Welcome back to The Think Bigger Real Estate Show. I’m your host, Justin Stoddart. I’m very excited about today, you as real estate agents work very hard for your money, right? Most of you, some of you don’t. Those that are high producers, those that love this show are very hard working. And wouldn’t it be nice if you could keep more of the money you earn number one? And number two, wouldn’t it be nice if you had a strategy to be able to differentiate yourself from the typical agent, differentiate yourself from technology disruptors, and give people a reason beyond just liking you as a human being, give them a real value proposition that makes them want to come to you because your commission becomes irrelevant, because you’re that valuable. Today’s topic is going to be all about that I have with me a true expert, national expert. His name is Toby Mathis. And let me get in his bio here in just a sec. But let me give everybody a reminder that we do a lot of content here on the think bigger real estate show, as you know, and I would encourage you if you’ve not yet signed up to get our weekly updates that go through and give you show notes and then also give you highlights and action steps. Go sign up for that at thinkbigger.realestate. Alright back to our guest today, Toby. Again, thank you for being on the show today. I’m super excited to introduce you. So let me to start by saying thank you for being here.
Hey, thanks for having me.
Yeah, this is good stuff, man. So for those that don’t know, Toby, he is a teacher. First and foremost, he said, that’s the thing that I want people to know, first and foremost about me as a he’s a teacher. He’s a writer. He’s written over 1000 articles, a number of books. He’s a tax lawyer out of Nevada. He and his firm serve on an ongoing basis, over 18,000 clients. And at any given time, they’re servicing upwards of 50,000 clients, because of their tax strategies. They understand tax law. They understand the importance of real estate when it comes to tax law. And these guys have some stuff that are going to absolutely blow your mind today, Toby. Again, thank you for being on the show. I’m excited to share your knowledge at least not sure all of it because that would take forever but at least introduce you to the audience and let people know how they can get in contact with you. So appreciate being here.
Hey, it’s again, it’s fun to finally get to join him. Usually people don’t bring a lawyer into the mix voluntarily. Usually it’s got to be a beaten over the head. But if you learn how to use them appropriately, they can be quite an asset.
I love it. So you’re in let’s let’s kind of get something out of the way here really quickly. This TB stands for think bigger. My goal is to help people think bigger and when they do their life gets better. What is Toby, you’re obviously a big thinker, I mean to have the kind of impact that you’re having, and servicing lot of people that you’re servicing and something I didn’t mention, you’ve got over 150 properties nationwide. So right you’re in this real estate game, not just from the outside, but from the inside. What what what is the reason why you do all of that? I mean, what’s behind you? is there is there family some sort of like big motivation that’s like, you know, I have a driving force to make a big difference in the world because I want to what does that look like for you? Yeah, for me,
It’s it all comes down to creating a legacy for my family. So when you first get involved in something, I always look and say what kind of what kind of impact in the world can I have? So I’m very much into the charities. From a tax lawyer standpoint, I can tell you there’s nothing better than tax free, where you give, you can literally just give you one example, you could literally give a rental property that you’ve depreciated fully to a charity and write it off all over again. So for some of the high net worth people out there, they’re going, what Yep, I can I can take 100% fair market value deduction tomorrow if I want to. So once you start realizing that there’s laws built around that it gets, it gets to be a lot of fun. And so for me, my driving force is a you shouldn’t be teaching something that you don’t do. I believe that there’s nuances to doing things. So if you’re in real estate, for example, you better be talking to advisors that actually are in real estate, that you can’t learn it out of a book he learned by doing. So I’m a big believer that I better be doing what my clients are doing, because there’s what you can do, and there’s what you should do. And I could I could get your taxes down to zero. I know that because I’m a tax lawyer, like there’s so many different loopholes or incentives out there. But if I did, did I just hose your business? Like, how are you going to get alone? How are you going to grow? And so there’s always this stuff where people will go to the accountant to the go to the lawyer, and they’re teaching it from a philosophical idea or out of a book, but they’re not thinking about real world impact. And as a result, I just say there’s so much bad information out there that I really enjoy correcting it and I enjoy watching people just get huge results with very little effort. That’s kind of that’s rewarding. Awesome. So that’s what that’s what’s driving these think bigger actions that you have. And this is the legacy and creating something great for your family as well as you seeing it. Kind of a big difference. It makes the lives of people I love that man. Let’s let’s look
Let’s kind of go here. What’s some of the biggest? And you’ve kind of already hinted at some of these. But what are some of the ways that a real estate agent not even including their own, like investment portfolio, right, that’s a whole separate topic that maybe we’ll go on in a different show. Maybe we’ll have time today. We’ll see. But let’s say that I’m a real estate agent and I’m earning income. What are some of the biggest mistakes real estate agents make, then would make an immediate difference in the amount of taxes that they pay on their income?
Let’s just increase your your take home pay by 10% on an average agent, so let’s just say that the average agent is somewhere between 50 and $70,000 a year. The what we see is if you implement one small strategy, which is the tax designation for the at that actual business, you’ll increase your take home pay by about 10%. So if you just want to increase your take home pay by a few thousand bucks, the easiest thing to do is make sure you’re not operating on your schedule. See on a 1040 70% of the agents out there operate a silver that’s what it’s called. Because the accountants say, Oh, it’s easy. It’s one of the worst things you can do if I could, I’m going to approach this from a couple different angles, Justin. Number one.From an audit standpoint, if you are a sole proprietor making, let’s say it’s $100,000, but I’ll just use that throughout hundred grand, you are 1200 percent more likely to be audited than your corporate counterpart. You are also going to lose that audit. And this is from the night 2018 IRS data book that they just published out a couple months ago. Like they’ll tell you who they who they audit and how often they when they went about 94% of the time, the IRS, so you’re 1200 percent more likely to be audited, you’re going to lose 94% of the time. So why would an accountant put you in that situation plus, you’re paying about $10,000 a year more in taxes as a sole proprietor and that’s because 100% of your product are subject to something called Old Age death and survivors and Medicare commonly known as social security, you’re getting hit on 100%. Whereas if you just designated yourself an escort, you would be able to eliminate about 70% of the money from that, that you make from that designation. You could literally buy a simple piece of paper change it. Now, here’s what gets confusing to agents is they’re told that their broker won’t pay an S corp or something like that. There is a workaround from a tax standpoint. So that is partially true from a state standpoint, but from a federal tax standpoint, there’s an easy workaround is two pieces of paper. Just knowing that can put on $100,000 a year it will put immediately about $10,000 more in your pocket. That’s 10,000 like, like $10,000 cash almost $1,000 a month. And that’s just the start. The second part. Is there something called an accountable plan for reimbursing all of your expenses as a sole proprietor project.
You’re able to to deduct parts of expenses that are business related. If you become an employee of an organization, ie an S corp, you become the employee. Now you can reimburse 100% of your medical, not your medical device, you can you can, you can reimburse 100% of your expenses that are associated that benefit that building including your cell phones, the actual physical phones, the computers, even a portion of your home, that is not a home office that that goes on your schedule C and files a special form. This is actually just a tax free. Hey, here’s a check to reimburse you that doesn’t get reported on your 1040. So like there’s some simple, easy ways to immediately increase your take home pay, which is what I do, I spend most of my time figuring out, it’s not what you make, it’s what you keep. And for real estate agents, my God, they leave a lot of money on the table, and that’s because they’re out there so busy, and they’re not thinking about keeping it so it’s almost like sandwich
Through their hand, they’re making a ton, but it’s going right through their fingers. And so a lot of what I do is saying, hey, let’s, let’s keep more of it.
You know, I think not all agents are like this right. And I believe that the audience is attracted to, to what we share here is not that group. But there is a group out there that’s very ego driven, right? It’s more about gross commission. It’s more about, you know, the car that I drive and the lifestyle that I lead, as opposed to actually building wealth and no judgment, right, if that’s what’s important. That’s what’s important. Great, but I think, for me, and the group and the, you know, the tribe of people that that, you know, I want to be a part of, it’s how much you keep, right? It’s, it’s, it’s the impact you make, and how much you keep. And so what you’re saying here, is really resonating, I think, with all of us, is that there are ways that you can go about keeping a lot more and it doesn’t necessarily buy into maybe some of the common held beliefs of right being a top producer when you’re asked about profitability, and you have no answer for it. Right? Because that that that’s not your goal, you know. This audience this show profitability. And and and building wealth is the goal. Right? So, you know, you’re speaking our language, is this fantastic? Okay, great. So so be sure and set your business up properly, as described, what else are agents missing? And in fact, let’s take that concept. Now, you want to look at this or two angles. One is, as a real estate agent, the way you’re set up can create some tax savings for you. What’s a way for a real estate agent? To be able to then be sure and offer that similar advice to their clients right? To where it becomes not only a value add to them on their bottom line, their net worth but also an added value proposition? What’s a way for them to bring that up, right as they’re interacting with clients?
Oh, you could actually very easily for no cost, by the way as a service. Hey, let’s take a look. Let’s take a look at the tax impact of your sale. So for example, let’s say that I, let’s say that I’m that I’m talking to a client in San Francisco. Client bought their house for, let’s say, half a million dollars. Now it’s worth 2,000,000 10 years later. And the knee jerk reaction is Oh, you’ll get to, yo, you don’t have to pay tax on capital gains on the sale of your house. But wait, there’s a limit to it. Yeah, it’s, it’s, it’s $250,000 for an individual $500,000 for a married couple. So they bought a house for 500,000. They’re selling it for 2 million. There’s a half million dollars of capital gain exclusion. So they’re going to have a million dollars again, and you go out capital gains, that’s great. Not great. 20% for where they’re at, and they’re going to have net investment income, there’s going to be a another tax a 3.8 Plus, there’s the state tax, you’re at about 37%. Which is a pretty significant sum on that million bucks. 370,000 What if you could avoid that 370,000 What if you had advice that you could give them that would actually say hey, if you want to avoid the 370,000? You could do it. What’s what differentiating factors that can have over the agents that are just saying, hey, let’s list this thing. If you just spoke that in their ear, by the way, you could avoid that. It’s actually really easy. And the IRS tells us exactly how to do it. If you can combine what’s called a 121 exclusion that two to five year, the $500,000, capital gains exclusion with a 1031 exchange, you just have to change the nature of the property, it doesn’t take very long, like a few months, and you could literally avoid the entire tax hit, if you wanted to, if you’re giving them that option, who they’re going to start listening to, hey, this guy is actually looking out for my best interest. That’s a huge amount of money by the way that they’re leaving on the table. It’s just knowing those little nuances and knowing enough to say, hey, maybe we should have a look at it. It could have a big impact.
You know, I love what you’re saying here, Toby, and we probably want to share canal conversation you and I have had prior which is the reality that many agents right now we’re in the are in the crosshairs of technology, I would say all agents are in the crosshairs of technology. And the reason why that is is because agents typically have come out of some sort of customer service industry, hospitality industry. And they’re there they think, like salespeople, right, like customer service representatives, they’re thinking like advisors. And technology has been looking at real estate agents saying, if all they do is market a house and sell a house, we can do that. We can write an algorithm for that or we can have low paid people help assist us with that. And think the way that people that agents are going to remain well paid is simply it’s not because you’re going to have a craft your message. It’s not because you’re going to be trickier in the way that you present at your listing presentation, right? It’s you’re going to actually have real value your commission will become irrelevant as you can have conversations like you just described, in which people are are actually allowing their clients to save 10s of thousands of dollars, right? Your fees become quickly irrelevant when you have people like Toby in your network, and that are pouring into you into your business and pouring into your your mind so that you can show up and deliver that kind of value. All of a sudden people, like your fee becomes irrelevant, right?
Because of the value that you’re bringing to them. You’re saying something that actually that I firmly believe, just because as a tax person, a lot of times we’ll go I go to h&r block, okay, you can pay $500 to get a return done, that’s going to cost you an extra $5,000 in taxes or you could spend $2,000 on a return that’s going to save you $10,000 the net in your pocket in the latter is $8,000 of actual cash in my pocket, the net and the other is a minus 40 $500. And the wealthiest folks, the most successful people realize that there’s a value, they get more money as a result, which is kind of the kicker, but their value proposition people, they’re not price people, anybody could say, Hey, I’ll list your house for 1%. That’s To me, that’s that that’s crud. Like, I’m going to get what I paid for, I would much rather get the maximum for my house. And by the way, it’s about what I get to keep. I give you a great example, Justin, there was a property, I think the purchase price and this is this is from about two years ago that just it sticks in my head because it was about a $1.3 million property was a four Plex that they ended up selling for 2.2. They’re going through and somebody is recommending something called a cost segregation. And the the individual, the agent of all was like, why would you do that it’s too late. You should have done that when you purchased and you’re like, hold on for a second. let’s actually look at the numbers of what happens when you do a cost segregation right before you sell. And for those who don’t know what a cost segregation is, it’s when you take a building and you break out the shorter lifespan company. From the actual structure itself, so typically in a residence, for example, that’s 27 and a half year property, the IRS lets you write it off 120 7.5 every year, that’s called depreciation. Well, you can accelerate that. I could take the carpet, for example, and write it off in five years, I could take the there’s there’s five, seven and 15 year property, I could write off the air conditioner, I could write off a bunch of the electric system and things like that things that are hooked up, that could that could be removed from the home in any way. So you’re you’re able to really rapidly depreciate though. So there’s a huge incentive if you’re an investor, but at the end of the life of it, when you’re actually selling it, there’s still an incentive. And so we did the numbers. It was the difference between paying $280,000 in tax versus 200,000. In taxes, that was literally the difference between doing the cut between not doing the cost segregation, doing the cost segregation. So let’s just put this in perspective, you’re selling a what was about to $2 million property? Your commission might be what 60,000, something like that. Depending on what I got to do the math in my head is but yeah, there’s there’s a pretty good chunk of money there that’s going away. I guess it’s just not 66,000 you could actually save them like a multiple of 10 in tax savings, just by knowing maybe we should have an analysis done. The cost of doing that cost segregation, by the way, and it’s not something we do. It’s something we work with other other engineers to do. The cost of that maybe around 20 $500 20 $500 saves them at your commission is a small fraction of that. Who are they going to use and refer all their friends to at this point, this agent saved me more than I had to pay them by about 10 times. They’re coming back to you
It really is the future of well paid real estate agents, folks, I hope you’re listening, number one for your own business, but I also hope that you’re listening and how you need to start showing up in the marketplace, right is that having better photographers having even a, you know, a slightly better social media presence? This is all becoming a commodity, right? It’s to the client that doesn’t move the needle enough to pay somebody this amount when a tech companies offering this amount, right. But yet that delta is irrelevant when it comes to adding in the kind of value that you’re, you know, that you’re talking about here, Toby, it becomes irrelevant again, the the law of value as described by yesterday’s guests, but that Kalin is the amount of value that you give minus your costs and that that delta right there as long as that is, is large, larger than the difference between you and the low cost competitors, your friends, right, as long as you can, can provide that, and then articulate it, communicate it to where people understand it, you’re in good shape, right? The sky is not falling for agents that can think intelligently and move forward with knowledge, right? We’re in the knowledge economy, and having superior knowledge wins, right? Yep, absolutely. I’m just going to reiterate what you’re saying I work with agents that make strong seven figures all day long in the difference, like they’re, they’re providing essentially the same service as far as selling the house. It’s all the added knowledge that they have that they bring to the table. I can tell you one thing, just my experience from doing this over for a couple of few decades now, gosh, it’s going on three now.
The people that focus on price, tend to be the ones that set that limit themselves. The people that focus on value are the people that explode and just have huge growth and that goes for yourself. And it’s hard because it’s kind of like learning a golf swing. feels uncomfortable because like, I think I’m going to people that spend a lot of money on photography and things like that. I have clients that do that stuff too. And they’re always tell me, staging and in photography on the right property obviously has to be a value proposition, it has to give you something back, but they’re not worried about the price of it. What they’re worried about is how much is it going to increase the value of the home and the sale price of the home and how quickly and how many offers they get, they’re focused on that they’re not looking at it, oh, my god, that was 1000 bucks that I could have kept in my pocket that that know they’re looking at the long game, I’m going to have people that love me, they’re going to tell me all their friends, I’m going to be top of the market, I’m going to be getting the most dollars per, you know, per foot out there. And these people are going to keep coming back to me and they’re going to send everybody else if you ever get into a investor, where you’re working with an investor, they will just keep using you because you are bringing them far more value than anybody else. Absolutely. Hundred percent. And I can tell you that from experience because I do the exact same thing. Well, and I think and I agree with you
I also agree that those things are becoming more and more common, right? having great photography, having drone photography used to be a real differentiator. And now it’s the standard now you you need to have that you had to have to have that. And I think having the strategies in your mind and or the people in your network like you, right, where the knowledge that you bring, as an example, becomes a real differentiator because most agents are not having those conversations, right? They’re there to market a house, they’re there to offer great customer service. They’re not there to say, let’s look at this differently. Let me introduce one of my experts who can really see from a tax standpoint, the best way to go about this right answer expert exit, you know, significant difference in return tax savings, depreciation, whatever it might be. And all of a sudden, like you You look and sound very different than the typical agent. And in Justin, just a dovetail on that. It’s so easy to say let’s do a quick tax analysis will do it for free. That’s all you I have to say, as a as part of my services, I’m going to look and see whether we can save you any money. It only takes one if you just walked up to one person and said, You know what? We did this one thing right before we sold it, and it saved him $40,000. That goes a long way as like, Hey, we’re going to see if that’s you, people just instinctual. You’re like, yeah, I want to know that. What did you do? Sign first. And we’ll share with you what we do. At the end of the day, we want you to have more money than what it costs to pay for us. And it’s like you said that value Delta. Most agents, there’s no value delta. So what I hear you saying is that agents ought to be including that into their presentation, right, is that if you signed with me, we do a free tax evaluation to make sure that the, you know, the proceeds of this property are maximized. It’s really easy. So like, if you’re just selling single family house, persons been living in it. The rule is two out of those five years, they had to have lived in it and owned it. So you know, if somebody gets married right before they sell it, they don’t meet the test, right? They may own it at the time that they sell it, but they didn’t live in it for two years, both both spouses. So you’re going to have either 250 or 500,000. So if you’re just dealing with houses in that range, you could learn that and you could be pretty potent. And most people actually know some of those things and they’re looking for it. So they may know where it really becomes valuables when you’re going into the million dollar plus houses. Now you have a huge differentiating factor. I don’t know about you, but I think I’d rather be selling some of the higher end price, you know, properties. Some people really love the stuff that that’s cheaper, fantastic. But where the real value Delta comes into play, is when you understand that there are ways to avoid the taxation, or to convert something into into a different category to where you’re able to jump up the depreciation right? And perfect example is if you have a house and you’re going to make it into a rental because you’re moving out. Most people would just do that. But if it’s appreciated, you should sell it, capture the 121 exclusion, but you could sell it to a related entity, you can actually sell it to your own business that then now has an increased depreciation. So now you’re not paying tax on the rents in all you did was literally sell it to yourself and you know, or to an artificial person called an entity like an LLC, taxes an S corp or something like that. You’re literally jumping up the depreciation level, the value of that house and you’re grabbing your capital gains exclusion at the same time, perfectly legal, really smart. But most probably nine out of 10 people don’t do it and if you look at as you’ve been living in the house for 20 years, it’s worth a ton more than what you paid for it. You may as well get the benefit of that. Why wouldn’t you harvest that there’s most people just don’t know, and financing from an entity that they don’t look at the entity in another itself to see if the entity can purchase at home. They’re still looking at the principles of that entity, correct? Yeah, what you look at whenever you’re doing lending is cash collateral or credibility. So the credibility of an entity that hasn’t been around, they’re looking at the owner, unless it has a bunch of cash. Now, here’s the beautiful part that that transaction I just described is where you take house, let’s say you bought the house for 100,000. And now it’s worth 400,000. If I just made that into a rental, because I’m going to buy a new house, you know, whatever, and I’m going to keep it I’m going to make it into a rental property, which is smart. My depreciation will be based on the hundred thousand dollar purchase price, the improve value would be what you’d appreciate. But if I sell it to my own escort at 400,000, and I carry back the note, I actually do an installment sale, I could literally pay myself out of the rents tax free because as that rent comes in, it’s being offset by this new increased basis of 400,000. Now my improvement value might be three Hundred 30,000 I’m getting over $10,000 a year in deduction to offset any rents that I get, it’s going to be, quite literally your quadrupling the amount of depreciation. And if that’s not enough, we’ll do a cost segregation on it, and we’ll get an immediate get this on that house. It’s about a $90,000 deduction in year one, because of bonus depreciation. And I’m not kidding you that 90,000 could offset their income, depending on whether they qualify as a real estate professional for a lot of the agents they are, you know, it’s almost goes without saying they automatically qualify. But it’s pretty potent stuff. And it doesn’t take much to learn it. And now all of a sudden, you’re like, Whoa, you say that you can sell it, you can sell it a property that let’s say my wife and I own, I can sell it to my entity. And I carry the notes where there’s actually not a traditional lender in place. Correct. You could actually you could actually do what’s called an installment sale, you make an election on your tax return to treat it as an installment sale, so I sell it for let’s say I sell it for 300,000. As an example, you would calculate out what the interest would be, you should use what we use as federal AFR rates, which is about 3%, a little bit less than 3%. Right now, you go and use the federal long term interest rate. So you know, its market value, and your entity pays you that interest. That’s okay. It’s deductible to the entity and it flows onto your return anyways, like you’re not actually paying tax on it. What you’re looking at is how much rent you’re able to calculate and it’s being offset by that increased depreciation. So you’re literally getting cash and not paying tax on it at all. Otherwise, if it was the hundred thousand I’m depreciating such a small amount I’m having to pay tax every year on all that rent. What goes into my highest tax bracket? Right so for some people are like, they’re giving away a third of it or more. Yeah, like I don’t want it. You know, this, this stinks. Let’s just sell a house. That’s the mentality. They’re like, ah,
I don’t really want to, you know, let’s just get it get rid of it. I don’t want to have the headache. If I could get an extra 10 or $12,000 a year tax free, I would take it. Yeah, right.
Folks, I hope this is illustrative of a couple of things. Number one, that Toby’s an expert. Right. I would I would venture to say that few of you were aware of this. I know I wasn’t I’ve never heard this taught. Maybe some of the more savvy agents and investors are very aware of this. But needless to say, you need to be surrounded with this kind of knowledge for your own good. As well as again, think about the differentiator, just this by reiterating some of what Toby speaking here to your clients taking this snapshot going back and listening to it again and again, and going and restating that and your next listing appointment. How much different Are you right, and then tune in to Toby fine, Toby, he does. What’s your ongoing sales talk? stuff, Toby? I gotta know.
Yes. So we teach for a lot of large organizations out there. I want get into him. But I love to teach. That’s why I say the first thing I am as a teacher. An easy way to go is if you go to our website, every other Tuesday I do something called tax Tuesday’s tax Tuesday’s is a free for all you can ask any tax question you want, no cost, no obligation, you’re not going to get hit, you’re just going to go on. And we have, we have about 5000 people that that are registered on a bi weekly basis. And all we do is bunch of our accountants. So it’s kind of fun. It’s what every now and again, I get stumped. And I have a 30 year accountant that the CPA that that does it with me. So we’re always sitting there and usually will know the answer. We’ve heard all these things before but everybody’s going to get stumped. And what’s fun is you’ll have you know, 10 CPA is out there doing the research, shooting it over like saying, Hey, here’s the answer. So, you know, I didn’t realize that notary fees weren’t, were exempt from social security taxes. I was like, Wow, so it was a notary as like a if you’re a notary, I guess, hey, you don’t have to pay the self employment tax. Make sure you’re not that it saves you. It’s a pretty big chunks. 12.4% old age and in survivors and 2.9, Medicare, that’s going to save you a little bit of money. Yeah, it’s a it’s about 15%. So it’s like, hey, let’s let’s save that. Just go on to it here. Usually you’re pretty shocked. I you know, I do make it into a podcast too. I’m not going to compete with your podcast, but we do make it to where you can listen to him later if you feel like it. Tax knowledge is one of those things where you get a little bit of it and it goes a long ways.
Yeah. But this is, this is golden stuff, Toby again, we there’s no way we have time to go through everything that you know, but hopefully we’ve at least pointed people to the source where they can go get more where they can follow you, and be taking these tips and bringing them into your everyday conversations, be sure that you’re applying them in your own life in business. It’s just a much better way to work. The further insulates you from everything that’s happening out there. Toby, I want to ask you this question is as we wrap up here, first and foremost, is there any other tax strategies, that are Top of Mind you really wanted to share today that we missed or are you feeling pretty good?
So many words by asking that question. Well, here’s a fun one if you know and just kind of, if you’re socially conscious person and you want to put some solar on your, on your house, just know that you get a tax credit for the solar and you can still, you can still depreciate it if you put it into service on like a rental property. So you’re getting your kind of double dipping there. The depreciation isn’t quite 100%, it’s 85%. But you’re getting a tax credit, which is basically you’re getting a huge chunk 30% that’s a tax credit, not a deduction, a credit. It’s like getting money back in your pocket. So you put a $20,000 solar right you’re getting $6,000 off of it. So you’re really spending 14 but now you’re going to depreciate the $20,000 it’s actually 85 $17,000 immediate depreciation. So for some people, it makes a huge difference. They obviously don’t have to pay tax on the rents and they’re like, Wait a second, I just wiped out all my, my tax hit, you know, and I’m going to have solar arrays on my on my rental property forever, you know, so like, there’s little things like that. But there’s so many of them, I can’t even begin to, to start doing this. If you’re an agent have your own solar for solo 401k, you can defer the first 19 five, directly into it. If you’re over 50. It’s 20. What is it 26,000. You can put a ton of money into these things and not pay tax on it as it goes in. And if you still want to invest in real estate, that 401k money, you could actually buy real estate in it, or you could borrow out 50% of it.Yep, you could. Absolutely. There’s so many little nuances.
I can tell you, you’ve got your arms around what agents need to know. And this has been fantastic, Toby, let me let me ask this final question, which is the signature question of the show, which is you’re obviously a big thinker. All right. You’re doing some incredible things, not just with your immediate clients, but now spreading it to a wider, wider audience. What is Toby do to continue to be a big thinker to continue to expand your own possibilities? What does that look like for you to teach us?
All right, I’ll make it really easy. I’m a big believer in a guy named Andrew Carnegie wrote something called the gospel of wealth in 1899. He was the richest man at the time. And he basically said that there’s nothing wrong with being rich. Just make sure you’re giving back and the way he put it is millionaires are trustees of the poor. You cannot fill up somebody’s glass with water from an empty picture. So you owe it to yourself and to those around you that if you’re good at something, do a lot of it. Don’t stop. Like I could have retired A while ago. Don’t stop. There’s no such thing. Continue to create wealth because some people are really bad at it. The honest truth is some people just good at making money. So if you’re really good at it, make it and then make sure you’re giving back and there’s so many ways that could take place. Do you know that low to moderate income housing is actually a nonprofit activity like, yeah, you could literally do this and not pay tax at all, not even property taxes. So there’s just so many little nuances out there, once you start making it. There’s so many cool ways that you can do just amazing things for society for other people. And frankly, it’s so much fun to do it. It just gets really exciting. Once you no longer worried about putting food on the table, you’re thinking about somebody else’s putting food on their table, and it just changes your whole outlook on life.
I, I can see why. There’s some people that get wealthy right, they’ve got a mentality like you do is that I’m going to do it not not to necessarily build another statue of myself, but because there’s other people out there that are needful of my abundance, and I’m happy to create so that I can share. It’s good stuff, man. You’ve been such a valuable contributor again, let’s tell people where they should go back. We’ll put it in the show notes. How you can get in contact with Toby and get access to more of his stuff. I know he’s got some other resources that will be really valuable for you as agents as you move from salesperson to advisor and create a better return for yourself in keeping more of your money as well as differentiating yourself in the marketplace. So final request to all of us is to GO THINK BIGGER! Hey, I appreciate it, Toby. Total pleasure having you on. Thanks, everybody for tuning in today. It’s been fantastic. tons of fun,
Justin. Thanks for having me, man.