2. Was Donald Trump out $916 million from his own pocket in 1995, or did he owe money to creditors he had borrowed from?
Tax experts said it is highly unlikely that Trump really lost $916 million of his own money, a huge sum by mid-’90s standards, even for a big real-estate developer.
“Based on everything Trump has ever said about being the king of leverage, it would be unlikely there was no debt,” said David Herzig, who teaches tax law at Valparaiso University Law School in Indiana.
It’s more likely that Trump used bank financing to buy his casinos and other properties — and was later forced to sell those investments at a fraction of their purchase prices, several experts said.
That’s where the complicated law governing real-estate investment comes in, with its many tax breaks and benefits that could help someone like Trump recover from huge business losses.
Say a developer like Trump wanted to buy a $1 billion building and reached a deal with a bank to put up $300,000, while the bank financed the rest. If the investment failed and the property was sold at a loss, the bank would absorb the majority of that loss.