Inspire Wealth with Prof M: Understanding the Tax Code with Jon Connors

For today's episode of the Inspire Wealth podcast with Prof M, Jon Connors, founder of LessTax Enterprises, cofounder of Tax-Free Gains, and author of Navigating the Tax Code to Riches, joins us. Jon believes in the power of real estate to drastically reduce tax liability while building wealth. EPISODE HIGHLIGHTS: * Tax Code Complexity: With the intricacy and extensiveness of the U.S. tax code, it is often compared to the Bible. Through AI tools, tax codes become more accessible and comprehensive. * Homeowner Deductions: Homeowners can deduct mortgage interest and property expenses including SALT (State and Local Taxes) capped at $10,000. * Tax Cuts and Jobs Act (TCJA): The 2017 TCJA made standard deductions more appealing, leading 90% of taxpayers to choose this option, reducing the benefits of itemizing deductions for homeowners. * Capital Gains Exclusion: When selling their primary residence, homeowners can exclude up to $250,000 in capital gains if they are single or $500,000 if they are married, provided they lived in the home for at least two of the last five years. * Capital gains exclusion is an attractive strategy for building wealth. However, not everyone utilizes this strategy due to various reasons. * Tax Code Strategies for High-Income Earners: 1. Short-Term Rental Tax Loophole 2. Depreciation Deductions 3. Cost Segregation 4. Consulting Professionals * Straight-Line Depreciation: Residential properties are depreciated over 27.5 years and commercial properties over 39 years, allowing annual deductions on the property's value (excluding land) from taxable income. * Accelerated Depreciation: This allows property owners to write off a larger portion of their property's cost early on, with some tax laws permitting up to 100% deduction in the first year, though this benefit has been reduced recently. * Cost Segregation Study: Analyzes a property’s components (like HVAC and flooring) to establish faster depreciation schedules, maximizing early tax deductions. * To qualify for the short-term rental loophole, properties must be rented out for short stays. Owners must actively manage the property to meet the required hours of involvement. * The "Peter Thiel Move": Peter Thiel grew billions tax-free by holding startup shares in a Roth IRA. For real estate, a similar strategy involves buying a low-cost property, such as a rural parking lot, through a self-directed IRA (SDIRA). Jon Connors Website: https://lesstax.us Email: lesstax@proton.me Book: Navigating the Tax Codes to Riches (Reach out to Jon for a copy of his book!) Instagram: https://www.instagram.com/taxfreegains_us/ Mallory Meehan Website: https://www.inspirewealthmgt.com/ Spotify: https://podcasters.spotify.com/pod/show/prof-mallory Apple Podcasts: https://podcasts.apple.com/us/podcast/inspire-wealth-through-real-estate-investing-w-prof/id1760185297 YouTube: https://www.youtube.com/@MalloryInspiresWealth For collaborations: ruby@inspirewealthmgt.com