368. Does Buy, Borrow, Die Still Work? Breaking Down Robuilt’s Strategy

Summary

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Tax Smart Real Estate Investors Podcast: Episode 368

Does Buy, Borrow, Die Still Work? Breaking Down Robuilt’s Strategy

Date: March 10, 2026
Hosts: Tom Wheelwright, Grant Cardone, Nate
Reviewed Guest Video: Robuilt (YouTube)

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Episode Overview

Theme:
This episode takes a deep dive into the “Buy, Borrow, Die” strategy, particularly focusing on how real estate investors—especially those using short-term rentals—can use it to build, compound, and preserve wealth. The hosts review and react to a recent video by Robuilt that explains this wealth-building technique, while also clarifying nuances, dispelling myths, and discussing practical applications and limitations of the strategy from a real estate tax perspective.

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Key Discussion Points & Insights

1. What Is “Buy, Borrow, Die”?

• Summary:
  The strategy involves buying appreciating assets like real estate, borrowing against them to access capital tax-free, and holding until death—at which point heirs receive a step-up in basis, potentially eliminating decades of capital gains taxes.
• Speaker Insight:
  • “Wealthy people buy assets… instead of selling their assets… they leverage against it.”
    —Grant Cardone [07:53]
  • “You buy the asset, you let it grow, you tap into the equity… using tax free cash out refinances… And then when you pass away, all your assets get stepped up to the fair market value and you eliminated the tax.”
    —Grant Cardone [14:28]

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2. Owners vs. Employees: Who Benefits Most?

• The tax code favors owners over W2 employees, but employees can absolutely build wealth (through stock, executive pay, stock options, etc.).
• Quote:
  • “I can’t tell you how many doctors I’ve seen… who are W2, who are making 7, 8, $902 million sales representatives in the same boat… So don’t just think that being a business owner is the only way to build wealth.”
    —Grant Cardone [06:44]
  • “Entrepreneurs technically have an unlimited cap, they also have unlimited risk… Look, you can… Are your tax strategies limited as a W2? Unfortunately, yes, that is true.”
    —Nate [07:18]

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3. The Power of Leverage & Why the Wealthy Don’t Sell

• Leverage Explained:
  Rather than selling assets and triggering capital gains tax, wealthy investors refinance or borrow against their appreciated assets (e.g., real estate, stocks).
• “Debt is a tool, not a threat; buy, grow, pay down debt, borrow against it, and buy again—a cycle.”
  —Grant Cardone [13:03]
• Real Estate Entry Point:
  Real estate is an accessible vehicle for ordinary Americans to replicate this model, especially with the rise of tools like Airbnb.

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4. The “Step-Up in Basis” at Death

• Tax Law Benefit:
  When a property owner dies, their heirs inherit the asset at current market value, erasing prior capital gains for tax purposes.
• Quote:
  • “If those heirs decide to sell, they own nothing on decades of gain… And the crazy thing is, it’s not illegal. It’s worse. It’s allowed.”
    —Robuilt [14:03]
• Explanation:
  • “If you bought a property… for $500,000, you sold it in 2056 for $3 million... But if you die in 2056... [heirs’] cost basis in the asset would be $3 million. If they sold it… for $3 million, they’d pay no taxes.”
    —Grant Cardone [14:28]

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5. The Short-Term Rental (STR) “Loophole” and Bonus Depreciation

• Key Mechanism:
  STR owners who materially participate (spend 100+ hours, more than anyone else) can use depreciation losses from the property to offset W2 or non-passive income. This is supercharged by 100% bonus depreciation if available.
• Quote:
  • “When you’re actively managing your short term rental… your losses… can offset your day job income, aka your W2 income.”
    —Robuilt [19:24]
  • “You have to materially participate. It’s not a passive investment.”
    —Nate [21:08]
  • “The short term rental tax loophole… has been around since the 80s and 90s… What kind of brought it back… is 100% bonus depreciation being renewed through the one big beautiful bill.”
    —Grant Cardone [21:41]

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6. Real-World Example: Snowballing Wealth

• Scenario:
  • W2 worker earns $100,000/year; acquires a $500,000 STR; uses cost segregation to create ~$125,000 in paper loss in year one.
  • Result: Wipes out $18-22k tax bill, possibly leaves another $25k loss for the next year.
• Quote:
  • “This $125,000… can offset your W2 income. So your taxable income of $100,000… drops to zero… and even better, you have an extra $25,000 loss left over.”
    —Robuilt [24:23]

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7. Limitations and Nuances

• Active Participation Allowance:
  For some, up to $25k in losses can offset ordinary income from long-term rentals without STR loophole.
• Excess Business Loss Limits:
  In 2026, can only offset up to $525,000 of W2 with business losses (down from $600k); only one materially-participating partner gets the main benefit in partnerships.
• Foreign Property Caveat:
  Only US property receives bonus depreciation.
• Quote:
  • “You can only offset up to $525,000 of your W2 income in 2026… That’s [a] limitation.”
    —Nate [27:34]
  • “Foreign assets don’t get 100% bonus depreciation.”
    —Tom Wheelwright [34:05]

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8. Practical Advice and Final Thoughts

• Entry Point for Most:
  Buy your first STR, manage it actively.
• Leverage All Benefits:
  Combine cash flow, refinance capital, and tax savings to buy subsequent properties—creates “zero tax snowball.”
• Quote:
  • “Cash flow grows equity. Equity unlocks borrowing tax free. Borrowed capital buys more assets... More deductions eliminate taxes... That, my friends, is the zero tax snowball.”
    —Robuilt [30:19]

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Notable Quotes & Memorable Moments

• “Debt is a tool, not a threat… The type of debt we're talking about, we're talking about debt to buy an asset that's going to make you money.”
  —Grant Cardone [12:59]
• “Real estate is the one true vehicle that anyone can use to sneak into this wealth-building club. It doesn't require billions in stock options.”
  —Robuilt [16:39]
• “If you're looking to buy short term rentals or you want to figure out how to use Buy, Borrow, Die in your wealth building plan, book a call with our team…”
  —Grant Cardone [35:01]

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Timestamps for Key Segments

| Timestamp | Segment/Topic | |------------|--------------------------------------------------------------| | 03:02 | Defining “Buy, Borrow, Die” & Strategy Context | | 04:09 | Robuilt on Owners’ Advantages (vs. Employees) | | 07:44 | How Wealthy Leverage Assets, Not Sell Them | | 10:42 | Real Example: Cash-out Refinance Explained | | 12:33 | Good vs. Bad Debt; Real Estate Leverage | | 14:03 | Heirs, Step-up in Basis, and Tax Implications | | 16:39 | Why Real Estate Is the Accessible Entry Point | | 19:03 | The STR Loophole—Eligibility and Recent Legislative Changes | | 24:23 | Example of Offsetting W2 Income with STR Depreciation Losses | | 27:34 | Key Limitation: Excess Business Loss Cap | | 30:19 | The Wealth Snowball Summarized | | 32:45 | Final Advice: STRs as an Entry, Bonus Depreciation Nuances | | 34:05 | Foreign Properties Ineligible for Bonus Depreciation |

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Tone & Language

The tone is practical, conversational, and “no-nonsense”—providing actionable, real-world advice while busting internet myths and detailing compliance requirements. Hosts and guests balance optimism about the strategies with candid warnings about complexity and the need for qualified advice.

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In Summary

• “Buy, Borrow, Die” remains a powerful, legal, and ethical strategy to build generational wealth through real estate, especially with short-term rentals and bonus depreciation.
• The keys:
  • Actively manage your STRs to qualify for the loophole,
  • Leverage smart debt,
  • Understand step-up in basis for estate planning,
  • Redeploy tax savings into new assets,
  • Beware of limitations—seek tax expertise.
• As summarized by the hosts: “If you’re in the game of real estate, it’s time to level up. You need more than just a tax preparer—you need a tax advisor.” [35:46]

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For more in-depth clarification, download the episode resources or book a discovery call with Hall CPA’s specialist team.

Transcript

[Tom Wheelwright]

You're now listening to the Tax Smart REI Podcast, the number one tax podcast

[Grant Cardone]

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[Podcast Producer]

all things real estate, accounting and tax. Here we reveal our secrets that can save you thousands in taxes, streamline your accounting process, and help grow your business. Stay tuned to hear insightful interviews with industry experts, successful real estate investors, and current clients on what strategies they use to grow their business and how they steer clear of Uncle Sam.

[Grant Cardone]

Hey everyone, thanks for tuning to this week's episode of the Tax Smart REI Podcast.

[Tom Wheelwright]

Today we're going to be going over

[Grant Cardone]

a new segment of the show.

[Tom Wheelwright]

It's going to be a segment where

[Grant Cardone]

we're going to review a video and we're going to break down that video from a strategic standpoint to see if it holds water. Today, the video we're going to be reviewing is one by Robuilt where he is covering the short term rental loophole and the strategy called Buy, Borrow, Die. We've talked about both these things here on the show today, but we're going to be doing a video review like watching this video and providing our comments. So super excited to do that and we'll be diving into all that in just one minute.

[Tom Wheelwright]

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Subscribe to the REI Daily newsletter [e-mail] subscribe. That's it for now and right back into today's episode.

[Grant Cardone]

All right, so we are back. So two things before we dive right into the episode today. First of all, Robill has been a guest on our podcast, I think multiple times now. Always love Robill, always like to see what he sees going on in the short term rental space. So we're going to be taking a look at his video today. All positive things we're making comments on on what we're seeing. Second thing is, as you'll notice, is that we started to post the Major League Real Estate podcast here on the Tax Smart REI feed. And the reason for that is that there's a lot of crossover within our existing audience. A lot of our existing audience here on the Tax Mar podcast are in the syndicate and fun space and we Figured everybody would love to hear from that as well. So the Major League Real Estate Investment Podcast is designed for syndicators, fund managers and large scale operators who are running large scale investment businesses. So tune into that show if you are interested in that. Again, we're going to be posting the Tax Smart REI podcast every Tuesday here on the feed like we have done since 2018. And then we're going to be posting the Major League Real Estate podcast, which we sometimes refer to as mlre on Thursdays going forward. So, so tune into whichever podcast episodes that make the most sense for you. If you want to tune to both, we welcome you to do that as well. But that's enough of that for today. We're going to dive right into the meat of today's episode. Nate, do you have any thoughts before we start reviewing this video?

[Nate]

Yeah, yeah, Tom. So buy, borrow, die, right? It's probably, it's like, it's like one of the like, sexiest terms out there when it comes to like, for high net worth people, right? Because everyone goes like, oh man, there's a way I can like avoid tax with the irs. And the answer is, yeah, it kind of is. It kind of is possible. Now, Grant. Now granted, like, there's a lot of caveats and nuance to it so much like, hey, don't out lever yourself completely. Don't out leverage your next generation. I know you. Look, the whole goal is to buy a bunch of assets and then grow up and scale up. Worldbuilt does a good job breaking that down. And we just thought it'd be neat and interesting to kind of break this down for you guys because it does involve a good aspect of the short term rental loophole, a lot of other things associated with it. But we thought it'd be fun to break down for everybody, buddy.

[Grant Cardone]

Yeah, absolutely. So if you're watching on video, you'll be able to watch the video with us. If you're tuning in, we're going to play the video in the background and we're just going to comment on it. The name of the full video is the quote, borrow until you die, unquote strategy that the IRS does not want you to know about. If you do want to check that out on YouTube, I'm sure we'll be linking it up into the show notes of this video. All right, so let's go hit play. Let's see what, what the first segment of the video has to say.

[Robuilt]

A silent operating system that the wealthy understand intimately and use every single day. You were never taught it you were never meant to use it. And most people have been actively steered away from ever seeing it once. Completely different sets of rules when it comes to money and taxes. And here's the part that nobody tells you. The tax code was not designed for workers. It was designed to reward owners. And the minute that you cross that line, even with just one rental, you're suddenly playing a completely different game. And when you combine this owner's playbook with one twist in the tax code that we're going to talk about in today's video, both are used to not just get rich, but to stay rich forever and to compound that wealth beyond what most people could ever imagine possible. And when you combine this owner's playbook.

[Grant Cardone]

Okay, so right now he's teeing it up. He's talking about the classic business owner versus employee playbook and how more tax advantages are available and more wealth building advantages are available to business owners than people who have W2 roles exclusively. So just to kind of give my thoughts on that so far, that is generally true. Right? There are more tax benches, more opportunities to build wealth for business owners. And we're going to get into a little bit more about some of those tools here on this episode. Having said that, I would like to play devil's advocate for a second because I know rich dad, poor dad, if you read those books, a lot of people in the real estate space has, he's very against W2 type jobs. He thinks everybody should be business owners and real estate investors. And I think there is more opportunity. The ceiling can certainly be higher for people. There are certainly more tax advantages. But I can't tell you how many doctors that I've seen come across here at a firm who are W2, who are making 7, 8, $902 million sales representatives in the same boat, executives. Think about an executive of any major corporation. They're making tens of millions of dollars a year and they are W2. Okay, they might have stock options and stuff like, but at the end of the day, they are W2. So I don't think that being in a W. And I think I spoke to a hedge fund, someone who's in the hedge fund space, and I'm pretty sure he was W2, but he made $6 million in one year. So it's hard to sit here and say that you cannot build wealth as a W2, having seen everything that I've seen. So don't just think that being a business owner is the only way to build wealth. You can certainly build significant amounts of wealth through W2 positions. In fact, I have a friend. I could give too much details, but they are basically retired off of stock options and things that they've achieved through the tech space. And they were always W2. So again, business ownership is not the only way to wealth. I know for a fact that's true. Nate, any thoughts on that?

[Nate]

Tom? I could not. I actually couldn't agree more. Is that you're totally right. Like software. Like, think about all, like the software engineer folks, right, who are getting massive stock options and then getting their salary too. Right, like, exactly what you're saying. I agree with you. Is that yes, entrepreneurs technically have an unlimited cap. They also have a unlimited risk at the same time. So there's a lot that goes into that. Look, you can. Are your tax strategies limited as a W2? Unfortunately, yes, that is true. However, comes to building wealth, that's absolutely not the case. And actually, you can use those same tax strategies business owners use to still save on tax. Just not your W2. More. More times than not. That's the only difference.

[Grant Cardone]

Yeah, no, exactly. The last comment I'll say on this particular issue, look, I'd rather be a W2 making $3 million a year than a business owner making 300k a year. And I get to deduct my vehicle. Like, who. Who cares, right? The W2 person probably doing much better from a. From an overall financial perspective. You just look at that high level. So nothing wrong with W2. You don't have to be a business owner's path to wealth. The first thing I wanted to comment on here, but shall we proceed?

[Nate]

Let's proceed.

[Grant Cardone]

Let's proceed.

[Robuilt]

Not selling the assets that make them money. They get wealth by leveraging those assets to make them more money with new assets. This is the owner's mindset, and it's the core of a system that never truly resets.

[Grant Cardone]

So let's break it down here because this is a big core of. Of the episode today here. What Robuilt is saying is that wealthy people buy assets. I don't know if he said it explicitly, but stocks, real estate, things like that. And then instead of selling their assets and to tap into the equity, he's saying that they leverage against it. So they go and get loans against their assets. And this is a very familiar concept. And you could do this as a W2 person. I mean, you can't get a loan against your W2. That's when you get like a payday advance loan. But that's not what we're talking about here. We're talking about. We're talking about leveraging assets you have. And even if you have a W2 job, right. You can go buy real estate. And you know, as your real estate increases in value, whether it's through value add or market appreciation, you can go get a loan against that real estate to pull out your equity. I'm sure we'll be talking more about that as this episode goes. Do the same thing with your stocks. Most major stock holdings or ETFs, you can get a pledged asset line against it. Instead of selling your stock and hitting capital gains tax, you can get a loan out against your stock and continue buying more. I think that's the point he's trying to make here.

[Nate]

Yeah, absolutely. As Tom I mean, think about all the business owners and real estate investors that we know that have a personal residence that appreciated vastly, and they get a HELOC out and use that to purchase another property. Right. All they've done is just take capitalize their equity without having to sell their property, which is what robot will get into here. But it's. There's so much opportunity with debt and leverage that we're going to, I think, explore here in a second.

[Grant Cardone]

Yeah, absolutely.

[Robuilt]

Families do this through businesses flow, leverage, appreciation, and tax advantages that you just don't get from a paycheck.

[Grant Cardone]

Here, here. The point of video. Let's make this really quick. He's saying that real estate's an easy entry point for most people, which I think we would agree. Real estate's one of the easiest things to get leveraged against. So of course you can invest in real estate on the side. I think that's what he's making the point here.

[Robuilt]

Every month, this property produces a small amount of cash flow, maybe 300 bucks a month initially.

[Grant Cardone]

But more important about appreciation and cash flow. Okay. Most people sell too early. Okay, real quick. What he's saying here is he's saying that most people, they see the big capital gain and they're like, oh, yes, big capital gain. Celebrate. Let's go ahead and sell. Tap into that capital gain, which you can do. And sometimes it is the best option to do that than your current capital gains tax. And what he's making the point is instead of selling, take out a loan against it because the proceeds from the loan are tax free when you do that. Okay, let's see what else he's saying. The tax hit from selling your asset. He's talking about capital gains taxes. Okay, cool. Why selling resets your wealth. That makes sense. How the wealthy use borrowing. Okay.

[Nate]

Just FYI, for anyone that's not watching, I know it's a video experience right now, but we're just kind of skipping around the video to different bookmarks, so feel like we're like repeating ourselves or going back. It's like you hear the audio a little bit just because we're just trying to get you guys to the right spots. We want to focus in on today.

[Grant Cardone]

Yeah, absolutely. So he's basically talking about how the wealthy use borrowing, and we've been talking about that. Now let's go to the most replayed section. Let's talk about this down payment.

[Robuilt]

And over the years, that wealthy person's tenants helped pay down the mortgage significantly, perhaps to 280,000 doll dollars. And the same house has appreciated to $500,000. Most lenders will allow that wealthy person to borrow up to 75% of that new appreciated value through what's called a cash out refinance. 75%.

[Grant Cardone]

Okay. Okay. Nate, Nate, do you have any comments on this?

[Nate]

Yeah, this is a fantastic look. This is. I always ask clients and they say, hey, I'm, I'm like, man, my property is really appreciated. I go, hey, if you like, if I want to get another property or some might do a 1031, I was like, is the old property bad? Like, do you want to get out of it? And a lot of times they say, not really. It's a good asset. Like, I don't necessarily need to get out, but I want a better one. I'm like, okay, have you thought about doing a cash out refi? And sometimes they know, sometimes they don't. But my favorite part about this is, I'm sorry, I'm going to beat Robills punch is you get take this debt out. No tax hit. That's like the best things that you don't have to put in. Whenever you do any kind of business deal, real estate deal, you always, more times than not, have to put in the cost of taxes. In this situation, the cost of taxes is zero. So you do not have to take that off of whatever your gain or cash is.

[Grant Cardone]

Yeah, yeah, absolutely. Absolutely. And I think what else he's saying here is basically saying as, as you own your property, you're going to pay down your debt. Your tenants are going to help you pay down their debt because they're paying your rental income. And as you pay down your debt, the principal on the note, you're actually going to be increasing your equity as you kind of decrease your principal. At the same time, if you buy right in the Right. Markets and all this good stuff. The property is also appreciating. So here you have a very nice asset on your hands. Your tenants are paying down your debt, you're increasing your equity. And rather than selling that good asset, to Nate's point, take out a loan on it tax free and use it to buy your next property. All right, so we're skipping around here. Debt is a tool, not a threat. He's basically saying, you know, debt is your friend. In this case, let's see what he's

[Nate]

saying here, which we maybe comment on that too, is that you hear like there's another very large, I will say financial entrepreneur influencer who is totally anti debt. Right? This person's very vocal about the hatred of debt and how you should never have debt. And I will somewhat agree for some people that's true. For other people, I don't think that's true.

[Grant Cardone]

Okay, you're not talking about the Dave Ramsey guy, right?

[Nate]

That's not who you're talking about, Dave Ramsey whatsoever. Tom, I would never bring up Ramsey on this podcast.

[Grant Cardone]

Okay. We're not talking about Dave Ramsey. No. For real debt, high level. A lot of people look at debt as a bad thing is because a lot of people look at consumer debt, right? If I take out a loan to go buy a boat, now I'm carrying this, this debt, but the boat's not. If I'm not renting out this boat or otherwise making income off this boat, some people look at it as bad debt or consumer debt. And some people mismanage their consumer debt. They get high, you know, high amounts of credit cards and things. You're not making money to pay down this debt. Specifically. Like what I'm trying to say is like that's personal assets you're buying that are not actually generating any cash flow for you to pay off your loans. You're paying that off with however you're paying it off. You know, get turned off by that. But the type of debt we're talking about, we're talking about debt to buy an asset that's going to make you money and then you take the money that you make from that asset and you pay off the debt. That's what real estate is all about here. So that's what he's saying here. He's saying you basically buy, you grow, you pay down your debt, you borrow against it and then you buy again. That's what he's describing here. That is also known as brrrr in some cases, right? Buy rent, renovate, refinance, Repeat. All right. Moving right along with a full step

[Robuilt]

up in basis, meaning if those heirs decide to sell, they own nothing on decades of gain. And the snowball keeps rolling, transferring wealth across generations, avoiding the tax reset button at every turn. And the crazy thing is, it's not illegal. It's worse. It's allowed. It's a system designed to keep wealth within families, compounding generation after generation, completely legally, completely ethically. And this is the game being played in the background.

[Grant Cardone]

So he's talking about the die part, the step up in basis. Right. Basically what happens is when you have an asset and you pass away, the asset is going to be stepped up to the fair market value. The basis can be set up for the fair market value at the date of your death. And so we transferred to your heirs at that fair market value. So by the way of example, if you bought a property here in 2026 for $500,000, you sold it in 2056 for $3 million, just for example, you'd have a $2.5 million capital gain. Now, if you died in 2056, sorry, and you pass into your heirs their basis, their cost basis in the asset would be $3 million. So if they theoretically sold it that same day or the next day for 3 million, they'd pay no taxes on that. So that's kind of the crux of the die part, right? You buy the asset, you let it grow, you tap into the equity as you hold the asset using tax free cash out refinances. Take that money to go buy your portfolio or continue to build your wealth. And then when you pass away, all your assets get stepped up to the fair market value and you eliminated the tax. I think that's the part here.

[Nate]

Yep.

[Tom Wheelwright]

Hey, real quick, if you've been a longtime listener to the show, then you

[Grant Cardone]

know we give everything away for free from how to use the real estate

[Tom Wheelwright]

professional status and the short term rental loophole to save tens of thousands of dollars on taxes to upcoming tax changes. We don't hold anything back. And the only way we're able to

[Grant Cardone]

help more real estate investors is if

[Tom Wheelwright]

you rate, review, share the show. It just takes 15 seconds to leave a quick rating review or share with a friend who may find this information

[Grant Cardone]

useful on their real estate journey.

[Tom Wheelwright]

That's all for now. We'll dive right back into today's episode,

[Robuilt]

get taxed, Spend what's left. It's an endless treadmill designed to keep you generating income, only to have a significant portion siphoned off by Uncle Sam, preventing you from ever truly accumulating and leveraging significant capital. Remember, for many Americans, you're working three to four months a year just to cover your tax bill. That's how much of your wealth is kept from you. And the difference between these two paths isn't intelligence. It's not how hard you work, it's access. Access to the information, access to the strategies. And here's the critical point. While many forms of ownership can get you into this game, real estate is the one true vehicle that anyone can use to sneak into this wealth building club. It doesn't require billions in stock options.

[Grant Cardone]

So what he's saying here is that from a W2 perspective, you're not as a W2, you're earning your money, you're paying your taxes and then you're not building any assets, you know, which is true. You're W2 alone. If you're spending your paycheck every single week, month, whatever, you're not building anything. You can't take a loan out against that.

[Nate]

Right.

[Grant Cardone]

That's what he's basically saying here. But then he's moving into. Okay, your entry point into this game is real estate, which we all and

[Nate]

Tom, to give some like real life examples. Like a lot of times people feel there's like a lot of unfairness out. Like people say there's unfairness that exists out there. Why? Well, because once upon a time a bunch of ultra, ultra wealthy people, like the top 10, the tax terms got released and it showed that Elon Musk has like no income. Basically he gets paid no W2 from his company, he basically gets nothing. But somehow he owns all these insane assets. Right, Tom? And the reason why is because he's borrowing off of the stock that he owns In Tesla, in SpaceX, all those things, right? That's how he's able to use that, because he's borrowing off and doesn't have to deal with the cost of tax. When he does those types of things, people get frustrated because, hey, how are you going to become Elon Musk? Right? Elon Musk is the ones in the top, like lifetime person, Mark Zuckerberg, once in a lifetime person. The other 99.9999% of the population can't become those people. So then we feel like, hey, there's unfairness because we can't do that, while maybe we can't do it in the exact same way they can. We can do it through real estate. That is the number one way that we can accomplish this and take advantage of it by doing this.

[Grant Cardone]

Yeah. Yeah, absolutely. Absolutely. That is his big point here, is that real estate is your entry point into playing the game like rich people.

[Nate]

And like to be completely honest, Tom, is that, that's, we've, me and you have both seen that in our, in like as people we've worked with over the many years. That is absolutely the case. Right. I know for a fact. And like there's, I know there's locations in Oklahoma that are basically dead center in the city where there's tons of revitalization happening, where people who have held this land for 70 plus years are not doing it. Why? Because they've held it for 70 plus years. They are waiting to pass away, let their kids sell it back to the government for a stupid, for a stupid millions of dollars. And guess what, they'll pay zero tax on that money and they could do whatever they want with it after that. Maybe it's continuing real estate, but in different ventures but do whatever they want. That's the whole game plan here, is that you think about doing this now for your future. But Robu will probably talk about that too.

[Grant Cardone]

Okay, so he's talking about real estate's the entry point now. Now let's get into the tax code twist that he, that he's thinking about here. Let's see what he has to say.

[Robuilt]

There something that suddenly gave W2 earners a way to generate the capital that they need to start their own borrow until you die strategy. But how? The answer lies in a powerful twist in the tax code. One that was quietly, almost miraculously brought back this year in a massive, messy and controversial piece of legislation. The so called one big beautiful bill.

[Grant Cardone]

Big beautiful bill.

[Nate]

The big beautiful bill.

[Robuilt]

But what the news missed amongst all of the political noise was that this didn't just bring back a tax break. It delivered the ultimate supercharger for building your initial asset base. And it unlocked a new way for millions of Americans to keep more of what they earned. Here's how. In episode one, we talked about short term rentals, AKA Airbnbs. We showed how if you own one, and more importantly, if you materially participate in managing it, essentially treating it like an active business, the IRS doesn't treat it like a typical long term rental. And this little distinction from long term rental to short term rental changes everything. Because when you're actively managing your short term rental, your losses from that property, those paper losses created by things like bonus depreciation can offset your day job income, aka your W2 income.

[Grant Cardone]

So here he's talking about the short term rental loophole all right, Every. I think, you know, if you've been tuning into the Tax Smart REI podcast for any amount of time, you know, you know the short term rental loophole is. He's saying that if you buy a short term rental, you have an average period of Customer use of 7 days or less and you materially participate, which is typically done by spending more than 100 hours in the property, making sure no one else spends more time than you, that you're going to be able to take the losses from this property against your W2 and your other non passive income to be able to generate significant tax benefits and tax savings. I think that's what he's kind of making the point here.

[Nate]

That's totally fake, right? This strategy is not possible at all, right, Tom? Like there's nothing, nothing, like we've written nothing about this. It's totally out of. It's totally bonkers. This is not a legitimate strategy at all. Right?

[Grant Cardone]

Yeah, the short term of the loophole is totally illegitimate.

[Nate]

Totally joking. He's done a great job. Hey, just want to say, I'll comment here for Robill. I have not personally met with him, we're spoken with him. Done a great job explaining how to actually make this work. There's a lot of people out there that don't mention the hours test or anything like that. And that is the key, the crux to get this to work.

[Grant Cardone]

Absolutely, absolutely. You have to materially participate. It's not a passive investment.

[Nate]

Right?

[Robuilt]

AIDS of tax write offs, potentially hundreds of thousands of dollars and apply them in year one. Just think about that. Instead of slowly depreciating your short term rental over 39 years, the government is essentially saying, go ahead, take a massive chunk of your W2 income, make it disappear on paper and pay almost nothing in taxes this year. This is what's called offsetting your taxes. Okay? They're not vanishing, they're not going away forever. You're kicking the can down the road. So you can kind of conceptualize this as the government giving you a tax free loan. You use it to acquire more assets to fuel your.

[Grant Cardone]

All right, so he's talking about bonus depreciation right here, which is a major unlock. And that's the part that was brought back by the one big beautiful bill. To be clear, the short term rental tax loophole, that in and of itself that has been around since the 80s and 90s through various forms of tax law and regulation, so on and so forth, that was originally designed for hotels, that has not changed at all really, since it was introduced. What kind of brought it back to robust point is 100% bonus depreciation being renewed through the one big beautiful bill.

[Nate]

Right. Like he's mentioned the controversial bill. Right. And like, like bringing back like, like you were saying, 100% bonus. And so. Well, I'll say 60 and 40%, probably not the most attractive in the world. There are still great benefits. And even before we had looked before 2017, we were stuck with 50% bonus appreciation. So it was still effective to do a cost segregation in those days. It was still going to be effective to do a cost segregation at 40%. 100% just means that you get more of your money now versus later with 100% bonus. That's the difference in my opinion. But it's still like, I just want to say it's like, hey, for those of you like, I know, like I've seen this come up a couple different times. There's some people out there who unfortunately are trapped with like a 40 or 20% bonus. I still think it's worth looking at a cost segregation study in those situations. Even though you have a low bonus appreciation figure.

[Grant Cardone]

Yeah, no, for sure, for sure. Even the lower priced properties, thanks to 100% bonus depreciation, cost segregation can still make sense. I still, I think since 2018, since bonus depreciation was first introduced, I think that's changed the sediment for cost segregation a lot. It used to be that cost segregation studies only made sense on much larger properties because there was no bonus depreciation. You were just using accelerated 5 year and 15 year depreciation for the most part. And you know, when you had a very large multifamily or commercial building, doing that made a lot of sense just because the numbers were very large. But now 100% bonus depreciation cost irrigation studies started to become a lot more cost effective on lower priced properties.

[Robuilt]

So wealth snowball. You use it to start playing the borrow until you die game. And that's why I think in the world of real estate, owning and managing a short term rental is the greatest tax strategy of all time. Because it allows you to immediately offset and eliminate your biggest outgoing expense, your taxes, and redirect that capital into your own financial machine. Let me show you how this all begins to unlock the borrow until you die strategy. This isn't just about reducing your taxes. It's about generating the initial capital to build your perpetual wealth machine. Let's take our typical W2 worker, their W2 salary is $100,000 and the typical taxes that they would owe are anywhere between $18,000 and $22,000 annually. Now you acquire a $500,000 short term rental property and you actively manage it for at least 100 hours. And more than anyone else in your organization, you get a cost segregation study down. This accelerates depreciation and creates a massive paper loss in year one. And in a very rough rule of thumb, 25% of the property's value and a realistic number in this example is $125,000. This $125,000 now thanks to bonus depreciation, can offset your W2 income. So your taxable income of $100,000, well, it drops to zero. And that 18 to $22,000 tax bill that you were bracing for offset, it's gone, it's eliminated. You kick the can down the road. And even better, you now even have an extra $25,000 loss left over that you can carry forward into the next year, continuing to reduce your tax burden.

[Grant Cardone]

He's talking a lot about a lot of different things here. So this video is very clearly targeted towards people who have W2 jobs and how the combination of short term rentals with buy bar die can help you build a lot of wealth. So the first thing he gave the example of how this works, the one thing he did talk about, you know, taking that loss, using it to offset your income, and then having an additional 25,000. Because in this example he's using $100,000 as their income. They have $125,000 loss and then that wipes them out to zero. They get a full refund or whatever taxes they paid in through their W2, and then they'll carry the other 25,000 forward as a net operating loss, or an NOL as we call it in tax terms. And they'll have that loss available in a future year, presumably next year to offset their taxes.

[Nate]

Yep, yep, Totally on the mark. Tom, I will say too, is that like he's also not factoring that fact. We all get standard deductions every year, Right? That's something else too. Also something to think about. Like if someone's making $100,000, at least consider the fact that you might not even have to do short term rental strategy. You might just be able to invest into a long term rental and then you might be able to use another exception called the active participation strategy. That means you buy a property and that you actually get to write off up to $25,000 of your income with that. So just FYI on that, there's a lot of limitations behind that. But like, you could do this actually without having to go the whole short term rent or just FYI, in this situation specifically, there's more than one option here than other than the short term rent.

[Grant Cardone]

Yeah, yeah, you're 100% right. You talk about the special loss allowance here. And if you're basically, long story short, if you're modified adjusted gross income, your MAGI, sometimes called is $100,000 or less, you will be able to take up to $25,000 of rental losses against your W2 income without having to do short term rentals or do anything too crazy. And that can be an effective strategy. So I think he's just using $100,000 right here. Which is fair. Which is fair. Just letting you guys know that exists. Oftentimes though, if you're making more than $150,000, because this special allowance we're talking about here, that phases out $1 for every 2000, excuse me, $1 for every $2 you have of Magi above 100,000 till you hit 150k. When you hit 150k, that is completely phased out and you get no deduction. So for a lot of people who are high income earners, this becomes not really viable. Right. And that's when we look at short term rentals as being the viable path, which is kind of what the point he's trying to make here. But to be fair to Robille, he's not a tax advisor, so maybe he's not focused on magi. But you know, still, I get his point. He's making the correct point here.

[Nate]

One more thing I want to bring up, Tom, that I do think is really important. I had another CPA actually reach out to me about this today who does not real estate specific. They're not. They're not real estate CPA per se, but they're like, hey, what do you do when you talk to people who want to do reps or short term rentals? But how do you work around excess business loss? Because that's something I don't think people talk about enough, is that you can only offset up to $525,000 of your W2 income in 2026. So that is basically the block that got created when 100% bonus came back. They also said, hey, we're going to create this block and says, hey, you got business income that's reducing losses. You can only use that to offset up to $500,000 of W2 income, because that's not considered business income. So that is A limitation that exists, just FYI. I want to put that little disclaimer out there as an FYI to remind people, but totally works in this example still.

[Grant Cardone]

Yeah, absolutely, absolutely. That is, that's important. And it's important to note that that's actually down from 2025. So I think it was like 600 and it was something more.

[Nate]

It was 600,000. Yeah, they just, they brought it back down by like 100k. It's a little tweak. And so this, FYI for people who are planning wise. Sorry, like that was just something that happened that was out of our control.

[Grant Cardone]

Yeah, absolutely, absolutely. So something to keep in mind, the excess business loss. All right, moving right back into the video here.

[Robuilt]

Well, the answer is simple. You strategically deploy it. You use that tax free capital combined with the cash flow from your first property as a down payment or renovation budget for another asset, maybe even a second short term rental. And guess what? That second short term rental, so long as you materially participate in the management of it, can also qualify for bonus.

[Grant Cardone]

So here he's basically talking that the strategy is like, okay, great, you buy the short term rental, you get the tax savings from using the short term rental loophole. Now he's saying take that money, take that tax savings, use it with the other money you've been accumulating from your first rental, assuming it's cash flowing. Right. And use it as your down payment on the next short term rental and then repeat this process. That's kind of the point he's trying to make. And I think that's wise advice. You want to take the tax savings instead of buying, I don't know, buying a trip to Maui for everybody. There's nothing wrong with a trip to Maui or wherever you want to go. But take this tax savings and redeploy it into more assets that can continue to build your wealth. I think that's what he's touching on here.

[Nate]

Yeah, I think there's a third thing you toss into that time. A lot of times people buy short term rentals. They do it like do tons of renovations on property. That's where the burger strategy comes into play. Buy, rehab, rent, refinance. Is that essentially now you can like take your tax savings, your cash flow and a refinance proposition if the value is higher, like we going back to, we talked about earlier, leverage off that. Now you've got a ton of capital that you can have access to here that really can help elevate and get you a bigger property and just keep it's a snowball. Right? I think he mentioned that earlier. The snowball that keeps escalating. And at some point in time, you're going to have five to six properties. If you're just diligent, dedicated every single year. Cool.

[Grant Cardone]

You know, it makes a lot of sense.

[Robuilt]

And this is what I want you to remember because these are the rules that the wealthy live by. Cash flow grows equity. Equity unlocks borrowing tax free. Borrowed capital buys more assets. More assets like short term rentals create more deductions, supercharged by bonus depreciation. More deductions eliminate taxes. Eliminated taxes mean more deployable capital. And more capital means acquiring even more assets. That, my friends, is the zero tax snowball. It's the engine for the wealthy. And if you like the strategy and you want to see how it all comes together.

[Grant Cardone]

Okay. Okay. So he did a great job of summarizing this entire thing. And we, you know, we've talked about this here on the show before, but basically the name of the game is you buy an asset, you increase its value, you push down. As you pay down the debt, your equity is going to increase. You pull out the money tax free using cash out refinance or line of credit against that asset. You take that money, you go buy the next asset with it. And then in this case, he's also adding on the tax benefits of short term rentals. If you're using this with short term rentals, you're also getting the added benefit of additional capital through tax savings thanks to the short term rental loophole, which is you're redeploying into buying more assets and letting this continue. And then when you pass away, after your property's appreciated throughout your lifetime, rather than selling while you're alive and having to face capital gains taxes, you're holding it until you pass away. Your heirs are receiving at the fair market value at the date of your death, wiping out all of the tax is that you would have paid if you sold. And that's how you're building this perpetual wealth machine.

[Nate]

Yeah, I think it's a great summarization for him. Now we're basically at the end of the video. What other final thoughts do you have, Tom? I would like any other final thoughts. I know you just gave some right there, but I know for me it's like, look, short term rentals, it's like in the easiest place you can get started for any W2 employee. Right? That's an absolute way. And look, 20 years ago I would have said this is not a deployable strategy. Right. Airbnb was not around back then. Short term rentals existed before Airbnb. Just like for most people who didn't know that, like I did. But they still existed. However, it just wasn't as well known. And Airbnb has just made this more prevalent and more of an option for people. Right. Some people don't want to use hotels. People, some people are looking for different options, looking for one night that's less than hotel, et cetera, et cetera, et cetera. So it's very possible to get into this game. It's very possible. And like we said here, it's eligible for anybody. So you can use that, save taxes, borrow and keep moving the snowball. And then hey, guess what? Maybe you start with a easy rental that's close nearby you and then two years from now maybe you've got some awesome beach property that's also a short term rental. Right. Just like scalings of economies in my opinion.

[Grant Cardone]

Yeah, no, that, that's 100% correct. Great insights. Some other things I want to touch on here you mentioned it, is that there's a few things here for people who might be considering this. First of all, when this makes the most sense is when you are buying the property yourself. Either you and or your spouse because you to meet the material participation tests. Again the most popular one is you're spending more than a hundred hours and no one else, cleaners, repair people, so on are spending more time than you. And that's because it's really hard to spend more than 500 hours or meet one of the other material participation tests if you're going to have other partners. So for example me, Nate purchases a short term rental. Well, chances of me and Nate each spending more than 500 hours on the short term rental each. So over a thousand hours of material participation is quite low for most typical short term rental properties. So when you have a partnership, usually only one partner is going to be able to hit one of those tests and the other partners unfortunately going to be in the passive bucket unless they have other things going on other short term rentals, which that just complicates things. We're not going to go through that probably in today's video. But that's just if you're doing this as a partnership, just note that typically only one person is going to get the benefit, only one partner. Another thing to to note is that properties, foreign properties, say I bought a property in Bogota, I just threw out that randomly.

[Nate]

So Tom's guy say it. I know you see, but Tom's browser had this pulled up beforehand. Just FYI. That's where the example is coming from.

[Grant Cardone]

Yeah, no for sure. If you have that right and you have that example, unfortunately that asset's not going to be eligible for 100% bonus depreciation because it's is a foreign asset and foreign assets don't get a hundred percent bonus depreciation treatment. So something else just to kind of keep in mind. These are a few things I've seen recently come up around this strategy that you just want to be aware of. Any anything else you want to add?

[Nate]

No Tom, I think you summed that up really well. Yo everyone listening to this. I hope you enjoyed today. Like we just wanted to do like a quick off the cuff reaction video. We just wanted to try something new. If you like it like give us some feedback, let us know, shoot us an email comment on Spotify, Apple Podcasts. We'd love to get your feedback on this and I'll comment on YouTube too please. But we we're planning on doing some more things like this in the future and like Robu did a great job. Right? We might go after some videos that are not doing as great a job and start pointing out the fallacies and flaws that they have going on that they're not thinking about or considering. But enjoy doing this. Tom. Looking forward to us doing it some more Tom.

[Grant Cardone]

Yeah, absolutely. I'm more than happy to do more reaction videos and I would love to jump into ones that are defunct or have some flaws because to be completely honest with you, Robo did a phenomenal job with this video and really hard to say that he got anything wrong. I don't think he really did. So I think he hit the nail on the head. If you're looking to buy short term rentals or you want to figure out how to use buy Bar Dai in your wealth building plan, go ahead and check out the link in the description to this video book a Discovery Call with our team, we deal with investors. We help investors on a daily basis maximize the tax benefits and avoid critical errors. While using the short term rental loophole and other strategies. We help them determine when it makes sense to maybe do it. Sometimes it does make sense to sell a property rather than a cash out refinance.

[Nate]

Right?

[Grant Cardone]

We can help you develop exit strategies for that as well. So long story short, if you're in the game of real estate, it's time to level up. You need more than just a tax preparer. You do need a tax advisor who's going to help you understand how to maximize your tax savings and avoid critical mistakes that could land you in hot water with the irs. So the link to Book a discovery call is in the Show Notes to this video. That's it for today. We'll catch you on next week's episode of the Tax Smart REI Podcast.

[Tom Wheelwright]

The Tax Smart Real Estate Investors Podcast is for general information purposes only and is not intended to provide and should not be relied upon for tax, legal or accounting advice. Information on the Podcast may not constitute the most up to date legal or other information. No reader, user or listener of this podcast should act or refrain from acting on the basis of the information on this podcast without first seeking legal and tax advice from Council in the relevant jurisdiction. Use of an access to this podcast or any of the links or resources contained or mentioned within the podcast show or show Notes do not create a relationship between the reader, user or listener of the podcast and the host, contributors or guests. Any mention of third party vendors, products or services does not constitute an endorsement or recommendation. You should conduct your own due diligence before engaging any vendor. For more information, reference the show notes or description of this episode.

[Podcast Producer]

Thanks for listening to today's show. If you enjoyed the show, please find us on itunes and leave us a review. You can also email [e-mail] with any feedback or topic suggestions. We are always taking on new clients and with the new tax laws in play, you really don't want to navigate this alone. Let us help you save money on taxes with your accounting and CFO name Needs to become a client. Navigate to our client page at therealestatecpa. Com and fill out a web form with as much detail about your situation as possible. Thanks so much for listening. Have a great rest of your week.