Six Financial Truths the Wealthy Use to Keep Their Money (and You Should Too)
Updated: Sep 30
You might have come across social media posts listing financial truths the wealthy use that more Americans wish they knew. While the internet is full of bad advice, this specific list hits on some of the most legitimate and powerful tools available to business owners and real estate investors.
We believe that everyday entrepreneurs and investors should have access to the same wealth-building strategies that billionaires use. Earning a profit on your next property is only half the battle. The other half is keeping the IRS out of your pocket so that your capital can compound.
Here is a plain-English breakdown of these six financial truths and how you can use them to maximize your Return on Investment (ROI).
The 6 Strategies Explained
The 14-Day Home Rental Strategy
Term to Know: THE AUGUSTA RULE (SECTION 280A)
An IRS rule that allows you to rent your primary residence to your own business for up to 14 days per year without paying any personal income tax on that rental income.
If you host board meetings, team retreats, or shoot marketing content for your real estate business at your house, your business can write a check to you personally for the rental. The business gets a tax deduction, and you receive the cash completely tax-free.
Putting Your Kids on the Payroll
Term to Know: STANDARD DEDUCTION
A specific dollar amount that reduces the income on which you are taxed. If your total income is below this amount, you generally do not owe federal income tax.
If your children do legitimate work for your business (like cleaning up a job site, organizing files, or helping with social media), you can pay them a salary. Their wages are tax-deductible as a business expense for you. Furthermore, as long as their income stays under the annual standard deduction limit (which is currently around $14,600 to $16,100 depending on the tax year and filing status), they pay zero federal income tax on it.
3. The Triple-Tax Advantage of an HSA
Term to Know: HEALTH SAVINGS ACCOUNT
A tax-advantaged savings account designed to help people with high-deductible health plans pay for medical expenses.
An HSA is arguably the best investment vehicle in existence. The money you put in is tax-deductible, it grows tax-free, and when you pull it out to pay for medical expenses, it comes out tax-free. It is a protective shield for your wealth.
4. The Truth About Tax Refunds
Term to Know: OVER WITHHOLDING
Having too much money taken out of your paycheck or overpaying your estimated quarterly taxes to the government.
A massive tax refund in April is not a "win" or free money. It simply means you overpaid your taxes throughout the year and gave the IRS an interest-free loan. That is cash you could have used as a down payment or rehab budget for an investment property. Keep your cash flow in your own control.
5. Writing Off the Heavy Work Vehicle
Term to Know: SECTION 179 WITHHOLDING
A tax code that allows businesses to deduct the full purchase price of qualifying equipment and software purchased or financed during the tax year.
If you buy a heavy SUV or truck for your real estate business, the IRS allows you to aggressively write off the entire cost. To qualify for this heavy vehicle deduction, the vehicle's Gross Vehicle Weight Rating (GVWR) must be over 6,000 pounds and under 14,000 pounds. Instead of depreciating the vehicle slowly over several years, you take a massive deduction in year one, drastically lowering your tax bill.
6. Deducting Business Travel
Term to Know: ORDINARY AND NECESSARY EXPENSES
For an expense to be deductible, the IRS requires it to be common and accepted in your trade (ordinary) and helpful and appropriate for your business (necessary).
When you fly out of state to view properties, attend a real estate conference, or meet with partners, the costs are deductible. Even the days you spend traveling count as business days, allowing you to write off flights, hotels, and a portion of your meals.
Keep Your Capital Working
Every dollar you save on taxes is another dollar you can deploy into your next asset. We want you to be highly profitable and incredibly cost-efficient.
When you find your next fix-and-flip or rental property in Albuquerque, Rio Rancho, or Santa Fe, you need a lending partner who understands ROI as well as you do. We provide direct, fast, asset-based capital to help you close the deal while the national lenders are still checking your credit score.
Disclaimer: We are private lenders, not CPAs or financial planners. Tax codes change constantly. Always consult with a licensed tax professional to ensure you are executing these strategies legally and correctly for your specific business structure.
