Can Everyday Americans Use the Same Tax Loopholes as Trump?
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G. Brian Davis
5 min read
Breaking with presidential tradition, President Donald Trump refused to release his personal tax returns to the public. That sparked a bitter legal debate a few years ago, eventually resulting in him being forced to do so.
It quickly became clear why President Trump didn’t want to share them. In some years, he paid no federal income taxes at all, and Bloomberg reported that the highest effective tax rate he paid during the published years was just 4.1%.
Real estate investors can deduct the value of the building itself, spread out over time.
“Depreciation is one of the biggest tax advantages in real estate,” said Austin Glanzer, owner of 717HomeBuyers. “It allows investors to deduct the ‘wear and tear’ on a property, even if it’s actually going up in value. It’s a strategy used by major investors like Trump, but everyday Americans can use it too.”
This deduction offsets their rental income and other investment income, such as dividends or capital gains.
Residential real estate investors divide the value of the building by 27.5 and can deduct that each year for the first 27.5 years of ownership. Commercial investors must spread the depreciation over 39 years.
That said, real estate investors can accelerate that depreciation through techniques such as cost segregation. Many parts of the building, such as appliances, can be depreciated much faster. That lets investors take a larger deduction in the first few years of ownership.
You don’t have to go out and become a landlord, either. By investing passively in real estate syndications, you get all the tax benefits without the headaches. Consider joining a real estate co-investing club to go in on these with other investors.
The tax code allows real estate investors to swap a lower-cost investment property for a more expensive one, deferring capital gains taxes until they sell the new one.
These come with some hoops to jump through, however. Investors have to hire a qualified intermediary to handle their proceeds and file the legal paperwork, identify a new property to purchase within 45 days of selling the old one and close on the new one within 180 days.
Long-Term Capital Gains
The wealthy earn a higher proportion of their income from capital gains from investments rather than earned income.
Arron Bennett, CEO at Bennett Financials, said, “Capital gains — profits from selling assets like property or stocks — are taxed at much lower levels than ordinary income. Trump has made savvy investments in real estate and stocks, setting himself up to profit from tax-favored treatment of investment returns.”
To take advantage of the lower long-term capital gains tax rates, you have to hold the asset for at least a year before selling.
Borrow, Don’t Sell
Sure, you could sell an asset to cash out its value. But then you’d owe capital gains taxes.
What if you borrowed money against it instead?
Imagine you buy a rental property with a 15-year mortgage. Over 15 years, you collect a bit of rental cash flow, and your renters effectively pay off your mortgage balance for you. After 15 years, your property has appreciated by hundreds of thousands of dollars. You want to cash that out, but you don’t want to pay capital gains taxes.
So you take out a new 15-year mortgage and do it all over again. You get to cash out the equity, you get to continue collecting cash flow, and you get to write off the mortgage interest as an expense. Win, win, win.
Mix Business and Pleasure To Max Out Deductions
No, you can’t just claim that the Vegas family vacation you took was a business trip and write off the expense. Unless you actually do some business on the trip.
Imagine you attend a conference for part of that family vacation. Or you meet with an important client or supplier. Now you can make a defensible case to the IRS that it was, in fact, a business trip if they ever audit you.
Carry Forward Net Operating Losses
Businesses have up years and down years. Sometimes, they manage to show losses on paper even while earning money. Look no further than the business deduction example above.
“One of the loopholes that President Trump has used to reduce his tax burden is carrying forward a net operating loss (NOL),” said Kari Brummond, accountant at TaxCure. “If you have an NOL, you can carry it forward indefinitely and use it to offset up to 80% of your income.”
Brummond helps illustrate how it works with an example. “Say you claim an NOL of $100,000 in 2025. In 2026, you have $50,000 of income. The NOL offsets $40,000, so you only pay taxes on $10,000 of income, and you still have $60,000 of your NOL to carry forward for future tax years.”
Avoid Taxes With Trusts
In 2025, the estate tax exemption rose to $13,990,000, per the IRS. But it may fall down again if the Tax Cuts and Jobs Act provisions expire, and many states impose their own lower exemptions.
Bennett points out that the president has an answer for that as well. “Trump has employed trusts to keep his assets out of reach and limit taxes. Trusts allow transferring wealth to future generations without the use of estate taxes.”
The benefits don’t end at taxes, either. “They also grant protection of assets against lawsuits. Many high-net-worth individuals utilize these tactics to safeguard assets and reduce taxes on the assets.”
You don’t have to be ultra-rich to take advantage of the strategies that Trump uses. Still, some of these cost more money to set up than others. Hiring an attorney to structure a trust for you costs real money and comes with significant risks, so put that last on your priority list for reducing your tax burden.
