Legal tax shelters,
2007-03-11 11:23:36 · 4 answers · asked by Andrew H 2 in Business & Finance ➔ Taxes ➔ United States
Buy items which can be deducted for depreciation..
Examples:
Buy a residential house and rent it out... Depreciate the cost of the improvement over 27.5 years. Let's say the house cost $600,000 and the land is worth $150,000.. You can deduct $450,000/27.5 = $16,363 per year for 27.5 years, plus the property taxes, plus the interest on the loans.. As long as you are a real estate professional (spend more than 750 hours per year in real estate - w/ or w/o a real estate licensce) then you can deduct all of your depreciation.. There will be no alternate minimum tax under these circumstances.
Buy an private airplane for business purposes. Deduct 1/5 of the cost per year.. Let's say you purchase a $600,000 airplane that you will use on business. You can deduct $600,000/5 = $120,000 per year for 5 years, plus interest on the loans, and all of the maintenance costs (i.e. fuel, etc.) that go with owning a plane..
2007-03-11 11:31:31 · answer #1 · answered by ........ 5 · 0⤊ 0⤋
rental real estate is probably the most common legal tax shelter there is. After depreciation, most rental properties will show a net loss, even if you have positive cash flow. You can generally write off up to $25K in losses against ordinary income.
If you are a W-2 employee, you get nailed with taxes with little hope of offsetting your expenses against your income. You need a side business that generates enough income to write off 'business' expenses. The cell phone you might have already would become a necessary business expense. Ditto for internet access, car expenses, etc. All sorts of things that may have for your personal convenience would be considered necessary for business purposes. If you are already self-employed, then you know what I'm talking about.
talk to your accountant about oil & gas partnerships (if you are wealthy).
2007-03-11 20:00:53 · answer #2 · answered by tax_man_cometh 2 · 0⤊ 0⤋
Depending where you live, property taxes, mortgage interest, IRA contributions, charitable and dependent deductions are legal tax write offs.
2007-03-11 18:28:52 · answer #3 · answered by Feathery 6 · 0⤊ 0⤋
Lie, Lie, and lie some more!
2007-03-11 18:25:52 · answer #4 · answered by Anonymous · 0⤊ 0⤋