Year End Tax Strategies for Business Owners and Real Estate Investors
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Year End Tax Strategies for Business Owners and Real Estate Investors In this 60 minute FREE video http://www.hasslefreecashflowinvesting.com/video/year-end-tax-strategies-for-business-owners-and-real-estate-investors/ ($39 VALUE) with professional investor David Campbell, tax strategist Amanda Han, CPA, and self-directed IRA expert Kaaren Hall, you’ll learn: * Top 5 Year-End Tax Strategies to save you taxes for 2012 and beyond * Strategies to pay yourself rather than the IRS * How you can make all your own choices about your retirement investing and not rely on the stock market * How IRA investing is different than investing with personal cash * How to buy profitable real estate inside your IRA even when you are starting with a small balance * Strategies for investing in real estate OUTSIDE your IRA when all of your cash is locked up INSIDE your IRA
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Year End Tax Strategies for Business Owners and Real Estate Investors
- 1. Year End Tax Strategies for Business Owners and Real Estate Investors Kaaren Hall - President www.uDirectIRA.com David Campbell - CEO www.HassleFreeCashflowInvesting.com Amanda Han - CPA www.KeystoneCPA.com
- 2. Event Faculty AHan@KeystoneCPA.com KHall@uDirectIRA.com David@HassleFreeCashflowInvesting.com
- 3. Begin with end in mind RELATIONSHIPS IDEAS OPPORTUNITIES NOT a sales pitch NOT investment, legal, or tax advice
- 4. Disclaimers & Cautionary Notes This educational seminar is not a substitute for getting your own professional advice. This webinar is offered with the understanding that the speakers are not offering legal, financial, tax, investment or other professional advice. Any actions with regard to the information contained in this seminar should be undertaken only upon the advice and counsel of competent legal and tax and investment professionals. Receiving this information does not create a fiduciary or client relationship between you and the speaker. The information contained herein may be inaccurate and the speaker makes no representation about its accuracy.
- 5. www.HasslefreeCashflowInvesting.com Today’s agenda * Top 5 Year-End Tax Strategies to save you taxes for 2012 and beyond * Strategies to pay yourself rather than the IRS * How you can make all your own choices about your retirement investing and not rely on the stock market * How IRA investing is different than investing with personal cash * How to buy profitable real estate inside your IRA even when you are starting with a small balance * Strategies for investing in real estate OUTSIDE your IRA when all of your cash is locked up INSIDE your IRA
- 6. www.HassleFreeCashflowInvesting.com Profit ROI = Money + Time + Hassle More profit with less invested
- 7. Stay to the end for a FREE report Using a Solo 401k to avoid UDFI
- 8. U.S. HISTORICAL TAX RATES (877) 975-0975 www.KeystoneCPA.com
- 9. Tax Rates Taxes 2012 2013 Federal Income Tax 35% 39.6% State Income Tax 12% 12% Payroll Tax 15% 15% Capital Gains Tax 15% 20% Estate Taxes 35% 55% New Taxes ++ (877) 975-0975 www.KeystoneCPA.com
- 10. Brand New Taxes Unearned Income Medicare Contributions Tax ….Wow, that’s a mouthful! -Brand New Tax on Net Investment Income = Another 3.8% Hospital Insurance Tax ….Another Innovative Brand New Concept -Brand New Tax on Earned Income = Yet Another 0.9% (877) 975-0975 www.KeystoneCPA.com
- 11. The Unknown (877) 975-0975 www.KeystoneCPA.com
- 12. WHAT DO WE KNOW FOR CERTAIN? • Tax Rates Will Increase • Deductions & Credits Will Decrease • Total Taxes Will Increase in 2013 • 2 New Tax Increases Become Effective in 2013 (877) 975-0975 www.KeystoneCPA.com
- 13. WHAT IS YEAR END TAX PLANNING? (877) 975-0975 www.KeystoneCPA.com
- 14. DIFFERENT TIMES, DIFFERENT STRATEGIES OLD NEW (877) 975-0975 www.KeystoneCPA.com
- 15. INVESTMENT STRATEGIES (877) 975-0975 www.KeystoneCPA.com
- 16. Income Shifting Dell (877) 975-0975 www.KeystoneCPA.com (877) 975-0975 (877) 975-0975
- 17. Tax Efficient Profit Extraction (877) 975-0975 www.KeystoneCPA.com (877) 975-0975 (877) 975-0975
- 18. Redirect Tax Dollars to Your Retirement Accounts • Pay Yourself Rather than the IRS • Create Tax Deferred Money to Invest and Grow Your Wealth (877) 975-0975 www.KeystoneCPA.com
- 20. Roth IRA Conversion Strategies 5 Strategies to Convert with Little or No Taxes 1)Contribute to Your Roth 2)Favorable Tax Positions 3) Unused Passive Losses 4) Real Estate Tax Benefits 5) Strategic Optimization (877) 975-0975
- 21. How to Self-Direct Your Retirement Savings uDirect IRA Services, LLC is not a fiduciary and does not render tax, legal, accounting, investment, or other professional advice. If tax, legal, accounting, investment, or other similar expert assistance is required, the services of a competent professional should be sought.
- 22. Saving for Retirement • There is a $6.6 trillion deficit between what Americans have & what we need for our retirement. • $100,000 in retirement savings @ age 59.5 (assuming no growth or loss) means $396.83 a month if you live till 86.5.
- 23. Total Retirement Funds • $4.6 Trillion in IRA money $4.3 Trillion in 401(k)s $4.2 Trillion in Pensions $2.3 Trillion in Defined Benefit Plans $1.6 Trillion in Annuities $17 Trillion in retirement funds and 97% of it remains to be self-directed.
- 24. Self-Direction Why Haven’t I Heard About This? • Few attorneys are knowledgeable – About self-directed plans • Few CPAs are knowledgeable – About self-directed plans • IRS rules have allowed self-direction since IRAs were created in mid-1970s
- 25. What’s the Difference? Typical IRA Self-Directed IRA • Stocks • Rental Property • Bonds • Notes • Mutual Funds • Private Stock • CD’s • LLC’s • Tax Liens • Foreign Property • Raw Land • Etc.
- 26. What About Losses? Losses • Cannot be written off taxes • Cannot be replaced in the retirement plan
- 27. What Are The Limits? A Self-Directed IRA can invest in anything EXCEPT 1. Life Insurance Policies 2. Collectibles 1. Artworks 2. Coins 3. Collectible Cars 4. Antiques 5. Gems 6. Stamps 7. Rugs
- 28. What if your funds are with your current employer? Your plan will probably NOT allow you to self- direct Must wait until you leave the company To rollover retirement plan You can request an “in-service” transfer from your current plan administrator.
- 29. Prohibited Transactions (IRS Publication 590) • Borrowing money from the IRA • Selling property to it. • Using it as security for a loan. • Buying property for personal use (present or future) with IRA funds.
- 30. Disqualified Person • Disqualified persons include your fiduciary and members of your family (spouse, ancestor, lineal descendant, and any spouse of a lineal descendant).
- 31. Qualified Persons • Aunts & Uncles • Cousins • Brothers & Sisters • Unrelated friends • Nieces & Nephews
- 32. Prohibited Transactions • Neither you nor any disqualified people may benefit from IRA • Cannot buy, sell or exchange property between plan and – Self or – Disqualified people • Cannot provide goods, services or facilities
- 33. Self-Directed IRA - Structure • You • Your IRA • TPA • Custodian
- 34. Buying Real Estate With Your IRA Pros 1. Capital gains are tax free 2. Positive cash flow is tax free 3. No time limit for holding property 4. IRA can borrow money – Leverage your investment 5. Potential to earn a larger rate of return on invested capital
- 35. Buying Real Estate With Your IRA Cons 1. No immediate tax advantages of owning real estate 2. No deduction for capital losses 3. You are solely responsible for all gains or losses 4. You cannot replace losses
- 36. Your IRA Can Take A Loan! • Loan must be non-recourse – Upon default, lender can seize subject property only • Upon default, lender cannot – Seize other IRA plan assets – Seize your personal assets
- 37. Non-Recourse Loans • Few lenders to choose from – Must be a portfolio loan – Cannot be sold on the secondary market • Larger down payment required – 40% to 45% • Cannot personally guarantee the loan
- 38. Personal Guarantees • Personal guarantees by the IRA owner not permitted • Can be personally guaranteed by a third party – Must not be a “disqualified” person – Disqualified people are • Ascendants • Descendants • Spouse and self • And others
- 39. UDFI • Unrelated Debt Financed Income tax • Any property held to produce income is debt-financed property if at any time during the tax year there was acquisition indebtedness outstanding for the property.
- 40. UBIT • Unrelated Business Income Tax • If a tax exempt entity engages in a business that is unrelated to its primary purpose, any income derived from such business will be subject to UBIT • IRS Pub 598 • UDFI & UBIT are reported on form 990-T
- 41. Buying Real Estate - The Process • Open a self-directed account • Shop for a property • Remember, it’s the IRA that is the buyer • Custodian to sign “Offer to Purchase” • Submit a Buy Direction Letter for earnest money deposit • Funds wired to closing from your IRA • Fund & Record • Rents are made payable to your IRA
- 42. 3 Types of Plans • IRAs – Individual Retirement Accounts – What you are doing for your own retirement • Qualified Plans – ERISA controlled – Typically, what an employer provides you • Other Plans – Education – Health
- 43. Types Of Self-Directed Plans IRAs Qualified Plans Other Plans Traditional 401K/ 457/ 403b Coverdell Roth Defined Benefit Health Savings Account SEP Profit Sharing Simple Individual K Spousal
- 44. How Do I Self-Direct? 1. Complete an application 1. Provide copy of driver’s license 2. Copy of statement 2. Fund your account 1. Annual Contribution 2. Transfer 3. Rollover 3. Tell us what you want to invest in
- 45. For More Information Kaaren Hall, President uDirect IRA Services, LLC (866) 447-6598 KHall@uDirectIRA.com uDirect IRA Services, LLC 2522 Chambers Road, Ste 100 Tustin, CA 92780
- 46. www.HassleFreeCashflowInvesting.com 8 strategic resources Cash Cashflow INSIDE YOUR IRA Equity Credit _________ Time Talent OUTSIDE YOUR IRA Strategic Relationships Control of deal flow
- 47. www.HassleFreeCashflowInvesting.com Real Estate Advantages BENEFIT INSIDE YOUR IRA OUTSIDE YOUR IRA Profit from Tax Deferred Taxable Cashflow Profit from Tax Deferred Tax Deferred - potential Appreciation 1031 Depreciation Losses do not offset other Losses may offset other gains gains Use of Financing Lower LTV / Higher Int. Higher LTV / Lower Int. Rate / potential for UDFI Rate / no UDFI Management Not allowed: excess Deductible expenses may business write off contribution shelter active income
- 48. How do I buy real estate outside my IRA when all my money is locked up inside my IRA?
- 49. www.HassleFreeCashflowInvesting.com IRA distribution IRA 401(k) loan repay Property distribution within 60 day Purchase time window (once per year) 401(k) Cash Out five year repayment Refinance
- 50. Do the math www.HassleFreeCashflowInvesting.com with your advisors! withdraw pay tax invest 72T ?
- 51. www.HasslefreeCashflowInvesting.com Investing with your IRA when your balance is small Group Investing Several individual investors combining their financial resources into a single investment managed by a team of professionals.
- 52. Event Faculty AHan@KeystoneCPA.com KHall@uDirectIRA.com David@HassleFreeCashflowInvesting.com