Tommy Dobczyk shows how a $1.6 million down payment on a $9 million building creates tax advantages. The IRS lets you depreciate the building over 39 years, which shields income from taxes and improves cash flow on the property.
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On that asset where we talked about Michael buying this building, Michael bought the building. When Michael bought the building, let's just say Michael bought the building for $9 million, or I'm sorry, let's say Katia bought the building. We're going to, because we're going to use Michael's example. Katia needs, is going to buy the building for $9 million. She's going to put the $1.6 million down as the down payment, right? What she can do is because it's a building, she can, it's a liability. Right? Like we said, machinery, equipment, building, land is 100% because it's going to appreciate, but a building depreciates. Why? Because you got maintenance and issues, right? So with the land, with the building going to depreciate, they'll give Katya 39 years to spread out $9 million.