How Can You Leverage Finances to Defer Capital Gains?

In today’s fast-paced financial environment, savvy entrepreneurs are finding ways to maximize their capital and minimize financial risk. One such approach is leveraging credit effectively to raise capital while strategically deferring capital gains. As someone who has successfully navigated these waters, I wanted to share my personal journey with you. In this blog, I will walk you through my top strategies for leveraging finances and managing capital gains, based on my experiences in both personal and business ventures.

My Experience: A Personal Story on Financial Leverage

When I first began building my portfolio of short-term rental properties, I quickly realized that traditional financing methods would not be sufficient to cover the upfront costs for new investments, furnishing, and personal development. Over time, I accumulated a range of credit cards—personal and business—that offered significant credit limits and benefits. One thing that stood out to me was the ability to leverage these cards for travel, personal development, and, most importantly, my business.

Last year alone, I spent over $25,000 on travel and personal development, with the confidence that I could offset these costs by strategically managing my credit. My goal wasn’t to create credit card debt but to build credit leverage, ensuring that every dollar spent contributed to long-term growth.

One of the key moments in my journey was when I had to pause my business income for a few months while transitioning between ventures. During this time, I relied heavily on 0% interest offers from my credit cards to keep my business afloat without incurring massive financial strain. By the end of the year, I had successfully leveraged my credit to continue expanding my rental properties and avoided falling into debt traps.

The Importance of Credit Management

One critical aspect of leveraging credit is understanding how to manage it effectively. I have a total available credit of $253,600 spread across 19 credit cards (both personal and business). While this may seem overwhelming, I manage it through a system I’ve developed over the years: the credit card waterfall sheet. This sheet allows me to track balances, due dates, minimum payments, and interest rates across all my accounts, ensuring that I never miss a payment and always stay on top of my financial obligations.

For example, when carrying balances on two business credit cards, I utilize 0% interest offers on personal cards to transfer the balances and reduce interest costs. This allows me to extend the repayment period while keeping my cash flow steady. The key here is understanding which cards offer the best terms for balance transfers and which are most beneficial for everyday business expenses.

7 Ways to Defer Capital Gains

1. Utilize 0% Interest Balance Transfers
One of the best tools for managing capital is the 0% interest balance transfer offer. Cards like Citi and Discover frequently provide these offers, allowing you to move balances around and reduce your interest payments to zero for 12-18 months. It’s important to track the balance transfer fees and understand your long-term cash flow to ensure this strategy works for you.

2. Maximize Rewards for Travel and Development
While leveraging credit, it’s important to also look at how to maximize rewards for essential business and personal expenses. For instance, I’ve earned significant points for travel, allowing me to attend conferences and events that contribute to my personal and professional growth. Certain cards offer higher rewards for travel or business-related purchases, which can be redeemed for flights, hotels, or even cash back.

3. Build a Credit Card Strategy
Having multiple cards is not just about increasing credit; it’s about using each card strategically. I created a chart outlining which card to use for which type of purchase (e.g., travel, groceries, business expenses) and this helped me maximize points and minimize interest rates. Each card has unique benefits, and by understanding which is best for each situation, you can optimize your financial strategy.

4. Cover Large Business Expenses with Personal Credit
At times, I’ve used 0% interest offers on personal credit cards to cover business expenses like property furnishing and development. By doing so, I’ve deferred payments and spread them out over time, reducing immediate cash strain. It’s essential to track when these offers expire so you can plan ahead and avoid interest charges.

5. Leverage Business Credit for Real Estate
For real estate investors, leveraging business credit cards is a great way to cover property-related expenses without affecting your personal credit. Business credit doesn’t typically show up on your personal credit report, making it a safer option for those who want to keep personal finances separate from business ventures.

6. Use Tools Like Plastic to Pay Expenses
There are services like Plastic that allow you to use credit cards to pay for expenses that typically don’t accept them, such as contractors or rent. This can help you accumulate points or take advantage of 0% interest periods, especially for large one-time expenses.

7. Plan Ahead and Track Your Progress
One of the biggest lessons I’ve learned is to plan for every financial move in advance. I track all my credit card payments, balances, and due dates meticulously through my credit card waterfall sheet. This ensures that I’m not caught off-guard by interest rate changes or large payments.

Conclusion

Leveraging finances and deferring capital gains is all about being strategic, disciplined, and having a clear plan in place. While credit can be a powerful tool, it requires careful management to avoid falling into debt traps. My personal journey has shown that with the right approach, you can use credit to fuel your business growth, personal development, and even lifestyle without sacrificing your financial future.

If you’re ready to explore how you can leverage your own finances, I encourage you to start small, stay organized, and focus on building long-term wealth. Whether you’re investing in real estate, starting a business, or expanding your career, smart credit management can be a game-changer.