Go Big with Gib Podcast
Go Big with Gib is a podcast for professionals, business owners and entrepreneurs to talk about their big wins.
Go Big with Gib Podcast
Ep 91. What the IRS Calls a Loss Might Be Your Shortcut to Financial Freedom
We unpack how passive losses in real estate, driven by depreciation, can show a tax “loss” while your property still pays you steady cash flow. We explain why this legal strategy helps you keep more of what you earn and how professionals can use it to speed up financial freedom.
• what passive losses are and why they matter
• how depreciation creates a paper loss without reducing cash flow
• a simple example showing $20k cash flow with a $25k paper loss
• why keeping more after tax beats earning more before tax
• who commonly uses this strategy and why
• the importance of playing by IRS rules and documenting activity
• a reminder to consult a qualified CPA or advisor
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Welcome to the Go Big With Gibb podcast, where we talk to professionals, business owners, and entrepreneurs about their big wins. Hey everyone, welcome back to this episode of Go Big With Gibb. I'm your host, Gib Irons. Today we're going to talk about one of the most powerful and misunderstood tools in real estate investing, passive losses. Now, the IRS calls it a loss, but smart investors know it's actually a strategy. Here's how it works. When you invest in a property, the IRS allows you to take depreciation. That's a paper loss. It makes the property look like it's losing money, but in reality, that property is oftentimes cash flowing and putting money directly in your pocket. Let's run a quick example. Imagine you invest in a deal that pays you$20,000 in cash flow this year. At the same time, depreciation creates a$25,000 paper loss. On your tax return, it looks like you made zero, but in real life, you just collected$20,000 in cash flow. That's the magic of passive losses. They reduce your taxes and they speed up your path to financial freedom. The wealthy have known this strategy for decades. They understand it's not just about how much money you make, it's about how much money you keep. And now more high-earning professionals, doctors, attorneys, business owners are learning how to use the tax code to their advantage. The rules are the same for everyone. The difference is whether you decide to play the game. So if you're looking to grow wealth, protect your income, and build a life of freedom, pay attention to passive losses. They may be one of the most important tools in your financial toolkit. Thanks for tuning in to this episode of Go Big with Gibb. I'm Gib Irons reminding you that wealth isn't just about what you earn, it's about what you keep. And as always, this is not tax or legal advice. Consult a qualified CPA or advisor before making any tax-related decisions. If you haven't already, go follow us on social media at GibIons. We'll see you next time.