Lee and Bonnie Saved over $59,000

Background:

Lee and Bonnie put down roots in their starter home.  As their family grew, they knew they needed to upsize but could not part with their original home.  They decided to keep their starter home as a rental investment.  This started Lee and Bonnie down the path of buying several homes over the years to grow their rental portfolio. 

Summary:

• $59,566 of tax eliminated over 7.5 years
• Original ROI was 5.1%
• ROI after Booster Report is 6.1%

Key Facts prior to Lee and Bonnie utilizing the Residential ROI Booster:

• Lee and Bonnie bought their home for $780,000 excluding land cost
• Annual rental income is $71,200
• Mortgage payments on the home total $24,000 a year 
• After the mortgage, their only major annual expense each year is ($28,363) in straight-line depreciation (expensing the cost of the home over 27.5 years) 
• Annual Profit (taxable) is rental income less mortgage and depreciation which is = $18,837 
• Tax due on Annual Profit, between federal and state returns, is ($7,535) 
• Net annual cash on the property, money they get to keep, is $39,665 which is income less mortgage and tax due (excludes depreciation since it is a non-cash expense)
• Their annual cash return on this investment (ROI) of 5.1% ($39,665 / $780,000)

Key Results after utilizing the Residential ROI Booster:

• Annual cash in the bank is boosted from $39,665 to $47,200
• Cash is increased with no taxes due on rental income for nearly 8 years
• Tax saved of $59,566 ($7,535 * 7.9 years)
• To achieve this result, $210,000 of the $780,000 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.