[BeetleB]

I was just listening to a small business owner yesterday. She paid a $120K down payment on a property, and has set everything up so that the tax benefit of that property is $180K.

That's not $180K deduction, but a $180K credit.

She'll rent the place out for a meager profit, so doesn't have to pay the rest of the mortgage. Essentially, the taxpayers bought her the house - she got a house + cash out of the deal.

Small business owners definitely play games with taxes.

[Alupis]

The Range Rovers... don't forget about all the Range Rovers (and similar large vehicles small business owners tend to use)[1].

Write off practically the entire vehicle (sometimes the entire vehicle) in the first year... making it nearly or completely free.

There's a lot of credits and deductions available to those who seek them out, or are in a position to best use them. They are not loopholes - these provisions were explicitly laid out by Congress.

[1] https://taxsaversonline.com/range-rover-tax-write-off/

[fnimick]

Care to share how you can get a $180k tax credit for buying a house?

[BeetleB]

Real estate businesses have a ridiculous amount of tax benefits. The terms to look up are:

Cost Segregation

Bonus Depreciation

(There's a third one I can't remember).

She basically utilized all three. The larger the value of the house (over $1M in her case), the greater the benefit.

[fnimick]

These just allow you to claim deductions which reduces your tax liability - it's not like you get a _credit_ out of it.

[BeetleB]

Yes, but because of the high value of the property, your deductions can be huge. I was using the word "credit" a bit loosely. The point is that her deductions is well above the quoted $180K. The equivalent extra refund she'll get due to them was $180K.

This is also because they are high income earners (one of them has a regular job), and they've manipulated things so that they can apply the deduction to the W-2 income (not usually possible). The federal tax bracket is 35+% - not sure if they can apply it to their state's income tax, but if they can, it's another 10-11%. So you don't need a massive deduction to get the equivalent of $180K refund.