Why the rich do what they do..
Rich people seem to have a sixth sense for attracting wealth. The rich seem to almost know something about our society, and human nature that escapes regular differences. I’m going to give some reasons why the rich do what they do so you can understand some of the habits and strategy and tactics that are behind a lot of these actions.
Why Buy Rent Properties
This usually boils down to taxes and income. While giving you the coverage of writing off expenses, you also get the added benefit of phantom depreciation. The main reason is the government doesn’t want to manage properties. There was once government housing, which was a complete wreck. It ended up in low-income housing that grew to be dangerous for it’s residences. Most of these no longer exist in such large abundance as they once did. The expenses of these rental properties can go directly to write off your adjusted gross income and putting you in another tax class.
Why the government write offs
I have a friend who is a travel agent. One of the perks of his job is he goes on great vacations and later sells them. Now, he has a pratical knowledge of the vacations. One of the reasons the government gives us write off so it can avoid the necessary services for its population. Can you image the government planning your vacation. Thankfully, they can’t either which is why the gave deductions to people like travel agent.
Why a larger House
Like wise with a larger houses, you get the depreciation credit. Like rentals you also get to write off of your interest. So, it is often to the benefit of the wealthy to purchase a larger home to get a bigger interest write off. While the home quietly accumulates equity. Then when a house is sold the equity is collected and the pattern can start again with a larger home. If the government wanted to stimulate the purchasing of expensive cars, all they would have to do is apply this same formula to high end cars. Any cars for that matter.
Money in the Bank
When I hear people use this I immediately think I’m not talking to a millionaire. Money in the bank is one of the worst tax classes you can have. It offers little to no protection. In fact the bank only insures it up to 250K. Real estate is it’s own insurance, and you can carry additional insurance. Money in the bank is usually for people who don’t know any better. The IRS loves to see money in the bank, it’s easier to freeze a checking account, or auto draft what they deem necessary to pay taxes.