Legal Tax Shelters For Millionaires

Start With Real Estate Depreciation.

Legal Tax Shelters For Millionaires: Millionaires often begin with real estate because it offers substantial tax benefits. One significant advantage is depreciation. Surprisingly, you can deduct property value loss, even as your asset gains value. This helps offset rental income, lowering your overall tax bill. As a result, many use platforms like Fundrise or Roofstock to find properties. Additionally, consult IRS.gov to understand the exact rules.

Contribute To Retirement Accounts.

Next, consider maxing out retirement plans. These accounts reduce taxable income now and grow your wealth over time. For instance, a Solo 401(k) allows larger contributions than traditional IRAs. Furthermore, high earners can use backdoor Roth conversions. Because these avoid income limits, they remain a powerful tactic. Visit Vanguard or Fidelity to explore available options.

Create A Tax-Advantaged Business.

Forming an LLC or S-Corp brings serious tax perks if you operate a business. You may deduct travel, office space, or even meals. Moreover, employing family members allows you to shift income into lower brackets. Due to the Section 199A deduction, you might save up to 20% on qualified income. Always review updates on IRS Section 199A.

Use Charitable Trusts Strategically.

For philanthropic millionaires, charitable trusts offer tax relief and legacy-building benefits. For example, a Donor-Advised Fund (DAF) gives an upfront deduction but allows future grantmaking. Meanwhile, Charitable Remainder Trusts (CRTs) let you convert assets into lifetime income while reducing estate taxes. As always, platforms like Fidelity Charitable and Schwab Charitable simplify setup.

Invest In Tax-Free Bonds.

Meanwhile, municipal bonds deliver steady, tax-free income. Unlike regular bonds, munis avoid federal taxes—and sometimes state taxes, too. Therefore, they’re attractive for those in high tax brackets. Since they’re relatively low-risk, they suit conservative portfolios. For current rates and expert tips, check out MuniBondAdvisor.

Use Life Insurance Wisely.

Many millionaires also rely on permanent life insurance. Not only does it grow tax-deferred, but you can borrow against it tax-free. Additionally, strategies like premium financing maximize your leverage. Some use indexed universal life (IUL) to combine safety with upside potential. Companies such as Guardian Life and MassMutual specialize in these advanced tools.

Review Your Plan Annually.

Finally, millionaires never leave tax planning to chance. They meet with advisors mid-year to refine strategies. Because tax laws change, staying proactive is essential. Therefore, legal tax shelters for millionaires require both foresight and flexibility. By planning now, you protect more of your wealth later.

To learn more, visit tax tips.