job, but it _does_ require spending free time more carefully or more on finances (e.g. studying the IRS tax code instead of watching Netflix/CZcams comedians).
This video is about how the rich get richer. Not how to get rich. This is a game only the wealthy people can play.
In other videos he says if you are in the E and S quadrant, then you need to try to put money into assets and pay off your bad debt like credit card debt. Let the assets build up. Kill your bad debt and get good debt.
Just out of curiosity, how can you pay millions in taxes if all your capital gains are stuck in your stock brokerage account and the withdrawal limit prevents you from withdrawing enough money to cover your taxes?
I’m 16 I understand everything except slightly the depreciation. So it means that expanses I pay on my business or the real estate I buy is lowered so I keep that money I would’ve payed in my pockets while the government pay? Can someone simplify it for me.
Depreciation is decrease in the value of your assets (i.e real estate) suppose you bought a. Building for 100k and its now worth 90k that 10k reduction in its value is depriciation and you can show depriciation as an expence to get tax benifit.
what kind of good debt can you get? Im wondering if you can get to but stocks gold or Realestate so I can lower taxable income and increase assets
This is for American Tax laws, I live in Canada. How could I do this here?
Research your tax laws. They are all very similar though.
Or move to America lol
Say you bought a 100k rental property on a 30 year fixed. You rent the property for 1,000 per month. That 1,000 covers your $500 amortization payment plus expenses. The rest is cash flow in your pocket. Also, houses and land tend to appreciate in value. So 10 years from now your property is worth 120k. You earned 20k in equity (120k-100k) tax free. Also, the income from the 1,000 per month is taxable, but you get to deduct Depreciation expense from that income every year, therefore money saved is money earned. To take it one step further, inflation means that the money you borrowed today isn't worth as much in the future, so the value of the money you pay back on the loan is worth less than the money you borrowed. Win, win, win, win.
With an accounting degree, I have to say their explanation was hard to stomach.
In what way? Is the explanation incorrect? Or just that you weren't taught how to be the owner?
What you will find is that the people best at doing stuff suck at explaining or teaching.
Accounts as a degree is garbage, balance sheets and what not, more garbage to over sell that skill, just follow Kiyosaki's quadrant and your set for life, no wonder AI bots are now filing financial statements and what not, for companies.
Aaron, I agree and I'm a CPA. Some of it made no sense. I just people do a little due diligence google and read the reviews. Google Kiyosaki, bankruptcy.
Yes it is. This video is misleading.
I will explain to clarify. They're many subjects here. Tax law, accountanting, and bank policies. Let's start with the easiest:
-amortization it's paying for your loan and tax free for companies
-when you buy the real state you have to register that at it's cost value. Also every year in the net income balance of the company you register the depreciation. So let's say I buy a condo and for the accounting registration I take the cost/50 years...so every year you are putting and expense and you have less income to be tax. The real objective of the depreciation is that you're "saving" a bit every year so when the times comes you can rebuilt it or rebuy it. You have to do that with many goods that depreciate over time like a computers, machines, etc. It's has to deal with accounting.... it's not a real expense but you have it in your income statement and it's allowed by tax laws as well.
-The real state is in the balance sheet at its cost (price you paid) and it doesn't matter for taxing or accounting if it appreciate its value (unless you sell it) but you can have benefits with the bank because the mortgage was for a less value propiety so with more value you can negotiate the terms or borrow more money That's it. Easy peacy haha
Am I the only one who thinks it's annoying when she says 10 minutes and 30 seconds is long? Really? That's a 6 year old attention span . A real seminar about making money usually over an hour long! In any case, Robert and his experts give great advice.
People who judge others are usually insecure about themselves
I get it , doing the things that the government wants you to do like housing, water etc.. what about security? Does that fall under the same bracket ?
I will have to watch this at least 30 times.
But if and when the property is sold the depreciation deduction now becomes income. Taxes must be paid on that amount.
Felt like we were watching Dora The Explorer at the outro.
Hola
This does not apply in many other countries as tax laws are different, for example they are placing restrictions on depreciation in Australia and Opposition Govt in Australia wants to place more restrictions....
I have quite a bit of money and profit sharing what can I do to get it out without being penalized and start new businesses with it
You have to Transition to the right side of the quadrant. Those who don’t, tax reform and the $10k maximum deduction will be painful. I did it with Toms help years ago, you can learn more about how I did it here. www.genalofton.com
Buy real estate for rentals.
Depreciation helps a real estate asset in taxes look like it’s operating at a loss and takes the biggest portion compared to debt interest or other write off expenses but realistically it’s only a small fraction of the tax savings you receive. All the deductions a real estate asset receives are deducted from the income the property is generating. If you are not at a loss you don’t get a tax deduction as your gain will then be thrown back into your regular income depending on how you structure your entity. All real estate gurus talk about the benefit of real estate deductions but don’t mention the need to be operating at a loss to save on taxes...
How can we get from salaried or self-employed to investor and big business.
Prajwal Khandare find a high income skill, learn it, market it, & scale it
Depreciation is great but if you decide to sell the property you my find that you may have to pay back some percent of the depreciation $$$ you saved in taxes over a period of time.
Hard to keep up when they’re over talking each other.
so how would you apply this knowledge, what would be teh first thing to do? 1.register a new company as... 2. how do you link your current cash inn,? 3. how do you link your current DIVIDENDS monthly income from a company? 4. how is yous income is tax free? 5. how do i transfer money to buy more of my "asset" that gives me income "dividends", ( do you use credit card)?
what KIND of debt? how is a business paying for say personal debt?
lets say in this scenario I have a hamburger business, then I guess I am paying off business debt without paying tax on it?
I have to say it, these 2 are mad mans
Can you ask robert that.
How student can start real estate investing just after graduation?
I thought a lot of time, for rental property or hotel, if you have to pay $500,000 of mortgage interest to the bank, and your rental income or hotel income is about $500,000, they already cancel each other out, and so you don't need to pay taxes... so why do you need the "depreciation cost" so that you pay no taxes? I can see that it is useful only when your rental income is greater than your mortgage interest expenses. In some parts of the world, your monthly mortgage payment is $30,000 and the rental income per month is $20,000 so you don't need the depreciation cost... but I guess if your mortgage payment is $3000 and you can take in rental income of $3500, then depreciation cost can help, especially after 10 or 15 years, when your mortgage interest expenses keep on dropping, while the rental income keep on rising
I don't understand depreciation when my dad sold his farm he paid 1000000 dollars in taxes
@Rex Erection
Not really
It was almost paid off
he did not had to if he had put that money in some other deal within 3 months
Well, what I understood that, it is simply as taking debts, having assets and after time you pay the bank but you still have a source of income right? 2:35
Guys I work tax and understand the content, however, I can't help but say you could have articulated your points better using a different object lesson. Marker boards are so yesterday.
These videos are shit
Then do it better, yourself, since you know how. Im sure you're richer than Robert is right?! Not!
Can someone clarify this. Rental income IS taxable. So how exactly is this working when you buy homes and rent them out? Am I missing a step?
Tax loopholes baby
It isn't really a "loophole", it is something that is intended to be taken advantage of in the tax code.
@@knpstrr a tax train huh
It's an incentive, not a loophole. The word 'loophole' assumes (wrongly) that taxes are something that everyone should be paying. Rather, tax is something owed only under a certain set of circumstances, and the government uses credits, deductions, etc. as incentive and tax as disincentive to encourage certain behaviors from residents.
Wish he also explains the risk of taking a loan. It’s good when things are appreciating and that’s what people did back in 2006-7. When the economy hits the fan, the asset value tank and a job loss which result in losing your property to the bank or keep paying interests on the property that is worth way less.
I understand that Everyone has a different level of risk tolerance. It’s paramount to know your risk tolerance level and act accordingly.
This is based on employee debt. Not as a business or investor. There's much more to the "economy hits the fan" logic you're applying here. The economy hit the fan for far worse things than loans and bad financial decisions. The banks sold junk bonds as good AAA bonds. This would be something I feel you'd find pleasure in researching further as I had as well.
"thats their contribution" lol, we are helping you by stealing less from you, great help. Taxation is theft.
Taxes are a necessary evil in not only paying for things like roads, health care, social security, etc, but it also frees up money so it can go back into circulation. Saving hoards of money (like the rich do) and not spending it hurts the economy because then the government has to print more money, which lessens its value, which spikes prices, etc.
@@johns3491 the public roads are garbage. I pay for my own healthcare, social security is a scam. public school is garbage. "frees up money so it can go back into circulation" might be one of the dumbest excuses i've ever heard...
@@moondog573 Money is like blood; it works when it moves. When it stays put for long periods of time, it kills the economy. This is why we need poor folks in a society, because if you give them money, they will spend it, which will in turn support jobs and businesses. Taxes free up that money folks at the top are hoarding away, so it can go back into circulation to be spent on goods and services without having to print more of it. As for your other asinine points: just about all roads are public roads, so I guess you don't like getting around anywhere by car. "I pay for my own healthcare" - either the business you work for pays for it, you don't have any major health problems yet, or you're already rich. If you're in one of the first 2 pools, just wait until you get cancer or into a serious car accident, and we'll see how well you can afford to help yourself. Social security is sustainable, but it does not necessarily guarantee retirees a paid-for future. It's supplemental income; not absolute.
@@johns3491 Tax and Interest are blood money. Blood sucked from the poor and given to the rich. There is a reason so many people hate most western governments.
John S You wrote all of that to rebuttal but didn’t prove anything. If you understood history and actually researched you’d understand that taxes are theft because CITIZENS are forced to pay them without being able to make a decision in where they go. I don’t want my taxes being used to create bombs to kill poor people in other countries. I don’t want my money being used to bail out big business that commit fraud and embezzlement.
Taxes = Extortion
Depreciation lowers your cost base of the asset so you’ll pay a higher capital gains tax once you sell the property. You’re simply deferring the taxes.
the accountant is distracting and unnecessary. his examples and teaching methods or not as effective as roberts
I couldn't disagree more. You can tell Robert has a language barrier & the accountant brings the correct terminology.
Can any tell bank have interest on debt in india. Is this. Formula really work for indian context
2:21 until the housing market crashes and it no longer your money. #2008 LOL
I think if you invest smartly it is almost impossible of you lose money
Wow this is Amazing! Is it the same for freelance? I try to figure everything out.
Clear as mud
I'm still not sure that I understand depreciation and how it works exactly to your benefit. Especially, when you have no money to pull from. Take me for example, I am currently on #disability I have no true income to invest my own money & as far as I know, I don't have OPM. Where can I look for the OPM in my case. I thought maybe doing it through a 1st time home buyers program, but that still seems like just my money. So, now, I'm confused on where to find the OPM. Am I just being more stupid or am I not looking in the right place?
Bernie Sander is watching and like..." oh ...I am going to change all of this." lol!
I’m so happy I made productive decisions about my finances that changed my life forever. I’m a single mother living in Melbourne Australia, bought my second house in September and hoping to retire next year at 50 if things keep going smoothly for me.....
Sorry for late reply sweetie, I used the FIRE movement to put my finances in order. Then lnvested in stocks, cryptocurencies and reaI estates though the assistance of an lnvestment Pro who helped me make it this big...
Can my brain take this info please!
I been watching this now 10 times still dont understand
I will watch till I learn
exactlly hon, listen again, and again, it will make sense....Thats the only way to get out from this rat race!! Think Asset, Cash Flow and other people money : credit card, loan (good debt)
Watch other videos and it'll start to make sense. This particular video is lacking information and poorly constructed.
I watched this video about a year ago and it did not make much sense then but I got a copy of his audiobook Tax Free Wealth and I now understand big time!
Say you bought a 100k rental property on a 30 year fixed. You rent the property for 1,000 per month. That 1,000 covers your $500 amortization payment plus expenses. The rest of cash flow in your pocket. Also, houses and land tend to appreciate in value. So 10 years from now your property is worth 120k. You earned 20k in equity (120k-100k) tax free. Also, the income from the 1,000 per month is taxable, but you get to deduct Depreciation expense from that income every year, therefore money saved is money earned. To take it one step further, inflation means that the money you borrowed today isn't worth as much in the future, so the value of the money you pay back on the loan is worth less than the money you borrowed. Win, win, win, win.
Teaching people that debt is good for you. This is why the world is in the state it is.
This girl is a liability for kiyosaki.
lol!!!! Nah, it helps show that he is trying to teach a new generation. I hear what you are saying, but it is good that she (or any millennial) is in the videos.
Hello Robert! I have a question on this topic. Can we I always be taxed free or only for an unpaid real estate building?
For example, I will get a loan from the bank a 1 million dollars to be invested on real estates. Then, after 3 years, I paid it. Then, I will get another loan to be invested on real estates. When does tax free be applicable? Am I tax free as long as I have loan? or should I pay the tax after paying my loan for the specific real estate? Like, I am paid for my first real estates, then I have loan for my second building. Should I pay tax for my first real estate or am I free of tax as long as I have loan?
And if I am free from tax as long as I have loan, I think this is good to do same process until reaching more buildings with tax free.
I hope you will answer my question. Thank you.
alexandra u r so sweet..............
Businesses can basically deduct interest on debt, rent, utilities, maintenance, etc. from their taxable income. The government get second dibs.
Individuals pay taxes before they pay those expenses. The government get first dibs.
So it helps to learn how to legally set yourself up as a business, so you get the deductions of a business.
so when i heard correctly: Your tax that you have to pay from your cashflow, goes into depreciation, because you borrow more money from the bank and because you buy real estate. So the taxes, turning from taxes into a check from the government to support you to buy real estate and pay off your debt faster, while you are paying your debt off with your cashflow from the asset (real estate). Am i right ??? Please Correct me if im wrong
Is it like getting a loan from the bank and then repaying it but without wasting your own money? I STILL DONT GET IT HOW?
girl is cute