Good Versus Bad
As a general rule, good debt,good expenses, and good losses all generate additional cash flow for you.
For instance, debt taken to acquire a rental property, which has a positive cash flow each month, would be good debt.
Likewise, paying for legal and tax advice are good expenses if they save you thousands of dollars in reduced taxes from tax planning.
An example of good loss is the loss generated by depreciation from real estate. This good loss is also called phantom loss because it is a paper loss and does not require an actual outlay of cash.
The end result is a savings in the amount of tax paid on the income offset by the loss.
For instance, debt taken to acquire a rental property, which has a positive cash flow each month, would be good debt.
Likewise, paying for legal and tax advice are good expenses if they save you thousands of dollars in reduced taxes from tax planning.
An example of good loss is the loss generated by depreciation from real estate. This good loss is also called phantom loss because it is a paper loss and does not require an actual outlay of cash.
The end result is a savings in the amount of tax paid on the income offset by the loss.
