John A. Weeks III wrote:
- quote -

Obviously real estate appreciation rates of 100% per annum can't
continue for very long. When appreciation rates get that high I think
the chances of the "bottom falling out next year" are pretty
significant.

Andy

me[at]privacy.net wrote:
- quote -

This is kind of a silly idea. You should start a small business because
you want to start a small business, not to get a tax break. If you do it
just for a tax break you're going to be disappointed, or maybe audited,
or both.

John's right that, for example, a computer can be considered a
deductible business expense. But you need to actually use it for
business and the expense offsets your income from the business. It's not
like you suddenly just deduct $1500 from your tax return just by filing
a form, unless you're cheating on your taxes (which is I guess one "tax
reduction strategy").

The basic point is that a small business owner can (legitimately) end up
turning a portion of what are now personal expenses into business
expenses. Eg a portion of your housing costs if you have a home office,
setting aside an area "exclusively" for business use. A portion of the
cost of your car or computer to the extent you use it for business.

But business expenses offset business income and if you file a Schedule
C with no revenue or huge losses every year the IRS can come back at you
and say you don't have a legitimate business. So that's why I consider
this kind of a silly idea. You want to lower your taxes, great, but what
about the value of all the hours you'll spend putting together even a
tiny small business, just to get those business expense deductions? What
if you don't make any money, are you comfortable filing Schedule Cs with
big losses on them? Would the losses be usable or are they of a type
that only carry forward to apply against future earnings of that
business activity?

I think the biggest tax advantages with business come from the ability
to fully control the terms of your retirement plan, and defer very large
amounts of income that way. But this is in a legitimate business, you
need to have enough business income to do that and that's the hard part
of course.

-Tad

- quote -

I really like that idea above as well!

And its something that never occurred to me.

Can someone expand on the idea a bit?

In article <1116333540.396692.173240[at]g43g2000cwa.googlegroups.com> ,
"herlihyboy" <ryan.parmenter[at]gmail.com> wrote:

- quote -

There is no need to sell the real estate when the leave.
A lot of people from overseas own real estate in the US.
A few years ago, the Japanese were buying up every tall
building in sight. Everyone is different and willing to
do different things, so that is why I used the word
"consider". From other postings I saw, it looks like they
did consider it and rejected the idea. That does not,
however, negate the fact that real estate still has some
upside, and if you invest, you may get some small tax
break in the process.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

In article
<zZnie.778691$w62.605453[at]bgtnsc05-news.ops.worldnet.att.net> ,
"Elizabeth Richardson" <erichktn[at]worldnet.att.net> wrote:

- quote -

I 1000% agree that taking out a mortgage just to get a tax break
is nuts. But if one is buying a house anyway, and cannot pay cash,
the "small tax break" is nice to have. In some places, real estate
is going up fast enough that owning for one year can make sense,
assuming the bottom doesn't fall out in the next year. Just look
at Las Vegas, as an example. People out there are seeing 100%
increases in a single year. If they did that, then they could pay
cash for a $25,000 car, and still have lots of profit left over.
It all depends on the person, the location, and the situation.
That is why I used the word "consider".

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

Thanks to all that replied to my question.

John, I agree with the rest of the people that a mortgage makes no
sense in my case. I actually studied this option a year ago, looking
for some good rental properties, but I found that it would be hard to
maintain a profitable rental once we are gone (since I would have to
pay other people to look after my property).

Kathryn, regarding the HMO idea, my wife works for a state university
so we pay almost nothing for our insurance ($13 per month)

Regarding the 401k option, I could raise the contribution (i.e.
exceeding my company match), but I'm reluctant to invest money here.
For the time being I'm building a business in my home country which is
giving me over 20% yearly (of course is a riskier alternative).

I haven't explored the idea of creating a small home business to lower
my taxes. Does any body has experience on this respect?

Thanks again

Cat101

"John A. Weeks III" <john[at]johnweeks.com> wrote in message
news:john-630913.06321817052005[at]ip-lcc.supernews.net...
- quote -

Taking out a mortgage to get a tax break is nuts. Why would anyone spend
$10000 to get $3600? Also, they're leaving the country in a year, the costs
associated with purchasing a house don't make good economic sense. Gosh,
John, they might as well go out and buy a $25,000 car for all the sense this
advice makes.

Elizabeth Richardson

John A. Weeks III wrote:
- quote -

John -

Even if they are planning to leave the country in a year?

Other than both of you maxing out your 401K contributions (up to 14K each)
or if she doesn't have a 401K she can do a traditional IRA up to 4K, there's
not a lot you can do. Can your medical insurance be paid through a
cafeteria plan at work for either of you and lower your taxable income?


"Cat101" <wmatiz[at]hotmail.com> wrote in message
news:1116296044.413627.283190[at]g47g2000cwa.googlegroups.com...
- quote -

In article <1116296044.413627.283190[at]g47g2000cwa.googlegroups.com> ,
"Cat101" <wmatiz[at]hotmail.com> wrote:

- quote -

The three biggest tax breaks out there are a house mortgage,
401K/IRA, and a small business. First off, consider buying
a house. In most areas, you still have room for upside
movement, plus you will get a small tax break on the mortgage.
Next, max out your 401K options, and see if you qualify for
any IRA options (at your income level, you likely don't).
Finally, consider starting a small business. Perhaps one
of you can convert to being a contractor rather than an
employee. Or sell some products on the side like Watkins
or Shaklee. The tax breaks here can be impressive, such as
taking a home office, deducting computer equipment, cars,
travel, etc.

Beyond that, there isn't too much you can do. You should
check with your financial planner to make sure that your
investments are tax efficient, you can look into investing
in tax free bonds, and from time to time there are
investments that have tax breaks associated with them.
A classic was from the 90's was low income housing.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

Hi all, I have a question that hopefully you may be able to shed some
light on. My wife and I make over 140K per year, we are both under 30
and we are really frugal. We don't have medical bills, debt, mortgages,
kids, etc.

On top of that we are foreigners and plan to leave the country in a
year (we have been here for 6 years). Most of our money has been going
to investments overseas.

My question: Is there anything that we can do to lower our taxes??

As far as I know we are out of luck.

Thanks for your help

Cat101

PS: Although I'm currently not doing any investments in the US, I've
been maxing out my company 401k match ($2000 per year)