blended tax rate

 

Real Estate Investor Rob Rowsell shares his wealth building formula as well as useful financial terms. Become an expert at investing wealth and building your portfolio with this crucial money glossary.

Wealth Building Formula - Useful financial terms will help you complete your financial educationFollow Rob’s Wealth Building Formula By Applying Financial Glossary Terms

Financial Freedom Formula

Continuing from last week’s lesson, Rob explains the most requested component in his overall wealth building formula – the Financial Freedom Formula. Start with your Horizontal Income number and then divide it by your Vitality Factor. Ideally, your passive income amount exceeds your cost of living. You are financially free if the solution to this formula is greater than 1.3. This amount accounts for a 30% blended tax rate. 

The Role of the Blended Tax Rate in the Wealth Building Formula

When we talk about a Blended Tax Rate, we mean the average rate the government taxes you on all of your sources of income. You may pay 40% on your own W2 as a business owner, and you may be taxed 20% on your other investments. It is your duty to know what all of these tax rates average out to!

What Is Tax Drag?

Rob defines Tax Drag as the wealth draining resistance of taxes on your investments and earnings. Obviously, you want to avoid this at all costs. If you work with your CPA on legally reducing your taxes owed, you can then invest those funds instead of paying them to Uncle Sam. Don’t throw your money away needlessly – earn compound interest by investing it!

Join Our Community

Do you own multi-family properties? If not, do you aspire to one day? Then you should consider joining our online discussion group, the ATL Inner Circle Community! Each month, Rob Rowsell will teach you what you must do in order to build wealth in the real estate business. It’s not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Sign up today!

How does a successful real estate investor calculate their blended tax rate? Let Addicted to Life’s Rob Rowsell teach you the secret formula so you won’t pay more taxes than you have to!

Blended Tax Rate for Real Estate InvestorsRob Explains Blended Tax Rate For Real Estate Investors

Let’s do the math! Rob lays out a theoretical income amount for the group to consider. On a sample effective annual gross income of $400,000, Rob calculates a blended tax rate of 2%. That may sound small, but it in fact adds up to $8,000.

Jake Garcia asks our host for a clarification. Rob shows his work with a very simple equation. You start with your annual total gross income. Then divided it by all the taxes you paid at the end of the year. When you solve this equation, you will end up with your blended tax rate.

Finally, Rob makes sure to clarify that he does not hate paying taxes to his state and federal governments! Taxes are necessary for the United States to build roads, employ police officers, and provide equipment for the armed forces to defend our freedom.

As any business owner with many investments to look after would tell you, he just does not want to pay more than he actually owes by mistake. That means more cash on hand to invest in his family, his staff, and his eventual retirement goals.

Join Our Community

Do you own multi-family properties? If not, do you aspire to one day? Then you should consider joining our online discussion group, the Addicted To Life Community! Each month, Rob Rowsell will teach you what you must do in order to build wealth in the real estate business. It’s not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Enroll today!

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  • Blended / Effective Tax Rate Review
  • Homework assigned to calculate your blended tax rate for 2021
  • Augusta Rule reviewed
  • Salt Rule reviewed
  • How to underwrite a house flip spreadsheet introduction
  • How to underwrite a multi family spreadsheet introduction
  • REA Local meetings – a great place to attend