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. 1. Year End Tax Strategies for Business Owners and Real Estate Investors Kaaren Hall - President www.uDirectIRA.com David Campbell - CEOwww.HassleFreeCashflowInvesting.com Amanda Han - CPA www.KeystoneCPA.com
  2. 2. Event FacultyAHan@KeystoneCPA.com KHall@uDirectIRA.com David@HassleFreeCashflowInvesting.com
  3. 3. Begin with end in mind RELATIONSHIPS IDEAS OPPORTUNITIES NOT a sales pitchNOT investment, legal, or tax advice
  4. 4. Disclaimers & Cautionary NotesThis educational seminar is not a substitute for getting your ownprofessional advice. This webinar is offered with theunderstanding that the speakers are not offering legal, financial,tax, investment or other professional advice. Any actions withregard to the information contained in this seminar should beundertaken only upon the advice and counsel of competentlegal and tax and investment professionals. Receiving thisinformation does not create a fiduciary or client relationshipbetween you and the speaker. The information containedherein may be inaccurate and the speaker makes norepresentation about its accuracy.
  5. 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. 6. www.HassleFreeCashflowInvesting.com ProfitROI = Money + Time + Hassle More profit with less invested
  7. 7. Stay to the end for a FREE reportUsing a Solo 401k to avoid UDFI
  8. 8. U.S. HISTORICAL TAX RATES(877) 975-0975 www.KeystoneCPA.com
  9. 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. 10. Brand New TaxesUnearned Income MedicareContributions 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. 11. The Unknown(877) 975-0975 www.KeystoneCPA.com
  12. 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. 13. WHAT IS YEAR END TAX PLANNING?(877) 975-0975 www.KeystoneCPA.com
  14. 14. DIFFERENT TIMES, DIFFERENT STRATEGIES OLD NEW(877) 975-0975 www.KeystoneCPA.com
  15. 15. INVESTMENT STRATEGIES(877) 975-0975 www.KeystoneCPA.com
  16. 16. Income Shifting Dell(877) 975-0975 www.KeystoneCPA.com (877) 975-0975 (877) 975-0975
  17. 17. Tax Efficient Profit Extraction(877) 975-0975 www.KeystoneCPA.com (877) 975-0975 (877) 975-0975
  18. 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
  19. 19. ROTH IRA(877) 975-0975
  20. 20. Roth IRA Conversion Strategies5 Strategies to Convert with Little or No Taxes1)Contribute to Your Roth2)Favorable Tax Positions3) Unused Passive Losses4) Real Estate Tax Benefits5) Strategic Optimization (877) 975-0975
  21. 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. 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. 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. 24. Self-DirectionWhy 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. 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. 26. What About Losses?Losses• Cannot be written off taxes• Cannot be replaced in the retirement plan
  27. 27. What Are The Limits? A Self-Directed IRA can invest in anything EXCEPT1. Life Insurance Policies2. Collectibles 1. Artworks 2. Coins 3. Collectible Cars 4. Antiques 5. Gems 6. Stamps 7. Rugs
  28. 28. What if your funds are with yourcurrent 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. 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. 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. 31. Qualified Persons• Aunts & Uncles• Cousins• Brothers & Sisters• Unrelated friends• Nieces & Nephews
  32. 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. 33. Self-Directed IRA - Structure• You• Your IRA• TPA• Custodian
  34. 34. Buying Real Estate With Your IRAPros1. Capital gains are tax free2. Positive cash flow is tax free3. No time limit for holding property4. IRA can borrow money – Leverage your investment5. Potential to earn a larger rate of return on invested capital
  35. 35. Buying Real Estate With Your IRACons1. No immediate tax advantages of owning real estate2. No deduction for capital losses3. You are solely responsible for all gains or losses4. You cannot replace losses
  36. 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. 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. 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. 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. 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. 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. 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. 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. 44. How Do I Self-Direct?1. Complete an application 1. Provide copy of driver’s license 2. Copy of statement2. Fund your account 1. Annual Contribution 2. Transfer 3. Rollover3. Tell us what you want to invest in
  45. 45. For More InformationKaaren Hall, PresidentuDirect IRA Services, LLC(866) 447-6598KHall@uDirectIRA.com uDirect IRA Services, LLC 2522 Chambers Road, Ste 100 Tustin, CA 92780
  46. 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. 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 gainsUse of Financing Lower LTV / Higher Int. Higher LTV / Lower Int. Rate / potential for UDFI Rate / no UDFI Management Not allowed: excess Deductible expenses maybusiness write off contribution shelter active income
  48. 48. How do I buy real estate outside my IRAwhen all my money is locked up inside my IRA?
  49. 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. 50. Do the mathwww.HassleFreeCashflowInvesting.com with your advisors! withdraw pay tax invest 72T ?
  51. 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. 52. Event FacultyAHan@KeystoneCPA.com KHall@uDirectIRA.com David@HassleFreeCashflowInvesting.com

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