Melinda and James Saved over $28,000

Background:

Melinda found the perfect swanky home after she moved to the city.  She settled in and poured capital into her investment.  Then she met her soulmate James…  James also had a home but it was located in the suburbs outside of town.  As happens with so many couples, once they decided to marry, next they had to decide whose house they would live in and which they would sell or rent.  Melinda and her new husband decided to rent her house, live in his home, and start a family in the suburbs.

Summary:

• $28,364 of tax eliminated over five years
• Original ROI was 6.4%
• ROI after Booster Report is 8.25%

Key Facts prior to Melinda and James utilizing the Residential ROI Booster:

• Melinda bought her home for $320,000 excluding land cost
• Annual rental income is $26,400
• Mortgage is paid off and the unit is relatively new so required few repairs 
• Their only major annual expense each year is ($11,636) in straight-line depreciation (expensing the cost of the home over 27.5 years) 
• Annual Profit (taxable) is rental income less depreciation which is = $14,764 
• Tax due on Annual Profit, between federal and state returns, is ($5,905) 
• Net annual cash on the property, money they get to keep, is $20,495 which is income less tax due (excludes depreciation since it is a non-cash expense)
• Their annual cash return on this investment (ROI) of 6.4% ($20,495 / $320,000)

Key Results after utilizing the Residential ROI Booster:

• Annual cash in the bank is boosted from $20,495 to $26,400
• Cash is increased with no taxes due on rental income for 5 years
• Tax saved of $28,364 ($5,905 * 4.8 years)
• To achieve this result, $80,000 of the $320,000 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.