This Is How the Rich Avoid Taxes (Legally)

The rich people keep on screwing us. He didn't pay any federal income tax, so that makes me smart. But maybe they know something we don't know. Elon Musk paid zero in 2018. Jeff Bezos paid zero federal income taxes in two recent years, 2007 and 2011. Michael Bloomberg paid zero in taxes in recent years. George Soros did it. Number one cheat code that the rich are using every single day and for the last several hundred years is publication 537. Now, publication 537 has just been re updated in 2024. So this is fresh, fresh, fresh, fresh. Publication 537 of the IRS code talks about how you can go and buy real estate with no money down, businesses with no money down without any credit and without the use of banks. So Publication 537 is all about creative finance. Now this is beautiful because a lot of people go, oh man, this Pace Morby guy is such a scam. He's buying RV parks and mobile home parks and multifamily. He's doing business acquisition and he's saying he's not using bank banks and he's doing seller finance, guys. Publication 537 of the IRS code talks about installment sales, which is creative finance. Rich people are using creative finance to acquire businesses, acquire real estate, and go and basically take over the world. They're doing hostile takeovers. Private equity are doing the same exact thing, and they are buying things with cheat codes. The cheat code of the world of buying and acquiring things is creative Finance. If you want to learn more about that. My name is Pace Moreby and that's all I focus on, is acquiring things with creative Finance. So start with publication 537. This is cheat code number one. Now to highlight this, I want to tell the story of a house, a house that I bought on a couple years back. I buy a property in Mesa, Arizona from a seller named Dave Byarski. Dave, shout out to you. He's awesome. He always watches the YouTube channel. Dave was in the process of buying another home and he says, I can't sell the house for what I owe. I. I owe $387,000 and I just can't seem to get an offer to pay this all the way off. And I said, hey, Dave, I'd love to take this house over. Let me buy it. Subject to. Subject to is taking over an existing mortgage without a credit check, without permission from the bank, without any credentials. And I was in this house with no money out of pocket. My interest rate was roughly 3%. Now here we are in 2025. I'm still buying properties at 2, 3 and sometimes even 0%. This is the absolute cheat code of all cheat codes. There's going to be other people that talk about, oh, the big beautiful bill and this and that. Guys, they're not talking about how to actually buy real estate and use depreciation. They're not talking about how to use these cheat codes. The number one way to use all four of these cheat codes, starting with Publication 537, is buying these things with Creative Finance. Only pay attention to people that show you how to utilize this. So if you want to go find deals just like this, I'll put a link in the description down below that shows you guys how to go and find these types of deals. In fact, I'll give you a link to an amazing ebook called sub2 or subject to a to Z that walks you all the way through a deal. Exactly how to do and take advantage of this exact publication. So I buy this property on Sterling. I buy it for 387. I'm $0 out of pocket. How? Because I took over somebody's existing mortgage. 387. My mortgage payment was now $1,900. I was paying that mortgage to Wells Fargo. That was still in Dave's name. Welcome to subject two. Now this leads us into part number two of Cheat Codes, which is depreciation. This has come out in Trump's big beautiful bill. That now 100% bonus depreciation is all the way back. We're back, baby. It is unbelievable. We'll make videos about it in. But what this essentially does is it makes it. So I bought this property and the IRS is now going to reward me with tax benefits so I can go and make, let's say 60, 50 to 60 thousand dollars at my job. And if I just own one piece of real estate, this one piece of real estate will wipe out my active income on other things like fixing and flipping or a side hustle or hell, even my W2 job. I can wipe out my active income from owning a piece of real estate. So think about this. Publication 537, Creative Finance. I can buy a property with no money and then that property can wipe out my active income through IRC 176 and 178. Look it up. It's the Internal Revenue cheat code. Buy properties with no money down, then use depreciation or tax benefits to pay no federal income taxes. That is how people are doing this legally. They are buying real estate or Businesses, they are then depreciating those assets, taking a loss against active income, and they are paying no money in federal income tax. Now, this leads into cheat code number three. Cheat code number three is pretty magnificent. This property I buy for 387, no money down. I get all these massive tax benefits that then allow me to avoid taxes like federal income taxes. Then this property goes all the way up in value to $680,000 in 2024. So I, the investor who bought this with no Money, have created $300,000 in value by just sitting on the property. That's called appreciation. Now, of course, that went through Covid, and that's not typical, that a property will double in a matter of just a couple of years. But what can I now do? If I sell the property and I try and take that $300,000, the IRS is going to tax me. But this is what the rich do. The rich look at this $300,000 and they go, ooh, I know what I can do. I can go and take advantage of IRC 1031. IRS says that instead of you taking that gain, if you sell that property and then you roll the profits into another property that is similar or like, for like, you can take that $300,000 and utilize it on another asset. Oh, my gosh, that's so cool. So I can avoid capital gains tax. I can avoid being taxed on the gain. So I created $300,000 in massive value. I got tax benefits, and then I can 1031 and exchange that money into another deal. Okay, great. So that is exactly what I did. This property on 2720 North Sterling, I bought it for no money. It goes up in value 300,000. I sell it on the real estate market, and instead of taking this $300,000 in my pocket, I sell it and I roll it into an RV park. So I've got an RV park that we just closed in Big Spring, Texas. That RV park in Big Spring, Texas, I bought that also utilizing Publication 537, which is creative Finance. I'm buying it on seller finance terms. So I'm utilizing 300,000 as my down payment. I'm then buying the rest with the seller finance, which is incredible. And I then get more tax benefits. The beautiful thing is now I can go into cheat code number four. So I make $300,000 basically out of thin air, buying a property with Creative finance using Publication 537. I then get the tax benefits of IRC 178 and 176, and then that gives me the ability to do the magical thing called a 1031 exchange, meaning, pace, you just made $300,000. Would you like to sell that property, take that $300,000 and then pay capital gains tax on that, or would you like to do a 1031 exchange and roll that money into another, bigger deal? They're rewarding you to keep your money invested into United States real estate. They're rewarding us. So this is not a loophole. This has been around for a very, very long time. They're just rewarding us to keep our money invested, providing affordable housing and doing other things, making America basically great again. So that 1031 exchange allows me to get in bigger deals over and over and over and over. And some people might go, well, then, when do you ever take your money if all you're doing is a 1031 exchange? All the time you're selling a property, rolling it, selling a property, rolling it. So when do you take your profits? That brings us down to one of the most beautiful things, which is IRC 1011001. IRC 1001 says that I can now take a loan against that property, and I can pull out all that equity in terms of a loan. And it says that when you take a loan against real estate, you take loans against your business, you take loans against your stock, you take loans against your Bitcoin. Think about this. I just made like $500,000 in Bitcoin in the last couple of weeks because bitcoin soared up. You know what I did? I went and took a loan against my gain instead of selling my Bitcoin. This is IRC1001. It allows you to do the same thing. So while you're complaining about rich people doing all of these things, it's a simple Google search away from you accomplishing the same thing. Now, we can hate on the rich all we want, but the reality is you don't have enough power to change the laws, and sadly, neither do I. I don't feel like your vote counts, and I don't feel like my vote counts. I feel like all these people are making these rules, and the least we can do is just follow in their footsteps. If Trump is doing George Soros is doing it and all of these rich Republicans and Democrats are doing it, they're making the laws, they're putting these publications in right in plain sight, and if you do not take advantage of it, who is going to lose is you. So IRC 1001 allows these people to just continually take loans against their assets over and over and over. They never take their gains, they just borrow more money. Robert Kiyosaki is very famous for talking about this. He says, I've never taken any profit. Debt is money today. And so when I acquire an asset, I use debt. It's the magical financing. I pay no taxes, I just keep taking new loans and then my tenants pay those loans off for me. Seven years later, the property's gone up in value, my tenants have paid it down and I've got another chunk of money that I can then do another cash out refinance. So all the way from Publication 537 with Creative Finance to then depreciation, to then tax benefits like the 1031 exchange, all the way down to IRC 1001 are the legal ways that all of these people and these politicians are avoiding federal income taxes. Now I pay taxes like property taxes, sales tax, employment tax and other things, but I stopped paying federal income taxes a long time ago. I suggest you guys do the same thing. And if you want to learn how I'm buying properties with Creative Finance, we've got an incredible e book down below. It's called sub 2A to Z. Click on it down below and it will show you exactly where I'm getting these deals, how I'm negotiating it and how you can do the same thing. We'll see you guys in the next video.