Jul 20, 2021 · 32m · we-live-to-build
Why Property Investors Never Pay Tax — And Now I Don't Either
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of the "We Live to Build" podcast, entrepreneur Stephen Keery joins host Sean Weisbrot to share strategic insights on founder wealth diversification, harvesting secondary equity, and leveraging real estate and tax-saving mechanisms for financial resilience.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Sean holds 27.7% of the talking time here. How this is scored →
Sean as informed peer 3.9 Guest teaching 5.0 Guest disagreement 1.2 Sean pushing back 1.7
speaking balance: gold is Sean, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 25:23 Direct correction on Trump's tax avoidance strategy
Stephen directly dismisses Sean's premise that Donald Trump pays no tax by losing money, countering that it is entirely through intentional real estate debt and accelerated depreciation.
Hardest push from Sean ▶ 20:01 Host challenges inflation timeline and CPI validitySean forcefully interjects to argue that inflation will hit much sooner than 10 to 15 years, arguing the CPI basket is manipulated and economists are misleading the public.
Biggest teaching moment ▶ 25:26 Masterclass on depreciation and tax incentivesStephen systematically educates Sean on phantom tax deductions via building depreciation and 1031 tax deferrals, showing how tax law incentivizes housing development.
Sean holds their own ▶ 20:01 Host demonstrates macroeconomic analysisSean exhibits deep domain knowledge by citing money printing statistics, GDP percentages, and limitations of the CPI calculation basket.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Sean as informed peer | Guest teaching | Guest disagreement | Sean pushing back | Why |
|---|---|---|---|---|---|---|
| Stephen Keery's Journey from Tech Startup to IPO | 3 | 4 | 1 | 1 | Sean asks Stephen about his background and philosophy on planning for post-startup wealth. Stephen shares his journey from early bootstrapped tech startups in Australia to an IPO and his approach to secondary sales. | |
| Managing Secondary Equity Sales and Founder Compensation | 4 | 5 | 1 | 2 | Sean asks targeted questions about investor pushback and founder dynamics around taking secondaries. Stephen explains the non-traditional Australian angel ecosystem and how they aligned co-founder incentives. | |
| Nurturing the Startup 'Baby' and Planning Founder Payoff | 5 | 3 | 0 | 1 | Sean shares his personal founder journey, delaying salary to fund runway until Series A. Stephen validates Sean's approach using the metaphor of nurturing a startup like a baby. | |
| Entrepreneurial Naivety, Failure, and the Long-Term Journey | 4 | 3 | 1 | 0 | Both host and guest bond over the necessary naivety and optimism required when launching early-stage companies and managing timelines. | |
| Building Cash Flow and House Hacking with FHA Loans | 2 | 6 | 1 | 1 | Sean asks about the capital required to enter real estate. Stephen breaks down house-hacking mechanics and leveraging FHA 3.5% down-payment loans. | |
| Inflation Hedging, Fixed-Rate Debt, and FHA Requirements | 6 | 5 | 2 | 4 | Sean pushes back on Stephen's conservative inflation timeline, citing CPI manipulation and money printing. Stephen agrees and explains how 30-year fixed debt acts as an inflation hedge. | |
| Using Margin Loans to Avoid Capital Gains Taxes | 2 | 7 | 1 | 1 | Stephen explains margin loans against equity portfolios as non-taxable liquidity events, warning about margin call risks while Sean asks clarifying definitions. | |
| Real Estate Tax Loopholes: Depreciation, 1031 Exchanges, and Installment Sales | 4 | 8 | 3 | 3 | When Sean attributes Trump's low tax rate to running businesses at a loss, Stephen firmly corrects him, detailing cost depreciation, 1031 exchanges, and installment sales. | |
| Hard Assets, Crypto, and Empowering Modern Entrepreneurs | 5 | 4 | 1 | 2 | Sean and Stephen discuss crypto and gold as alternatives to fiat before Sean asks why Stephen had to pay US taxes, prompting a quick tax-residency breakdown. |
Statements from this episode (14)
Stephen Keery's online directory startup IPO'd at a $315 million valuation.
“So look, we grew that IPO on the Australian stock exchange in November last year, and then we had a market capitalization of three hundred and fifteen million dollars.”
Stephen Keery notes most Australian Rich List members built wealth in property.
“In Australia, I'm from Australia originally, and we have the BIW Rich List, you know, sort of like the Forbes list, and if you look at that, most people made their money through property or held their money in property.”
Stephen Keery equates founder secondary liquidity to securing an insurance policy.
“Taking a secondary sort of like an insurance policy. Like you don't want to cash out your insurance policy. You pay it because you should have it. You don't want to use it. And for me, selling some of those shares just meant that if things went bad, at least I…”
Stephen Keery says investors block major secondary liquidity to ensure founder commitment.
“Investors are coming in and they're putting good money in. You can't be pulling out too big a chunk of your equity because They want that skin in the game.”
Sean Weisbrot will use Series A funds for four years back pay.
“I haven't taken a salary yet, although I'm planning on taking some of the money from the A round to cover my back pay. It's been three years. By the time we get to the A round, it'll be four years where I've had no income, which I would like to get paid back f…”
Stephen Keery recommends house-hacking multifamily properties with FHA loans to eliminate rent.
“Buy a duplex or a fourplex with an FHA loan, live in one of the sides, rent out the others. If you do that right, you can generally live rent free. You basically eliminate your rent. You know, your FHA loan, you need 3.5% down.”
Stephen Keery predicts inflation will erode 30-year fixed mortgage debt.
“If you look as well, like the government's printing massive amounts of money, right? So if you can get a fixed 30 year interest loan, what will happen is I believe in 1015 years, you know, you're going to see some amount of inflation. So even if the property d…”
Stephen Keery buys discounted real estate with cash and refinances long-term debt.
“And I've been turning cash into property and I buy them really well. So I get discounted properties, but then what I'm doing is I buy it cash or I get that discount. And then what I do is I refinance, I add a 30 year debt on it.”
Stephen Keery uses margin loans against his equity to avoid taxable events.
“So my next thought is I'm not going to sell more shares, but I am going to get a margin loan because a loan, it's not a taxable event.”
Stephen Keery limits margin loan borrowing to 25% to prevent margin calls.
“So if they lend you 50%, Don't take 50%. Take like 25%. Have a threshold so you're not forced to sell the shares.”
Stephen Keery predicts the Biden administration will restrict 1031 real estate exchanges.
“One thing they are talking about changing, and I think this government will change it, Is a thing called a 10 31 exchange and a 10 31 exchange basically means that you can sell a property and you can defer the capital gain”
Stephen Keery utilizes installment sales to offer sellers deferred tax benefits.
“So that's an opportunity for me. I'll try to buy more properties by installment sale.”
Stephen Keery expects the Biden administration to eliminate the step-up in basis.
“So actually passing on was actually a good way to get a new basis. That is very likely to change as well under this administration.”
Stephen Keery argues cryptocurrency wealth empowers early adopters to launch new startups.
“I think crypto is enabling a bunch of, you know, new entrepreneurs because those early adopters are all techie young people, right? And they've built wealth. So they can start companies. They can do things. And I think that's really good for society.”