WNYShooter wrote:
These are income tax returns. Income tax is paid on taxable events, not on increases in equity. For instance, hypothetically, let's say you purchase an income property for $1, and it generates $1000 in income a year. Now let's say that the maintenance, administration, and tax costs on that property adds up to $1000/Y. Let's also assume that that income and cost stays the same for 10 years, but that the property is now worth $1,000,001, essentially increasing your equity (wealth on paper) by $1M.
Thing is, even though you're now $1M wealthier, you haven't needed to pay a dime of income tax on that gain in wealth. Now the beautiful part about this is that you can take a secured loan out against that equity and repeat that whole cycle again and again, thus multiplying your gain in wealth many times over, and even write off the added interest costs against any income from each of those properties. Theoretically speaking, let say 20 years later, all of these income properties you purchased are now worth $100,000,001, as long as you were able to offset any income generated from them with ownership costs, you wouldn't have paid a single penny in income tax on that $999,999,999 increase in wealth. Why? Because income tax isn't due until a taxable event, which would be the sale of the property.
This is of course a very simplified example, but essentially, it is the method most successful real estate investors use to get extremely wealthy. Keep in mind, the vast majority of Trump's wealth comes from real estate.
These are income tax returns. Income tax is paid o... (
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Yes but income from property is a taxable event and costs that offset the income entirely might not be actually deductible (IRS from experience can be picky about this, particularly when the net is no taxable income).
Another question is how highly his real estate is leveraged. If it’s very high as suggested by other documents he’s not that wealthy at all. As the massive equity in the properties isn’t actually his.