Tax Angles & Quantum Wealth

by | Apr 23, 2010 | Archives

A reader asked the question about tax angles and the question led to thoughts about quantum wealth.

Yesterday’s message Quantum Wealth Evolution pointed out that when we do what we love we enjoy greater success.

Having tax efficiency is a big part of quantum wealth.

Below is one of the best ways to earn and legally avoid tax.

First, the reader’s question.

Dear Gary,  May I ask your opinion?

It used to be that owning income real estate in the US was the best tax shelter, unless one owned a business.

What, in your opinion, is the best type of investment today that provides a dependable income and a tax shelter? (if I can find the right investment type, I need to boost my income by ~ $1000 per month and yet have it shelter most, if not all, of this increase in income)

Thank you very much.

I’ll answer the tax question in a moment.  First, let’s outline the history behind the answer.

Recently a friend, Don Mahoney, sent me this note. Don, Merri and I go way back… over 20 years.  We do not see each other very often.  It’s funny.  Our paths seem to always narrowly miss… yet we always seem to be on the same track.

Don wrote:

Might I beg a favor?

Dear Family and Friends,

I have embarked on a very challenging journey and would like to ask your help. I’ve bought a house in upstate New York. It’s a historic house, known as The Andrew Mann Inn in the Town of Unadilla, New York, in Otsego County, on the Susquehanna River. It’s listed on the National Register of Historic Places. Built around 1795 by an architect named James DeCalvin, it was designed to be an inn to serve the Catskill Turnpike, which terminated in Unadilla. Apparently it was one of the first homes built in the area.

The reason I’m asking for help is that the house is now in utter disrepair, and if nothing is done within one or two more years it will be beyond saving. Some parts of it are already beginning to collapse. Some parts are even unsafe. I figure it will take a good three to five years and a few hundred thousand dollars to renovate it. The banks won’t loan on it and there is virtually no state or federal money available (wonder why?). So I’ll have to pay cash on the barrelhead for every nail.

So I decided I’m not too proud to ask for help. Whatever I get I get. The local media has said they’ll cover it when I get up there from Florida, so I’ll probably get a little support from the area. It’s a magnificent building, and dates almost to the Revolutionary War. I invite you to take a look at the website, and if you’re in the area, dew drop inn. My friend, Cuban artist Frank Monteavaro, is coming up to help, so he’ll be in the West wing with a working studio. He does everything from painting to sculpture, so it should be interesting. I may set up a little coffee shop while we’re there, too.
Anyway, if you can help with $5 or $10, it’s only a minute to put it through the website, and it goes straight into the house fund.

The whole story and photos are on the website, so drop in and take a look. It used to sit on the main route west from Catskill and Albany. At one point it was the frontier, until development went past it. You can almost hear the horses and wagons that used to pull up there. Ghosts still dancing the minuet in the ballroom.

Thanks for reading, thanks for looking if you do, and many thanks if you donate a couple of dollars. You’ll be helping to put some local craftsmen to work, so they thank you too!  All help is welcome, all media is welcome.

Thanks again and best wishes,

Donald Mahoney and family

My reply to Don gets down to the essence of quantum wealth… doing what you love… and being tax efficient.  This provides the perfect answer for the reader who wants to reduce tax and earn an extra $1,000 a month.

I replied:


Way to go!  You are as crazy as I am.  And it seems we keep moving along similar tracks.  Can’t resist old places. We have seminars in them… the old Bel Mido in Tampa… Green Park Inn in Blowing Rock…  Mt. Washington Hotel in New Hampshire are a few. Now we have our Florida seminars in the Lakeside Inn… built and in operation since 1860… a record.

Some delegates hate this… the mustiness and creaky boards.

Yet we cannot get enough of it… restoring the history.

We are currently redoing a big old place… (not so old as yours) in Umatilla, Florida. We have done this all our lives.

I was originally hooked when I bought this old manor house called Forwood near Minchinhampton, Gloucestershire.


Princess Anne was our next door neighbor at Gatcombe Park. She nearly killed me one day. I was jogging She was riding. There was a blind corner.  Construction there began in the 1500s and ran into Victorian… what a mishmash.  And the cost of Cotswold Stone for the roof. Ahhhh!

Then we redid a 100 year old house in Naples, Florida…. one of the first ten built there.


We lived there and fixed slowly almost 20 years.

Then two old Blue Ridge farm houses…


on a creek. We still have this one.

that emerged from this.

The crown jewel though has been the 180 year old colonial hotel in Cotacachi, Ecuador.


This is going strong and profitable…

You would have thought that would be enough but… no… we are doing it again… restoring a 16 acre estate… orange grove and all…we are beginning to look really good here now…


in central Florida.  This one is not so old… but was a wreck anyhow.


Sometimes we cannot understand ourselves!  Doing these crazy things but an old friend once wrote to me and explained when I told him about our latest restoration venture: “I love the metaphor. It echoes your and Merri’s stated love of old things and bringing them into service!”

Maybe that’s it… bring old things back into service… old houses. ancient knowledge about better living… even old hotels to live better in.  There is a bug… more than a cockroach… in our bonnet somewhere.  Plus it is fun and pays its way as well.

Anyway, there you have it… we have old places in North Carolina, Florida and Ecuador right now…. all brought from wrack and ruin to serving quite well.

Yours is a worthy cause and I’ll write about this if you like in our Smalltown USA focus.  We have a over 20,000 readers so perhaps it’ll help.

Any ideas on what to say and coordination welcome.



Merri and I love fixing up old places… finding good bones… restoring the flesh and adding our touch. Obviously Don Mahoney does as well.  This is a great way to earn extra income if you love real estate and bring old things back into service.

And the US government in its infinite wisdom has made the process of doing this tax free.

I have told each of my children… if they love the idea that the most tax efficient way to live is to buy an old house… live in it and fix it.. then sell it after two years.  Capital gains (up to $250,000) on your residence is tax free.  Where else can you earn $125,000 a year and not owe a penny of income or capital gains tax?

A variation in the theme is to do as we have done in Ecuador. Buy an old hotel or B&B… live in it… fix it up and rent.  You have some tax to pay then… but  not that much.

There are three keys in the beautiful melody of this theme… love…  value and tax savings.

If you love fixing up… there are incredible values on the real estate market now. It is difficult to sell new homes in good shape… much less places with problems.  You get extra low prices and yet can increase value dramatically with your energy and a can of paint!  Few outlays bring as much return on investment as a small… a few bucks a gallon… investment in Sherwin Williams, Behr or Valspar.

The tax benefits are a great added bonus.

Flexibility is another big benefit for those of us who love to be fixer uppers. Here we are…Merri and me… in our North Carolina heaven… our Florida lakeside grove and in Ecuador in the mountains and on the sea.  You can do what you love and earn… tax free or on a low tax basis almost anywhere!

See more about this idea in Ecuador.

Real estate in Ecuador can also offer tax advantages. See a Mindo Ecuador house for sale here.


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