Background:
Traveling during retirement is the ultimate dream of many. June and Albert decided to start their retirement years by traveling around the country in their new decked out RV. What would they do with their home? Rent it of course!…
Summary:
- $48,502 of tax eliminated over seven and a half years
- Original ROI was 5.3%
- ROI after Booster Report is 6.5%
Key Facts prior to June and Albert utilizing the Residential ROI Booster:
- June & Albert bought the home for $570,000 excluding land cost
- Annual rental income is $40,800
- Mortgage is paid off and annual repairs average $4,000
- In addition to repairs they have ($20,727) in straight-line depreciation (expensing the cost of the house over 27.5 years)
- Annual Profit (taxable) is rental income less repairs and depreciation equaling $16,073
- Tax due on Annual Profit, between federal and state returns, is ($6,429)
- Net annual cash on the property, money they get to keep, is $30,371 which is income less repairs (excludes depreciation since it is a non-cash expense)
- Their annual cash return on this investment (ROI) is 5.3% ($30,371 / $570,000)
Key Results after utilizing the Residential ROI Booster:
- Annual cash in the bank is boosted from $30,371 to $36,800
- Cash is increased with no taxes due on rental income for 7.5 years
- Tax saved of $48,502 ($6,409 * 7.54 years)
- To achieve this result, $171,000 of the $570,000 cost of the home was re-categorized with the booster report, into shorter depreciable lives and expensed immediately with depreciation, a non-cash expense item
In a nutshell, The Residential ROI Booster is pushing your tax savings forward to give you additional cash flow in the early years where money is more valuable.
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