5 Tax Secrets the Richest 1% Don’t Want You to Know
I'll show you how to use real estate to keep more of what you earn each year
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When Donald Trump's tax returns showed he paid $750 in federal taxes in 2017, a lot of people asked the same question:
"How?"
I was curious too. Not because I wanted to avoid paying taxes entirely — that's impossible (and illegal). But I wanted to understand how the ultra-wealthy built their fortunes while keeping more of their money.
After building MAK Construction into a successful company, I started studying exactly how the 1% handled their taxes.
And learning the ins and outs have been useful for me. So I wanted to share them with you.
When I bought my first office building for $1.1 million, something incredible happened. That year, my construction company made $250,000 in net profit. But through depreciation on the building, I wrote off over $300,000.
The result? Instead of owing taxes, I got a refund.
That's when I realized — the wealthy really aren't using “loopholes.” They just understand how to use the tax code better than most people.
Here are 5 strategies I use to legally minimize my tax burden:
1. Real Estate Depreciation
This is the strategy that changed everything for me. As a real estate professional, you can use depreciation from property investments to offset your active business income.
The key is cost segregation — accelerating the depreciation to maximize your paper losses while your properties generate actual cash flow.
2. 1031 Exchanges
When you sell a property with significant gains, you don't have to pay taxes immediately. Using a 1031 exchange, you can roll those proceeds into a new asset.
You never touch the money (it stays with a qualified intermediary), but your wealth keeps growing tax-deferred. Plus, you get fresh depreciation on the new property.
3. Tax-Advantaged Accounts
The government gives us plenty of tools to legally reduce taxes - we just have to use them:
IRAs
401(k)s
HSAs
High-yield savings accounts
Whole life insurance policies
With health insurance costs rising, HSAs are especially valuable. There are even ways to use backdoor IRA strategies to fund real estate investments.
4. Capital Gains vs Ordinary Income
This is where the real magic happens. Long-term capital gains (holding assets over 1 year) are taxed around 15% versus ordinary income rates that can get up to 40+% depending on where you live.
Let me show you a real example from my storage development business:
If I build a facility for $3 million and sell individual units within a year, I pay high ordinary income rates. But if I hold for 5 years and sell for $6 million, that $3 million profit gets taxed at just 15%.
(Assuming the entire gain qualifies for the long-term capital gains rate. Factors like depreciation recapture (taxed at a higher rate) can complicate this.)
That's why I focus on building and holding assets rather than quick flips.
5. Playing the Long Game
The biggest mistake I see? People focusing on quick profits instead of long-term wealth building.
Real estate takes time. I tell my investors to expect a 10-year horizon for maximum benefits. That's how you get:
Maximum appreciation
Full depreciation benefits
Lower tax rates
Compounding returns
Fixed debt during inflation
But you have to be patient. Everyone wants to quit their job tomorrow. That's not how real wealth works.
Bottom line: You can't avoid taxes completely. But you can be strategic about how and when you pay them.
The ultra-wealthy understand this.
They:
Buy assets that appreciate.
Think in decades, not days.
Use every available tax advantage.
Hold for long-term capital gains rates.
Focus on building equity over quick cash.
This isn't about finding loopholes. It's about understanding the rules and using them properly.
When I started in construction 15 years ago, pouring concrete and building homes, I didn't know any of this. Learning these strategies helped me build two successful companies and a growing real estate portfolio.
I love teaching others to think differently about building wealth. These tax strategies are really just the beginning.
Of course, these strategies depend your individual financial situation and should be discussed with a tax professional.
Share this with someone who needs to learn about smart tax strategy — you might just change their financial future.