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The taxes you pay are too high.
What's worse, you probably pay more than you have to.
Why do the vast majority of real estate investors pay more taxes than the law requires? There are 8 major reasons:
1. Ignorance of favorable parts of the tax law.
2. Bad advice from tax advisers who are either incompetent or placing their own interest above their clients.
3. Inordinate fear of the IRS and the courts.
4. Erroneous notions about losses, "shelter," deductions, and so forth.
5. Lack of understanding of the judgmental nature of many aspects of tax law.
6. Lack of understanding of the time value of money.
7. Human inertia as in reluctance to exchange rather than sell.
8. Failure to think through the "old wives tales of tax law."
In this book, I aim to make sure that you don't pay more taxes than the law requires. To do that I'm going to :
1. Tell you about tax breaks which investors often overlook.
2. Show you how to tell when you're getting bad advice-and how to find a good tax adviser.
3. Give you a more accurate picture of the IRS and the courts so you fear them less.
4. Correct your erroneous ideas about taxes.
5. Explain the judgmental nature of many tax questions-and tell you the aggressive way to deal with those questions.
6. Show you how the time value of money should affect your tax decisions.
7. Help you overcome the human inertia which causes you to pay thousands of dollars more taxes than you should.
This book will not:
1. Tell you how to start your own church or become a minister in someone else's.
2. Recommend that you put everything you own in family trusts.
3. Reveal that income taxes are unconstitutional.
4. Ask you to become a tax protestor.
5. Tell you how to cheat and get away with it.
6. Show you how you can write off vacations to Hawaii.
I have never been accused of fraud by the IRS (or anyone else for that matter).
I tell you these facts because some of those who give tax advice have been convicted of various illegal activities. And by using the word "aggressive" in the title of my book, I cause some people to wonder if the book's advice is legal. It is. My approach to taxes is to go over the law with a fine-tooth comb making sure I'm not paying one more cent than I have to. That's what this book is about-legal ways to minimize taxes.
One other thing about this book: I am not obsessed with avoiding taxes. You shouldn't be either. At the end of this book, I'll step back and look at the whole idea of avoiding taxes-and how tax avoidance should fit into the grand scheme of your life. I'll point out that while paying zero taxes is possible, it may not be worth the effort and risk required. Your goal should be maximum after-tax income-not minimum taxes.
But if you're willing to take a whole new approach to earning your living, I can tell you how to become invulnerable to taxation. No gimmicks or untested legal theories. Just a straight-forward look at what gets taxed and what does not.
I used to give seminars on this subject. I also write articles on taxes. As a result of both activities, I have discussed taxes with hundreds of real estate investors all over the United States.
From those discussions I learned that the vast majority of real estate investors are making a bunch of mistakes. The cost of the smallest mistakes is hundreds of dollars per year. The biggest mistakes cost tens of thousands in the typical case-hundreds of thousands or even millions if your holdings are large enough. And most investors make just about all the mistakes if they make any. If you're the typical investor and you follow the advice in this book, I believe you'll probably save tens of thousands of dollars in taxes. All that from a book that costs less than $50.
John T. Reed