Women Get Wealthy

Depreciation is a non-cash expense which has the ability to reduce the amount of tax payment due (which means you get to keep more of your hard earned cash).  We have likely all heard the term before but how exactly does it work?  How can it help us to reduce the amount of tax we pay each year?

Let’s use an example:  Say you purchase a rental property for $100,000 and the value of the land which comes with this property is $10,000.  The means the ‘basis’ value of your building is $90,000.  Rental property buildings can be depreciated over 27.5 years, so, if we take the $90,000 and divide by 27.5, the result is $3272 of depreciation for each year.

Next, let’s make some assumptions about how this depreciation might be used each year.  If, for example, the rental property produces $100 of cash flow per month (after all expenses), this would translate to $1200/year in rental income, right?  This $1200 of income could be offset by a portion of the depreciation, thus making your $1200 of rental income non-taxable. 

So, if we started with 3272 and we used $1200, we are now left with $2072 is depreciation expense.  This remaining depreciation can then be applied to offset your other income.  Depending on your tax bracket (10-35% in 2009), you would calculate your additional net tax savings. 

As you build a real estate portfolio, you can see how this could make a significant impact in the amount of take home income you actually get to keep.  There is a reason why many of the world's wealthy individuals own real estate.  It provides a non-cash deductible, which can be extremely powferful for building and KEEPING wealth. 

Please note, there are IRS limitations and you must ensure that you qualify for the deductions.

NAWBO (National Association of Women Business Owners) just announced their annual Women's Business Conference.  I've never been but it looks like a great opportunity to network with other women & learn strategies for benefiting from the current economy.  June 9-11th -  Is anyone planning to attend this event?  

http://www.NAWBO.org

(click on Events --> Women's Business Conference)

I just got home from an extremely inspirational event - the United Way's 'Girls Today, Leaders Tomorrow' Gala Dinner.  Delivered by a group known as the Women's Initiative, the event highlights efforts to support young girls via education, positive reinforcement and development of core values.

Many girls from the program (12-13 years in age) were part of the event.  They took turns introducting key speakers, thanking sponsors and sharing their hopes and dreams.  One girl wants to be an archeologist, another a gynochologist, and plenty of teachers and doctors too!

They spoke of the 'Six Pillars of Character':

1. Trustworthiness
2. Respect
3. Responsibility
4. Fairness
5. Caring
6. Citizenship

The conclusion of the event was the presentation of the 'Women Caring About What Matters Award', given to Laurada Byers.  Laurada has a background in commercial real estate and, in 1999, her husband, a prominent columnist at the Philadelphia Inquirer, was stabbed to death in a failed robbery attempt.  Laurada was present at the time of the murder and her husband died there, in her arms.  As she put it, at this point, she had a choice.  She chose to LIVE.  3 months later, Laurada started the Russell Byers Charter School, in honor of her husband. 

These women/girls gave me some amazing perspective.  It was an absolute pleasure to spend an evening in their presence.

Every now and then, I attend an online webinar.  Last night, I attended a great one.  My husband and I turned off the TV, grabbed a notepad and pen and kicked back to learn something new.

Make no mistake, there is a sales pitch at the end but it  is 1.5 hours of pure content leading up to it.

It will only be available until March 17th and you will need some time to get through it but, if you are interested in buying a business (or need some redirection related to ownership of an existing one), I think you will be happy you took the time.

Learn from someone who has walked the walk (not just read a book about it).


http://www.keystothevault.com/video/...YABUSINESS.wmv