Advanced Tax Savings Strategies for W2 Earners: Cash Flow & Depreciation Deals

For high-income W2 earners, Cash Flow Deals and Depreciation Deals are powerful tools to maximize tax savings, supplement income, and build wealth.

You need to make an informed decision about your path to financial freedom. So let’s get things going ….

Cash Flow Deals: Steady Income and Tax Benefits

“Cash flow deals” are investments that provide regular income. 

“Duh,” right?

But here’s the thing to know: They don’t inherently provide tax benefits. 

That said, when they are used in conjunction with a Private Foundation, they can become highly effective. This strategy is ideal for those looking to replace active income with passive streams, leveraging the Private Foundation to shelter earnings and grow wealth

Royal Legal Solutions helps you navigate these strategies to decrease your tax burden. We’ll show you how to use them in tandem. Once we set everything up, the foundation gives you initial tax savings, while cash flow deals give you high-yield returns (and no capital gains tax).

Cash flow investments are awesome for W2 earners looking to ditch their full-time jobs or generate passive income. These deals include heavy machinery, forex trading, and algorithmic trading. 

A $100k investment in a cash flow deal could potentially return $30k annually, paid out in installments..

Depreciation Deals: Reducing Taxes and Building Wealth Efficiently

Depreciation deals leverage investments that allow accelerated bonus depreciation, reducing taxable income immediately. These deals come in different types:

• Real Estate Investments: Multi-family properties or leveraging short-term rental loopholes are popular options. However, you typically need to be a real estate professional to fully benefit from these tax breaks.
• Energy and Equipment Investments: Car washes, energy projects, or equipment allow investors to claim depreciation benefits without requiring real estate professional status.
• RV and Mobile Home Parks: Investing in these assets qualifies you as a real estate professional and opens up a wider range of tax-saving opportunities. They also allow for larger investment amounts.

Depreciation deals offer substantial tax savings and help build net worth, making them a strategic option for those needing to offset high W2 income. Typically, these investments are held in your personal name to take full advantage of the depreciation benefits.

Balancing Cash Flow and Depreciation for Optimal Tax Savings

The best approach often depends on your financial goals:

• If Immediate Cash Flow is a Priority: Combine cash flow deals with a Private Foundation to maximize immediate income without additional tax burdens.
• If Tax Savings and Long-Term Wealth Building Are Priorities: Focus on depreciation deals, which allow substantial tax deductions and efficient net worth growth.

To maximize savings, it is often recommended to max-fund a Private Foundation first and then explore additional investments in cash flow and depreciation deals for layered benefits.

Finding the Right Mix For You

The right blend of cash flow and depreciation deals depends on your financial goals and tax situation. By leveraging these strategies, W2 earners can significantly reduce taxes, build wealth efficiently, and create a pathway to financial freedom. 

Consulting with a financial advisor or tax professional can help tailor the right mix of investments to meet your specific needs and objectives. Royal Legal Solutions will help maximize your tax savings and investment ROI. We do that by modeling scenarios, forecasting how different types of investments can impact your bottom line. 

Royal Legal does not offer, underwrite, or recommend deals, operators, or deal clubs. We do not take a cut or get a kickback from any third-party deals.

Our clients are responsible for underwriting their own deals and investing their own money. YOU are responsible for deciding which strategies to implement. We provide access to a curated list of deal clubs and investment opportunities, but you are still responsible for your own due diligence.

Have questions? We’ve got answers. But first we’ll need to learn about  your situation and goals. We will help you model how different types of tax shelters and investment options impact your bottom line, and from there you can decide what best fits into your lifestyle.