How to Keep More of Your Money: Active vs. Passive & Real Estate Truths | Neil Jesani | EP 90

Summary

Podcast Summary: "How to Keep More of Your Money: Active vs. Passive & Real Estate Truths"

The Entrepreneur DNA | Host: Justin Colby | Guest: Neil Jesani | Episode 90
Release Date: September 15, 2025

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Overview

In this engaging episode of The Entrepreneur DNA, host Justin Colby welcomes Neil Jesani—a Miami-based financial and accounting expert—to break down the realities of tax strategies and financial management for entrepreneurs. The conversation zeroes in on the often misunderstood advantages (and pitfalls) of real estate investing, what truly qualifies for tax write-offs, the nuances of active versus passive income, and practical advice for anyone looking to keep more of their money as their business scales.

With candid personal anecdotes and a no-nonsense look at the myths around real estate tax shelters, Neil and Justin cut through internet hype and clickbait, giving listeners actionable information about structuring investments, tax law, and building wealth the smart way.

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Key Topics & Insights

1. Why Move to Florida? Personal & Tax Story

• [02:26 – 06:45]
  • Both Justin and Neil share their motivation for relocating to Miami, largely due to the favorable tax environment and absence of state income tax.
  • Neil details his journey from New Jersey to Florida, balancing lifestyle, weather, property taxes, and insurance costs.
  • “Once you reach a certain stage in life... you want to do whatever you can [for] saving money in tax. It is actually substantial.” – Neil [03:28]
  • The reality: even in tax-friendly states, costs like property insurance and high regional prices can offset savings.

2. The Realities—Not Myths—of Real Estate Tax Advantages

• [06:45 – 13:09]

  • Real estate is touted as a tax shelter, but the benefits are not universal.
  • Misconceptions abound on social media: e.g., W2 employees can offset all their salary with real estate losses; this is factually wrong.
  • Depreciation and Cost Segregation:
    • Residential property: depreciated over 27.5 years; commercial over 38 years.
    • Cost segregation studies can accelerate depreciation on eligible property components.
  • Active vs. Passive Income
    • Rental losses are “passive,” offsetting only passive gains unless you have “real estate professional” status or use certain loopholes (like short-term rentals/Airbnb).
    • Requirements for real estate professional status:
      • 750 hours/year spent actively managing property.
      • Must be more hours than any other activity.
    • For short-term rentals (<7 days), only 100 hours/year is necessary, and you must be the primary manager.

  “Generally, this is the depreciation, it's a passive depreciation, meaning it will offset your passive income. Now your W2 K1s... those are active income. So you cannot offset your active income unless you convert your passive loss into active loss.” – Neil [09:36]

3. Tax Law Nuances: How Much Can You Really Offset?

• [11:16 – 13:09; 16:26 – 18:06]

  • For W2 (salary) income: there's a “business loss limit” (Sec. 461(l)):
    • Married: can offset up to $626,000/year (2025 figure).
    • Single: half that amount.
  • Entrepreneurs with business income (not just W2) can potentially eliminate more taxable income using depreciation, but with strategic caution:

  “You don't want to go less than 20% because... you're going to recapture it. When you're selling you're paying the extra 20%.” – Neil [17:06]

• The “golden handcuffs” of real estate:

  • You avoid immediate taxes, but recapture and capital gains can hit hard when you sell, locking you into a cycle of reinvestment.

4. Estate Tax & Stepped-Up Basis: The Wealth Trap

• [18:06 – 22:57]
  • As investors get wealthier, estate tax becomes a major issue.
  • The “step-up in basis” allows heirs to pay no capital gains if they inherit and immediately sell at fair market value, but only if the property is owned directly or via a revocable trust.
  • Moving assets into an irrevocable trust avoids estate taxes but forfeits the step-up benefit.
  • There is no easy way to game the system by shifting ownership near death; market value resets eliminate the advantage.

5. Political Perspectives & Economic Realities

• [24:10 – 34:16]

  • Both parties dislike the step-up in basis, but it remains.
  • Deep dive into the national debt problem and how only half of Americans pay federal income taxes.
  • Discussion of societal inequities, government spending, and the need to lift incomes at the bottom.
  • The impact of U.S. tariffs (example: shipping glasses to India and getting hit with massive customs duties).

  “If the US government were to be a public limited company, then according to GAAP accounting standards, you also need to include all of your unfunded liabilities... you're talking about maybe $150 trillion.” – Neil [24:51]

6. The True Drivers of Rising Costs & Inflation

• [34:16 – 38:45]
  • Many small/midsize business owners raised prices during COVID and never reversed them, fueling “sticky” inflation even after the crisis abated.
  • Big money is still flowing—there are more profitable businesses than most people realize.
  • Rising costs disproportionately hurt lower-income households.

7. Top Tax Write-offs for Entrepreneurs (Beyond Real Estate)

• [38:45 – 42:39]

  • Equipment depreciation can often be even bigger than real estate:
    • 100% write-off on new equipment (e.g., heavy construction machinery, oil rigs).
    • Can be “short-term rented” (like Airbnb model for equipment) for further tax benefits.
    • After several years, much of the asset’s value is written off, so recapture on sale is smaller.

  “Equipment is way more efficient than real estate in terms of tax side... If you buy 1 million dollar worth of equipment, you can write off 100%.” – Neil [39:23]

  • But always consider investment value first, not just tax perks.

8. Advice for New Entrepreneurs

• [43:07 – 48:17]
  • Three Pillars of Success:
    1. Put in the hours: “Anyone can make a good living by working half a day, and half day meaning 12 hours.” – Neil, referencing Chet Holmes [46:01]
    2. Be the best at what you do—specialize and know your craft inside out.
    3. Ethics first. Success without integrity is hollow.
  • Start with a single-member LLC for flexibility, then move to S-Corp or other structures as your revenue grows.
  • Focus on generating real profits before worrying deeply about taxes.

9. The Myth and Truth of the “Car Write-off”

• [48:35 – 51:59]

  • Section 179 deduction allows 100% write-off for business-use vehicles over 6,000 lbs, regardless of how you finance (loan or cash), but only applies to the business-use portion.
  • Accurate documentation (mileage, trip logs, receipts) is crucial, especially if audited.
  • Aggressive deductions are a big IRS audit trigger, especially for Schedule C filers reporting large write-offs on moderate incomes.

  “You need to be very, very careful. The devil is in the detail; give the record.” – Neil [50:50]

10. Advanced Strategies for High-Income Earners

• [51:59 – 53:49]

  • For earners over $500k, focus on depreciation where possible.
  • Stack with “charitable strategies”: direct donations, donor-advised funds, charitable trusts, or even founding your own charity, some of which can multiply tax effectiveness.

  “Charitable donation can be... in the form of writing a check to charity directly... donor advice fund... create a trust, krats and cruts... or your own foundation.” – Neil [53:11]

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Notable Quotes & Moments

• On Real Estate Professional Status:
  “If you're working full time [elsewhere], you cannot do that. But if you’re married and your spouse is not working, you can make them the real estate professional.” – Neil [11:19]

• On Recapturing Real Estate Depreciation:
  "It's the golden handcuffs of real estate. It's like, now also if you don't sell it, then it's not a big deal. Who cares?" – Justin [17:53]

• On U.S. National Debt:
  "If the US government were a public limited company ... now you're talking about maybe $150 trillion." – Neil [24:51]

• On Entrepreneurs' Priorities:
  "Don’t worry about money and taxes first—worry about creating the problem of tax. Meaning: create the problem of real revenue." – Neil [47:01]

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Timestamps for Key Segments

• [02:26 – 06:45] – Miami move & the real cost of “tax-free” states
• [06:45 – 13:09] – Real estate tax shelter breakdown, active vs. passive losses
• [16:26 – 18:06] – Loss limitations & “golden handcuffs” of real estate
• [18:06 – 22:57] – Estate tax, step-up in basis, and trust strategies
• [24:10 – 27:31] – U.S. debt and who pays taxes
• [34:16 – 38:45] – Inflation, COVID business effects, lifestyle cost increases
• [38:45 – 42:39] – Equipment as a tax strategy vs. real estate
• [43:07 – 48:17] – Advice for new business owners: work ethic, specialty, integrity
• [48:35 – 51:59] – Car write-off rules, audit red flags
• [51:59 – 53:49] – Charitable strategies for big earners

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Actionable Takeaways

• Know Your Real Estate Deductions: Understand the active vs. passive rules, and don’t expect to “beat the tax man” with clickbait solutions.
• Explore Equipment Purchases: For certain business owners, equipment leasing or rentals offer massive up-front write-offs, often more flexible than real estate.
• Build Wealth Ethically: Long-term wealth comes from diligence, depth in your craft, and playing by the rules—but using every legal advantage.
• High Earners: Tap depreciation and charitable giving for the biggest impact; work with an expert for optimal strategy.
• Document Everything: Especially with cars or any asset-intensive business; the IRS will check.

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Closing Thought

This episode is a must-listen for entrepreneurs navigating taxes and wealth-building. Neil Jesani’s advice is clear: focus on generating real profits, understand the real levers of tax deductions, and always think several steps ahead—both for your business and your family’s financial future.

“Create the problem of tax—meaning, create the problem of real revenue.” – Neil Jesani [47:01]

Contact Neil at: neiljesani.com

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Host: Justin Colby
Guest: Neil Jesani
Podcast: The Entrepreneur DNA – Bleav Network

Transcript

[Justin]

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[Justin]

Yo yo what is up entrepreneur DNA family. I am back with an incredible guest. If you are a business owner or maybe you're an aspiring business owners and you aren't totally aware of all the tax write offs and the advantages that you can have as a business owner, whether it be an L.L.C. s corporation or otherwise and you could use some help understanding how to keep more of that hard earned money you have this guest, Neil Giussani is going to talk about all the things that we can do. What's up, brother?

[Neil Giussani]

Thank you for having me, Justin. Yeah, always great to be here.

[Justin]

It's great. You and I are both newer to Miami, right? You moved six years ago, I think.

[Neil Giussani]

Six years back from New Jersey.

[Justin]

Yeah, I moved during COVID so I was in Scottsdale, Arizona and I moved during COVID in 2021. So I've been here four years, you've been here six. It's a great place. Great tax advantages.

[Neil Giussani]

Oh, absolutely.

[Justin]

No income tax.

[Neil Giussani]

Absolutely. Love.

[Justin]

That's great.

[Neil Giussani]

I think that was, that was one of the reason on top of some other reason. But that was also one of the very attraction to move to Miami.

[Justin]

Yeah. So you run a financial firm, an accounting firm. And so this is your wheelhouse. We are going to talk taxes, we are going to talk financials, we are going to talk accounting. Talk to me a little bit about your decision. I know one of the reasons we just said no income tax, that's big, right? So California. I was born and raised in California. I don't know if they have the worst. You might be able to tell me, but they have a terrible income tax law. Right. Florida is great. You know, we as entrepreneurs, we have no income tax if we build our LLC and S Corp and pay ourselves. Talk a little bit about your decision to move here and some of the tax advantages here for Florians.

[Neil Giussani]

So I think number one reason was the tax because, you know, once you reach at the certain stage in a life and where, you know, God has been kind and you are making lots of money, then you know that you want to do whatever you can. So that actually one of the reason was the saving money in tax. You know, it is actually substantial. So that was number one. Number two, I'm 55 now and at that time.

[Justin]

Thank you, man.

[Neil Giussani]

You know, I was just under 50. I used to work in, you know, New York City. Reached to office every day, 7:30 in the morning. Never left before 7:30. But now I go to New York City. You know, my hands hurts, you know, my ear gets cold and so on and so forth. So I thought, you know, I met these days, it was great. Northeast is wonderful when you're young and when you're a hustler. But once you pay your price, I thought it might be time to move to Florida. And when I came in over here, I wanted to do actually summer, winter. So I said I'm gonna, you know, you know, put 183 days I will become United Freudian. So I don't need to pay to Governor Murphy in New Jersey. Yeah. But I came in over here and you know, Covid strike. And I was stuck over here. I thought the summer would be hot, but it was ok. And this summer was pretty hot.

[Justin]

This one got me.

[Neil Giussani]

No, it is. But. But that I learned that their summer is a great time to go on the ocean. You know that you can jump in the water. It is a wonderful, you know, extra temperature of the water. So I loved it. And I never went back.

[Justin]

Yeah.

[Neil Giussani]

To New Jersey.

[Justin]

So that's a big one. Now it's funny because me and my wife were just talking about this, right. So before we moved here, we were in Scottsdale, Arizona. She's from Florida. And so I was like, oh great. No income tax, so I'll save 15% or so. Awesome. But then I get my property tax bill and I'm like, this is triple what I'd be paying in Arizona. And health insurance is more. And I'm like, they're always going to get you like somewhere. There's never like some amazing thing that I somehow win. Right.

[Neil Giussani]

Like that Ours one New New Jersey. There's also that extra property tax is very high in Jersey. Yeah. So. So. So that, you know, that was not big even. The only big thing I found is over here. You have to renew your. You know that. Yes. You know. Yes. That actually insurance is insurance.

[Justin]

I spend almost ten grand a year in fire, flood, wind and property insurance.

[Neil Giussani]

No, absolutely. Yes. In the same. Yeah. So it is in fact car insurance, you know, South Florida driving. It's crazy. I have no idea. These people never give any signal left. Right. You know, I think there's nobody trained them, you know. Yeah. That move or that give the signals. But anyway. Yeah. So that was the. Another thing I found is it is small, but in New Jersey you can actually renew your car registration for four years or something like that one. Only 20 bucks. Here there are some 120 or 200 bucks and that every year you have to renew. So obviously they are trying to make some money somewhere. But still, honestly, Justine, lifestyle is wonderful. I would pay anything to solve. Absolutely.

[Justin]

So I'm in real estate and I want to get into some of this tax stuff because I love real estate. I will always be in real estate. A lot of people look at real estate as a great tax shelter, a great tax advantage. Do we agree just the basic premise? Yes, I agree as well. This is why I will always buy apartments and storage facilities. Any type of commercial that I can have the most tax write off. However, I want to start this out a little more controversial. I want people to understand, like it's not as big and beautiful as a lot of people think. Right. I've gone round and round in different investments and I own a big property in Houston, I own smaller properties in Alabama and I'm diversified. Sometimes I have a really large tax write off and other times I don't. Right where I can't get the cost segregation study to get enough value out of it to give me the bigger tax write off. What are some misconceptions about tax write offs, tax sheltering within the real estate that people maybe make big assumptions because they see some of the, I don't know, clickbait type of social media about it. Oh, buy real estate, you get tax write offs. But what are some, some missed assumptions that they're making that you, you can advise us on?

[Neil Giussani]

So I think the biggest one, and this is really big and nobody talks about it's called active and passive. This is big. Okay. So that most people don't understand. I have seen many clip online that said, hey, if you're making 200,000, you know, you are actually W2 employee, you can buy $200,000 worth of real estate. And you know that pays zero in taxes. Not true at all. Not true. So I think that's where the biggest misconception and that it is unfortunately it's not actually people's faul. There is so many misinformation out there. So that actually let's go one by one in detail. So what happens is real estate, IRS puts in two categories, commercial and real estate. Residential, residential. So IRS says your residential real estate will be worthless in a 27 and a half. So you can depreciate over the 27 and a half and your commercial would be 38 years. Okay, fine. So now that actually technically, let's say you buy $1 million worth of condo, right. So that essentially you can write it off in 27 and a half. Now you and I both know that I have owned many real estate as well, that your carpet does not last for 27 and a half. Your faucet, your so many things doesn't last for 27 and a half. So essentially IRS allows you to do something called cost segregation study, which is actually an engineering study and that allows you to accelerate depreciation, basically. So generally cost segregation study when you do that one is the land value, obviously do not depreciate. So let's say there's a $1 million worth of condo, say $2 million. $200,000 is a land. So you're left with 800,000. And then generally you will get anywhere between 25% of that value that you can depreciate now. So the 25% of the 800,000, which is another 200,000, so meaning you would be able to depreciate 200,000 do now. And with the bonus depreciation back in the new bill, obviously you can take the $200,000 as the depreciation. Now let's go in detail about active and passive. So generally this is the depreciation, it's a passive depreciation, meaning it will offset your passive income. Now your W2K1s, all of that one, those are active income. So you cannot offset your active income unless you convert your passive loss into active loss.

[Justin]

Or if you're a real estate professional.

[Neil Giussani]

Right, exactly.

[Justin]

Me, I get to take that whole $200,000 immediate tax write off year one.

[Neil Giussani]

Absolutely. So actually that is where I was going. Either you are in a business of real estate, then that obviously you are in that business or there's only two other ways you can convert your passive depreciation inactive is one is rep real estate professional status. Right. And the second one is you buy short term Airbnb loophole, as we say, there's only two ways.

[Justin]

Now it's more of a business. Right. And so now you're in the business.

[Neil Giussani]

Exactly, exactly. So that other, how do you, how do you become rep or the real estate professional? So these are two main rule you have to look for. One is you need to give 750 hours a year managing your property or doing something with real estate. And the second one, which is very important, that 750 hours needs to be higher than any other activities you can do. So let's say if you're engineer working for larger corporation, generally people work for 2,000 hours. So obviously it's not going to work for you. But if you're married and if you have your spouse, and if your spouse is not working, obviously you can make them the real estate professional. Or you buy the short term rental which is less than seven days. You know, Airbnb type. And that's where you need to provide a hundred hours. So anybody can do the 100 hours. But there's a second condition is as long as nobody else puts more than 100 hours, your 100 hours is higher than anybody else, then you're okay. So that Airbnb type, it is easily doable. But that other the real estate professional. If you're working full time, you cannot do that one second myth, which is also very, very important. Certain time people say, hey, that I'm making $2 million, I will buy maybe $10 million worth of real estate and I will get the $2 million depreciation and I can wipe out my income. Zero. Not true. Again, there's a 461L limit. It's called the business loss limit. So if you're getting your income from A W2 sources, basically, then IRS allows you to offset only $626,000 in a year. 2025 if you are married. If you are single, then only half, basically.

[Justin]

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[Justin]

You can still push that tax deduction forward next to you still, you still have a million six or whatever million door to be able to push next year and first year.

[Neil Giussani]

Absolutely.

[Justin]

Now what if you are an entrepreneur? Same idea. Entrepreneur makes $2 million but not real estate. Entrepreneur, Entrepreneur, a day trader, that's fine. Makes $2 million, buys $10 million worth of real estate.

[Neil Giussani]

Are they able to offset entire 2 million in higher? Yes. Right. Because. Because. Because when your income comes from a W2 then. And then 461L limit comes in. But that. So that actually we do have a client, we do have a client who makes, you know, $10 million, $20 million and we find a depreciation which is 10 million, 20 million and we can literally make their income zero. Obviously you don't want to go less than 20%, you know, because that whenever you're selling it, you are going to recapture it. That's right. So that actually you want to be careful because it's going to be your actual long term capital gain. So that you don't want to be zero now. And when you're selling you're paying the extra 20% so you don't want to go less than 20%. But the entrepreneur, you can do that.

[Justin]

Well, that's a little bit of the trap of real estate. Right. To your whole point. If you. 1. So let's just say you take all 2 million today. Like great, no taxes, but then you sell year five. Well, you may owe taxes, you may owe a million dollars in taxes now because you took 2 million but you only got the. And now you're selling. So now you're like okay, now I got to roll this over.

[Neil Giussani]

Correct.

[Justin]

So now you got to go buy more real estate. It's like the golden handcuffs of real estate. It's like now also if you don't sell it, then it's not a big deal. Who cares?

[Neil Giussani]

Correct. But unless you become wealthy.

[Justin]

What do you mean?

[Neil Giussani]

Okay, so this is very interesting. So whenever you hear people talk about real estate, primarily we talk about income tax.

[Justin]

Okay.

[Neil Giussani]

And if you're not wealthy, only thing you need to worry about is income tax.

[Justin]

Sure.

[Neil Giussani]

But once you get wealthy, now you need to worry about estate tax, you know, debt tax when you die.

[Justin]

That's right.

[Neil Giussani]

So that you would have heard people saying that hey, you can hold the real estate until you die, right. You keep rolling it, right. And you can hold it until you die. And when you die you get something called stepped up in a basis. Right. So meaning you will get the fair market value. So let's say you bought the real estate for 2 million. When you die, the value is 30 million. Guess what? You don't need to worry about that one. When you die, you will get something called stuffed up ten apes. By the way, both the party, Democrat and Republican both were against the, you know, stepped up to the basis. But still it is there.

[Justin]

Okay.

[Neil Giussani]

So hopefully it's going to stay there. But that actually both the parties against. But anyway, so that when you die, you get the stepped up to the basis. So meaning the fair market value of that your beneficiary are Getting it is $30 million. They can sell it next day for $30 million and they have to pay zero income tax. Sounds wonderful. But now guess what? That for you to get the benefit of the stepped up in basis, you need to own the real estate. So either you own, your spouse own or your revocable living trust, not irrevocable trust, you're revocable. So meaning when the real estate is owned by yourself or your revocable living trust, it will include in your state. So when you die, your state will become subject to the state tax. And if it is $30 million, it will be added to your state.

[Justin]

So if I own it with an llc, it won't count.

[Neil Giussani]

No llc. If you own the llc, it will count yours.

[Justin]

Okay, it will, yeah. So the same, same. You're either a revocable trust or if I own an llc.

[Neil Giussani]

Correct. Single member, right?

[Justin]

Yeah, single member. Single LLC is owned by my S corporation. I own my S corporation.

[Neil Giussani]

It doesn't matter. It is still, still owned. So only circumvent this one. So that's why that other. Once you getting big in real estate, what people start doing it is they will start transferring or gifting it into irrevocable trust. When you do it in an irrevocable trust, now it is out of your state, basically. So that.

[Justin]

But then the irrevocable trust doesn't get the step up basis.

[Neil Giussani]

Bingo. Yes. So that when you push it to the irrevocable trust, you will not get the stuffed up in a basis.

[Justin]

So why would someone do that?

[Neil Giussani]

Right. Because the income tax tax, income tax rate is lower than estate tax. Estate tax is 40% versus income tax is the 37. And the long term is, you know, half of that one. So that's what it is. So that and your growth. Right. Because let's say if you push your real estate you bought for $2 million value is now 10 million. Now you gift it to your irrevocable trust, basically. Right. And at your death it's become 30 million. Right?

[Justin]

Right.

[Neil Giussani]

So that the earlier that you are going to pay that actual estate tax on the 30 million minus whatever exemption you get, which is, you know, somewhere around 14, $15 million basically, versus over here, you pushed it at the $10 million valuation. Now it is part of your irrevocable trust and still the value is still $30 million basically. But that you're not paying any tax.

[Justin]

You'Re not paying as much taxes.

[Neil Giussani]

Right?

[Justin]

Yeah. Well, so for clarity purposes, let's just say I was getting up in years and initially I have it in my irrevocable trust because I would pay less taxes in irrevocable. Then I said, all right, I'm 69 years old, I'm now going to take it from my irrevocable trust over my revocable trust because I may any day now kick the bucket. Would that be a smart move? Because now it gets a step up in basis that doesn't have to be taxed by my kids.

[Neil Giussani]

It could be. And that the smarter way to do that one is how you take it out from your irrevocable trust is you can take as a loan from your irrevocable trust. So you do take a loan but at the time you are technically buying the real estate at the fair market value. So no, it would not be smart move. It would not work because you know, at that time fair market value of that real estate is probably 29 million.

[Justin]

So that doesn't matter now it's your whole point. You can go just get a bank loan tax free, throw it in the bank, they can sell it when they sell it and now they're, they sell it for 30 million. But I got a 20 million dollar loan. So they're only getting taxed on bingoing, right? Yeah.

[Neil Giussani]

If you, if you do something like that one, that is fine.

[Justin]

God, I love real estate. This fires me. There's so many ways to do it and, and only an hour worth of telling it all and there's so much more. So by the way, make sure you are reaching out to Neil immediately. He's all over my Instagram or this episode's going to be out soon. Make sure you reach out to Neil to understand the stuff you guys here. Let's get into something a little bit interesting. Because of what has happened with Trump, the big beautiful bill passed. That is great. But you brought up something that I want to know more about as a financial advisor and an accounting firm. The right side and the left sided politics. How are they viewing the economics today? How are they viewing financials today? You just told me both, both sides do not like the step up basis. Right? Let's talk a little bit more about what they like and don't like. Because I look at myself as a Republican, I'm socially more of a Democrat in terms of what I believe in, how I feel and how I treat people and just that whole side of it. Fiscally I'm more of a Republican and I'm not cheap. I like nice things and whatever, but I just look at money in a way more fiscally. As a Republican. Talk about the differences right now as you see them given the seat that you sit in.

[Neil Giussani]

And with all disclosure, my belief or my thinking is very similar. Somebody said to me earlier on when I came into this country, he said, you are fiscally conservative but socially liberal. So I guess it is the same kind of category. I personally like it. What is happening currently. Only thing I don't like is the debt, you know, current debt of the U.S. you know, that is, you know, and that other even most people talk about, you know, that actually $35 trillion and so on so forth. But actually it is much more than that.

[Justin]

Of course it is.

[Neil Giussani]

Because if the US government were to be a public limited company then according to the GAAP accounting standard, you also need to include all of your unfunded liabilities. So if you factor in the unfunded liability of the Social Security and you know, actually Medicare and so on and so forth, now you're talking about maybe $150 trillion. And that other. If you look at 50% American do not pay any taxes. Okay, 50% American do not pay any Taxes. Only 50%.

[Justin]

50%. Is that because they don't make enough to pay?

[Neil Giussani]

They don't make. They don't make enough money.

[Justin]

So yeah, they don't make enough money. So they make like 38 grand a year less or whatever it is.

[Neil Giussani]

Correct. And, and, and the. That is what. That is what the another things we can talk that we need to somehow bring this segment of the population up. Right. Basically.

[Justin]

So you need to lift the bottom. Right. We need to. There's the 1 percenters. Right. And, and we've worked our face off to get to where we're at and all that. And I have my own opinions on people's work ethic but simple things like teachers, police officers, fire like the services the people that are actually helping our community. It's crazy me at times like I don't know the teacher national average of salaries across the nation. I have no idea. I can tell you what is drastically too small.

[Neil Giussani]

Absolutely.

[Justin]

I would guess 4x I would 4x all their income.

[Neil Giussani]

And, and that I personally because I have seen the other part of the world so many people and that other. You know if I may digress for a second most American, you know and my kids are, you know she born over here. Most American when I say they don't appreciate this country. This is, this is, this is a wonderful country. I'm telling you. I have probably seen one third of the globe. You know I travel and you know I take my children and Americans are hardest working people.

[Justin]

You know, majority Americans are the hardest right.

[Neil Giussani]

Americans. I would have thought that all compared to Europe, even Asia, you know that are the Americans are hardest working. In fact there is actually study has been done. Most American do not take all of their PTO paid time off. That is actually employer provides American do not take. Okay, now that the other. I think the, the, the area of improvement is somehow nobody has stayed to this segment to save money. You know I think that is where I see they're blowing, you're right, you.

[Justin]

Know debt and they blow through it. And they're paycheck to paycheck.

[Neil Giussani]

Absolutely.

[Justin]

They make 300 grand a year, but they're like every month they're like, oh my God.

[Neil Giussani]

Absolutely. I think the lifestyle is the biggest drag and that obviously inflation we've seen, you know, actually rent, you know, real estate, you know, that actually went quite a bit up. So I think that's where you will see but somehow you can still save some money. You don't need to say, you know, there's actually a great story, if I may tell you over here. So that actually when I started my first company, you know that other one Friday, I was leaving Friday, I leave office somewhere on five o' clock and I'm getting call, you know, from that other some business. Long story short, one of my employee, we used to do the payroll on Friday and that at that time we used to, you know, give a check actually. Yeah, it's a physical check in the day. Right. You know, back in the day. So that woman went for the, you know, actually check cashing service. And you know, that person called me to actually verify that she's your employees and she's working and so on and so forth. So I did confirm and then I talked to this person on Monday and I said, you know what, I'm in a really good mood, I'm planning to give you some raise today. And she said, oh Neil, that would be great. So I said, you know what, I'm going to start making payroll on Thursday rather than on Friday. So that from that point onward we start doing payroll on Thursday before lunchtime. So this employee can go out on Thursday at the lunchtime, they can deposit their check in a bank and they can save whatever 5, 6% they were paying to the check cashing company. And then I say to her that you can't wait for a day. Something is wrong over here. Right. You know that actually whatever 800, nine hundred dollar check you got, you can't wait for a day and you pay somebody to get that money right away, it means that we haven't. So I said that let's, you know, actually from this point onwards start saving. You know, it might be 30 bucks, it might be 40 bucks, it might be 50 bucks, but let's start putting that one in the side.

[Justin]

Yeah.

[Neil Giussani]

And that after, you know, six months, year, you will start seeing maybe $5,000 in your checking account and you're going to feel great. So they're actually coming back over here somehow. The only thing, you know, the, the big beautiful bill worries me is the debt Situation it is that somehow that it is going to add unless that we grow the gdp and that so far it looks like that we will be. That's where Scott Besson is saying that. 3, 3, 3, right. Basically. So as long as we grow the GDP, we grow the economy. And so far, honestly, when that does, actually Trump declared the tariff. You know, I went to my analyst in my office and I said, you know what? I'm feeling way more bullish in America now. You know that other.

[Justin]

How do you feel? So you just said how you feel about tariffs. But like it's really hitting America pretty hard. Oh, and how long do you think it will hit? Like, he's like, this is the ripping the band aid off, in my opinion. I'm not political and I'm not an economist and I'm not a financial advisor. I just know some things and I interview some really smart people.

[Neil Giussani]

Sure.

[Justin]

I feel like what he is doing with the tariffs is saying it is either death by a million paper cuts or sever the arm. Choose. You get a die by a million pay cut or you cut your arm off and you live forever. And he's saying, I'm going to cut the arm off. Like we are going to make this an issue. It's going to hurt a lot of people, but then we will rebound. Do you. Is that I agree?

[Neil Giussani]

No, that actually I agree with there. In fact, you know, that I'll give you a quick example. This is another story I think you're gonna love. So I went to India in January of this year, 2025. You know, I went for a few days. You know, my nephew owns the, you know, store for, you know, extra glasses. So I wear reading glasses and that. He said, uncle, I can make something called, you know, progressive for you. I had no idea. Anyway, I bought three pairs of the glasses from him. He said it would take two weeks. I will ship it to us. So that came back. It was fine. I bought it for some five, six hundred dollars or something like that one actually US Dollar. Anyway, so that actually he shipped the three glasses it came in over here. All good. It is somewhere. Came in March or something like that one February, March. Anyway, I tried and I did not like it because, you know, progressive is not that easy to get used to.

[Justin]

Not at all. These are progressive.

[Neil Giussani]

Oh, is it hard?

[Justin]

So under here I can read and then over here.

[Neil Giussani]

Right.

[Justin]

It starts to give you a headache a little bit.

[Neil Giussani]

Right? Yeah. You know, somehow. So, you know, my nephew said that, uncle, I would like to fix it. You know, these Are very expensive glasses for you. Why don't you ship it back? And I said, no, don't worry. He said, no, no, no, ship it back. So actually my wife goes and you know, she ship it to, you know, to India. So I then asked her, how much was that fund? She said, no, it was some extra 50, 60 bucks to ship to India. Fine. Now the story begins after a few days, she said, oh, somehow FedEx charged me some 360 bucks. I said 360 bucks to ship to India. So that she called FedEx, guess what? India charged $300 tariff on a glasses which I bought it from India, sending it back to repair it. They charge $300 tariff on it because.

[Justin]

It was entering the country, entering the company.

[Neil Giussani]

So that if you look at that one, I mean, somehow people across the globe, they have used and abused America, you know. So I think up to some extent that we need to level the planefold. Yeah, actually that's been said that you also need to be mindful. Even with no tariff and so on so forth, we are still number one country on the earth and we become number one. So that whatever we have done up to some extent, it is right, whatever, something broken, that's what we have to fix. And I think that is where that is. That other. Yes. Tariff might help up to some extent over there. That's been said. I guess. You know, knowing President Trump, he's a very smart guy. He's a businessman, I particularly believe, even though he shows that one, he has an ego, but he has no ego. He can walk back, he can be very flexible, he can be very nimble. So the appropriate opportunity come, he will make a deal with people and make it work. So I'm personally very, very, a bit very bullish on America at the moment. Moment.

[Justin]

I mean, that's great. I. I'm interested to see on all the different things that he's doing. Right. I think between immigration and tariffs and I, you know, listen, I'm even in construction. Like the cost of things is insane, insane right now. Right, right. And so something has to be done because it's not covet anymore. The ships aren't lost at sea with all the products, like everything's landed. We shouldn't have material costs the way we are. It doesn't make any sense. It's hurting everybody, everyone, even people who do financially. Well, you're like, why does this cost this much?

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[Neil Giussani]

I think up to some extent, I personally believe that some of the upper middle class business owners took the advantage of the COVID of course. So meaning they got the opportunity to raise the price of a menu. They got the opportunity to raise the price of their plumbing services, electric services, everybody raised the price even though there was no need. And then Covid, you know, Covid is gone. But still they haven't lowered the price. So I think some people. So if you look at that one, you know I'm in a business of money, right? I mean that the only time I'm talking to somebody when they have a tax problem, I mean we deal with people who makes more $2 million, right? I see money. There's lots of money out there. There's so many people makes lots of money. So I Think that if you look at, you know, there's always some winners and losers. Right. So that one. But obviously losers don't need us. Only. Only the winners need us. Right. Basically. So I see that, I can see that there's so many. Even the normal businesses which you can't imagine, they are making tremendous amount of money. So I personally believe that these people did. It's Your next bottom 50% is probably paying the UNIX price.

[Justin]

Yeah. I mean listen, yesterday I went to go get a. Or it was Sunday I went to go get. Just like a breakfast burrito is $21 for eggs, beans, rice, bacon, like it's a breakfast burrito. It's $21. I get. Anyways, so given where you sit, knowing the amount of people that make money and it could be real estate, what would be your number one tax write off suggestion? And I don't care the vertical. Whether they day trade or they do hair for a living. They do really well.

[Neil Giussani]

Sure.

[Justin]

Where would you typically suggest. What's your number one suggestion for tax write offs?

[Neil Giussani]

Sure.

[Justin]

Is it really? And maybe it is, maybe it isn't.

[Neil Giussani]

No, that. So, so that number one is actually depreciation based strategy. Basically. So it could be, it could be real estate. You could use actually believe or not and that we do quite a bit. You can use the equipment.

[Justin]

Oh yeah.

[Neil Giussani]

And that's huge, right? That one is huge. And why equipment? Because that. Let's take the same example of the $1 million condo. If you buy $1 million condo that you get $200,000 writes off. Right?

[Justin]

Right.

[Neil Giussani]

With the cost segregation study, if you buy 1 million dollar worth of equipment, you can write off 100%. So equipments are way more efficient than real estate in terms of tax side. Okay. I'm not talking about investment.

[Justin]

Obviously people make money in oil and you buy a new oil rig, it's 100% tax write.

[Neil Giussani]

Correct. So that are the equipment. So we do, you know, quite a bit, you know, equipment deal basically. So that's where. So that it is very similar like a managed services basically. So somebody want to buy the equipment in a big equipment and you know, you just create your llc, you buy inside your llc, they will manage it and they will pay you some, you know, the tax of return on investment and you will get entire, you know, tax writes off. So that does actually that would be one strategy.

[Justin]

What would be a good piece of equipment? Because now people are probably thinking oh I gotta go buy equipment. What would you suggest?

[Neil Giussani]

So that there's somehow we like actually heavy construction Equipment, those are very, very good. That's one truly holds the value, you know, those kind of things. So I think that is one. We like it quite a bit. And what we do, even that one, is that actually some of the companies we deal with, they use the same IRS code of Airbnb, Lufo. Right. Short term rental, basically. So rent it for less than seven days. You can become active as long as you give 100 hours. And now you can offset your.

[Justin]

So I could go in and buy a bulldozer.

[Neil Giussani]

Bingo.

[Justin]

And start short term renting it out to construction companies. I get 100% tax write off for whatever they cost in whatever income that I'm producing. And maybe I don't even want to produce income, but I just don't want to have to sell it because if I do sell it, just like real estate, then I have to go recapture it. Recapture the tax write off I got correct.

[Neil Giussani]

And the good thing is about equipment is after five, six years, value of equipment is 50%. So even though you recapture, you are recapturing only 50% value after five years. After five, six years. Yeah. So that's actually, you know, so that one is actually wonderful. That's been said. Real estate has always. It's a value because that other. I think, you know, that people talk much more about taxes about the real estate, but I think real estate has much more value in terms of investment as well. So I personally believe and that I have invested quite, you know, maybe for last 15, 16 years in the real estate. And my primary logic is, is it makes sense from investment perspective. That's right. You know, tax is the additional benefit. Yes, I do factor in, but it's the investment. Does it make sense from the investment perspective and that once it makes investment perspective, then you factor in the tax. So I think real estate has a much more other value that we are missing sometime. And that when you only buy from tax perspective, that's where disappointment comes. But if you buy for right reason, then you're going to stay in a game and you can really take a benefit because I personally believe in that, you know, real estate way more than I am. But real estate is funny, you know that the real estate is not like a stock market, Right. You know, Apple stock. You can be in America, you can be in Africa, you can be in Asia. It is still the same price.

[Justin]

That's right.

[Neil Giussani]

Real estate even you go 10 miles and it's a whole together different ballgame. Right. So real estate is, you know, that actually very, very different than any other investment So I personally believe there's always opportunity in real estate. You need to just, just find it. You know, you need to work hard and sometimes people are lazy. They don't want to put in the efforts. You know, you need to.

[Justin]

I agree.

[Neil Giussani]

You know, you need to, you know, really, really work hard.

[Justin]

It's, you know, this is one of my favorite subjects, to the point I created this podcast because I want people to understand financial literacy. I want them to understand the things that you know. Again, make sure you are reaching out to Neil, before we end here, I want to know a little bit more about what you would advise someone starting the new entrepreneur. I'm going for it, Neil. I'm ready. I'm hungry. What if you could grab that person, sit them down for a cup of coffee and really give them the lessons financially? Here's what to do. Here's how you start. This is how you should be thinking. What would you suggest to that person?

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[Neil Giussani]

Is that guy with the binoculars watching us?

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[Neil Giussani]

So I would say three, you know, main area. So one is this, you know, I'm not sure you know Chet Holmes. But yeah sure Chet Holmes passed away now but he's to say anybody can make a good living by working half day and half day meaning 12 hours. Okay. So meaning number one is you need work, you need to, you need to put the hours. So that's number one. Number two is being best at what you do. You want to know more than anybody else. I don't care if I know more than you about some sports or some other stuff, but whatever I do for a living, I need to know more than anybody else. So being best at what you do, I guess. Right. Third thing is also very, very important is your ethics. You don't want to compromise your ethics because end of the day when you don't have a lot more money, you think so money is the goal, but goal is not money. Goal is to be happy and the happiness comes when you do it right away basically. So these are the three things you know that I personally believe. Diligency always pay so you can be average person and if you're putting the efforts you will outsmart the other smart people if they're lazy. Right. So that the other so coming back the hard work being best at that time actually what you do and being ethical that's been said on the financial side, I would probably say create the single member LLC initially. You don't need to go crazy do that one. Once you start seeing the traction, once you see the revenue once you're 100,000 plus then you can probably elect as the S Corp or so if you're buying the other real estate for other reason you can do that other many single member LLCs. And obviously your show has talked quite a bit and I'm sure your viewers knows about that one. So I'm not going to go about jurisdiction and so on and so forth basically. But yes, those are things but I would probably say don't worry about these that money and taxes first worry about creating a problem of tax meaning creating a problem of real revenue. That's very hard. You know that one, you know, you understand that you're actually becoming successful in business. It's not easy.

[Justin]

No, it takes a lot of work.

[Neil Giussani]

It is very.

[Justin]

And a lot of times you become an overnight success because you did all this work when no one saw you. And all of a sudden you became successful enough that you had got notoriety.

[Neil Giussani]

You're.

[Justin]

And they're like, man, what an overnight success. And you're like, I've been eating for a decade.

[Neil Giussani]

Bingo.

[Justin]

And it's not, it's not that easy. The last one, I think this is a fun topic because everyone talks about it, but talk to us about the tax write off of the cars. 100. What is the 176 or 179?

[Neil Giussani]

Right down.

[Justin]

So, so like I just bought a new Range Rover. Okay, Exactly. So it's over £6,000. But exactly how does that write off? Because some people have the mystery misconception. Again. Let's just say my, my, my payment is two grand. Do I get to write off all two grand every single month or is it just the interest of the principal?

[Neil Giussani]

So, so, so are you buying or you are leasing? Right, right, right. So if you're buying, ideally what you should do so that other, you know, if it is for 100% business purpose. Right. Basically, yeah. So you can take the, you know, 100% write off, basically note that the entire, entire value so that you bought it. Yeah. So it doesn't matter you're paying cash or you're financing. Let's say value of a car is $150,000, you're taking rights off for the $150,000. Simple as that. Because it is for a business, basically. So that's what it is. Now that other people don't realize that if you're not utilizing for business, then there's an issue, basically. Right. So that's where, and this is the.

[Justin]

Gray area we talked about before.

[Neil Giussani]

This is where the gray.

[Justin]

How do you prove it? How many miles, where did you go? Like now this is. I go round and round with my accountant. It only matters if you get audited.

[Neil Giussani]

Correct?

[Justin]

Correct. If you, if you get caught, if you're going to be pushing the lines like we were talking about off camera, this thing over here might actually catch you. It may not be the car thing, but this thing that you did over here, you didn't even think about.

[Neil Giussani]

Correct.

[Justin]

Caused the red flag. The IRS says, hold on, so and so did this thing over here. Meanwhile, you're trying to push the lines over here. They don't catch. But now they're going to go look at Everything.

[Neil Giussani]

Exactly. In fact if you look at that one, you know that are the audit, you know, statistics. One of the high audit area is people who makes less than $140,000 and takes you know, deduction on their schedule C which is, which is car or you know, business Travel. Business Mill.

[Justin]

$100,000 on Schedule C. Yeah.

[Neil Giussani]

So you need to be very, very careful. So that actually this is say Babel is in a detail give the record and that's where it gets harder. So when you are small you can keep the records but once you are making lots of money, you don't have a time to get the receipt for the 200 dinner you had with your actual prospect. Basically you don't basically. So that's where it gets harder. But when you're actually starting out, I would keep the receipt of everything. I would probably take a quick picture, write it down.

[Justin]

There's apps like expensify something that make it a little bit easier something.

[Neil Giussani]

Yeah, something like that one. As long as you have the detail that's going to help you basically. But that is what I would say and that actually we did talk, you know, off camera. There are so many legal strategies available. So you know, you probably don't need to push to the gay area. Yeah it's a gray area because if you can get it, you know, everything legally and ethically, why need to go there? You know, basically, you know, you can do, you know, depreciation based strategy. You can do some cheatable based strategies that are also extra profound amount, you know, once you have some money basically.

[Justin]

So as you're in my community of all the the guests and most of my guests are high income earners, what would be and this is where we'll leave it, last question. What would be your top, your biggest tip for the higher income earners making? Let's just say north of 500,000 most likely making. What's the first thing you'd say guys, you need to be looking at this if you aren't so.

[Neil Giussani]

So I would look at depreciation as the first. You know now that as I mentioned once you cross 600 and extra 26,000. So meaning if you're making $2 million depreciation can only give you 626,000 if you are pure W2 earners. Basically if you are, if you're a business owner you can get as much as you want. Right. So then you stack on top of that one is some yangsha chet strategy. Charitable strategy is very, very powerful. And that other you feel good as well, because you know that you have been fortunate. You know, God has given you something. So by doing good, you are able to take some, you know, hefty deduction for yourself. So I would.

[Justin]

Charitable deduction. So you write a check to whatever charity. What's the write off?

[Neil Giussani]

No, that actually you can do so many other ways, so many creative ways so that actually charitable donation can be, say for example, in the form of, of writing a check to charity directly. Right. Number two could be donor advice fund. Number three, you can create a trust, you know, Krats and Cruts. Or you can create your own foundation. Right. And the other one is you can also become part of some LLCs and you can get multiples of your money. You buy at the early stage, you buy at the lower price. When you're actually donating, you're getting multiple of that one. It is very, very attractive. So there's so many wonderful strategies.

[Justin]

I'm glad we ended with because this is a perfect reason me to say, go get a hold of this man right now. There's just so many great strategies that like, because I come from real estate, it becomes always top of mind. But for people who are out there making money, and even if you're about to make money, understand what you have in front of you. And so, Neil, I really appreciate it. Make sure you follow Neil Gasani everywhere. What website can they go to? If you want to push them to.

[Neil Giussani]

A website, they can go to neiljasani.com N E I L J E S A N I dot spell I appreciate you, brother.

[Justin]

If, if this was helpful to you guys out there and you're like, wow, I didn't know that. Make sure you like this and make sure you share this episode with least two of your friends. We'll see you on the next episode.

[Neil Giussani]

You are the best, Justin.

[Justin]

Thank you.

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[Neil Giussani]

Is that guy with the binoculars watching us.

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