Grant Cardone: 4 Ways To Reduce Your Tax Bill To Build Wealth
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Gabrielle Olya
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Gary Dudak
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Becoming wealthy isn’t just about how much money you make — it’s also about how much money you hold onto. According to Grant Cardone, fund manager and CEO of Cardone Capital and Cardone Training Technologies, reducing your tax bill is the No. 1 most underutilized way to build wealth.
“Your federal and your state taxes are probably the biggest expense a middle-class family has,” Cardone told GOBankingRates. “So No. 1, reduce your tax bill — that’s what the wealthy do. Billionaires pay about 8.3% of their annual income in taxes, and the middle class pays double that.”
To reduce your tax bill, you have to “discover the loopholes,” Cardone said. Here are some of the “loopholes” Cardone recommends for paying less in taxes.
Take Advantage of the ‘Augusta Rule’
The Augusta Rule is a tax strategy that allows business owners to rent out their homes tax-free for 14 days or less in a year.
“I can rent my house out 14 days a year and not pay taxes on that income,” said Cardone, who will be hosting the 10X Wealth Conference in Aventura, Florida on Nov. 17-18. “I can literally divert 14 days times whatever the rental amount of my house would be to my company.
“So let’s say my house rents for $10,000 a night — that’s what the market would allow on my house,” he continued. “I can do that 14 times for 14 days — $140,000 a year. My business gets to write it off, and I don’t have to report it, and I don’t have to pay income [taxes] on it.”
Give Your Kids a Salary Instead of an Allowance
If you are a business owner, consider making your children your employees.
“If you own a business, you can, rather than giving your kids an allowance — not tax deductible — give your kids a salary — [which] is tax deductible,” Cardone said. “Turn your freeloaders into a write-off.”
Buy an SUV
The Section 179 tax deduction allows you to write off a business-use vehicle or SUV that weighs more than 6,000 pounds.
“If you’re a Realtor or you’re in multi-level-marketing or you’re a salesperson or you own your own company, buy cars that weigh a certain weight, and they’re deductible 100% in the year that you purchased the vehicle,” Cardone said.
Purchase a Multi-Family Home
If you buy a multi-family home instead of a single-family home, not only will you generate rental income, but you will also get a major tax break.
“All the interest is deductible with no limitations,” Cardone said. “All the property taxes are deductible with no limitation. All the electric bill, the gas bill, the water bill, everything in that property is now tax deductible where it wouldn’t be with the single-family home.”
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