yead end tax strategies for real estate investors
DESCRIPTION
You can watch a free video recording of this event at: http://www.hasslefreecashflowinvesting.com/tax-planning-2011/ It's not about how much you earn. It's about how much you keep! Learning how to legally avoid or defer the payment of income taxes is essential to your financial success. Our world class faculty show experienced and novice real estate investors how to legally earn more while paying less in taxes. You will learn: 1) Urgent year-end tax moves every real estate investor must be aware of 2) How to take advantage of special 2011 tax deductions before they expire 3) How to get the IRS and your tenants to pay for a healthier retirement than you thought possible 4) Ways to ensure your self-directed IRA stays tax deferred 5) Which investments you should own personally and which investments you should own inside an IRA to optimize your tax advantages 6) How to identify and use your eight essential resources to legally earn more and pay less in taxes 7) Strategies to produce cash flowing real estate profits without the hassle and without the tax 8) Time sensitive legal considerations that could have a huge impact on your taxes In this 90 minute FREE webinar, you'll hear from professional investor David Campbell, self-directed IRA company president Kaaren Hall, tax strategist Amanda Han, CPA, real estate attorney Jeff Lerman, and estate planning attorney Michell Lerman. This webinar is appropriate for both new and well seasoned investors. While this webinar will be recorded, you'll get the most out of the experience by attending live so you can ask questions. MEET OUR WORLD CLASS FACULTY DAVID CAMPBELL - professional investor / developer www.HasslefreeCashflowInvesting.com KAAREN HALL - president of uDirect IRA Services www.uDirectIRA.com AMANDA HAN, CPA - tax strategist with Keystone CPA www.KeystoneCPA.com JEFFREY H. LERMAN - real estate attorney www.realestateinvestorlaw.com MICHELLE C. LERMAN - estate planning attorney www.realestateinvestorlaw.comTRANSCRIPT
Year End Tax Strategies for
Real Estate Investors
www.LermanLaw.comwww.uDirectIRA.com
www.KeyStoneCPA.comwww.HasslefreeCashflowInvesting.com
David CampbellDavid Campbelldeveloper / broker / syndicator
Former high school & college band director Professional investor over $800 million of real
estate experience
Self-made multi-millionaireReal estate & business advisor
Financial mentorHouses, condo-conversion, multi-family, winery, resort, office, retail, medical office, commercial
development, home building
[email protected]@HasslefreeCashflowInvesting.com
Begin with end in mindBegin with end in mind
��NOT a sales pitchNOT a sales pitch
��NOT investment, legal, or tax adviceNOT investment, legal, or tax advice
��NOT an investment offeringNOT an investment offering
Helping other people live more abundant lives by giving knowledge and support for our others to
invest profitably and with mental tranquility.
WHAT THIS WHAT THIS ISIS !!
��This This ISIS an educational an educational
service to our existing service to our existing
clientsclients
��This This ISIS a job interviewa job interview
Real Estate Investor Tax Advantages
•Tax Rate Reduction
• Capital Gains versus Ordinary Income
•Taxable Income Reduction
• Depreciation / write offs
•Tax Deferral
•Self-Directed IRA / 1031 exchange / capital gains
•Tax Avoidance
•Estate planning / 1031 swap till you drop
$ 1,271,408 $ 775,496 GROSS PROFIT
$ 1,171,804 $ 875,496 2042
$ 995,395 $ 757,595 2040
$ 845,544 $ 655,572 2038
$ 718,252 $ 567,287 2036
$ 610,123 $ 490,892 2034
$ 518,272 $ 424,785 2032
$ 440,249 $ 367,580 2030
$ 373,972 $ 318,079 2028
$ 317,672 $ 275,244 2026
$ 269,848 $ 238,178 2024
$ 229,224 $ 206,103 2022
$ 194,716 $ 178,348 2020
$ 165,402 $ 154,330 2018
$ 140,502 $ 133,547 2016
$ 119,350 $ 115,563 2014
$ 100,000 $ 100,000 2012
10% Profit Pay 15% CAP Gains Tax 10% Profit Pay 25%
Ordinary Income Taxes
Tax Rate Reduction
Taxable Income Reduction
Gross Income
X Rate
TAX OWED
(Gross Income
less Deductions
less Depreciation)
X Rate
TAX OWED
Tax Deferral
Arbitrage IRS
Invest at 10%
-Borrow from IRS at 0%
------------------------------------
PROFIT on IRS’s MONEY 10%
Arbitrage Bank
Invest at 10%
-Borrow from BANK at 5%
------------------------------------
PROFIT on BANK’s MONEY 5%
$ 1,233,705 $ 775,496 NET PROFIT
$ 411,235 paid along the way Income Tax Owed
$ 1,644,940 $ 775,496 GROSS PROFIT
$ 1,744,940 $ 875,496 2042
$ 1,442,099 $ 757,595 2040
$ 1,191,818 $ 655,572 2038
$ 984,973 $ 567,287 2036
$ 814,027 $ 490,892 2034
$ 672,750 $ 424,785 2032
$ 555,992 $ 367,580 2030
$ 459,497 $ 318,079 2028
$ 379,750 $ 275,244 2026
$ 313,843 $ 238,178 2024
$ 259,374 $ 206,103 2022
$ 214,359 $ 178,348 2020
$ 177,156 $ 154,330 2018
$ 146,410 $ 133,547 2016
$ 121,000 $ 115,563 2014
$ 100,000 $ 100,000 2012
10% Profit with Tax Deferral 10% Profit but Pay Taxes Tax Deferral
$ 1,644,940$ 775,496 NET PROFIT
ESTATE PLANNING SWAP TILL YOU DROPpaid along the way Income Tax Owed
$ 1,644,940 $ 775,496 GROSS PROFIT
$ 1,744,940 $ 875,496 2042
$ 1,442,099 $ 757,595 2040
$ 1,191,818 $ 655,572 2038
$ 984,973 $ 567,287 2036
$ 814,027 $ 490,892 2034
$ 672,750 $ 424,785 2032
$ 555,992 $ 367,580 2030
$ 459,497 $ 318,079 2028
$ 379,750 $ 275,244 2026
$ 313,843 $ 238,178 2024
$ 259,374 $ 206,103 2022
$ 214,359 $ 178,348 2020
$ 177,156 $ 154,330 2018
$ 146,410 $ 133,547 2016
$ 121,000 $ 115,563 2014
$ 100,000 $ 100,000 2012
10% Profit with NO TAX EVER 10% Profit but Pay Taxes Tax Avoidance
[email protected]@HasslefreeCashflowInvesting.com
“Quarter-Back” of your Investing Team”
NEW HOUSES
PASSIVE SYNDICATIONS
COACHING
David Campbellwww.HasslefreeCashflowInvesting.com
Presented By
(877) 975-0975
KEYSTONE CPA, INC.
2011 YEAR-END TAX PLANNING STRATEGIES
www.KeystoneCPA.com
Federal Income Taxes @ 35%
State Income Taxes @ 11%
Current Tax Rates
Payroll Taxes @ 15%
Capital Gains Taxes @ 15%
Estate Taxes @ 35%
(877) 975-0975 www.KeystoneCPA.com
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
www.themegallery.com Company Logo
Redirect Tax Dollars to Your Retirement Accounts
• Pay Yourself Rather than the IRS
• Create Tax Deferred Money to Invest in Real Estate
• Start a Bucket of Tax Free Money for Life
(877) 975-0975 www.KeystoneCPA.com
2011 TAX REDUCTION STRATEGIES
Income Deferral
(877) 975-0975 www.KeystoneCPA.com
2011 TAX REDUCTION STRATEGIES
Accelerate Expenses
EXPENSES
(877) 975-0975 www.KeystoneCPA.com
2011 Bonus Depreciation
2011201120112011
(877) 975-0975 www.KeystoneCPA.com
For Real Estate Investors
(877) 975-0975 www.KeystoneCPA.com
Contact Us
Company Logo(877) 975-0975
KEYSTONE CPA, INC. Maximizing Profits & Increasing Wealth
www.KeystoneCPA.com
AS SEEN ON:
(877) 975-0975
www.KeystoneCPA.com
Presented By
FREE! Downloadable eBook
*****Any tax advice included in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, (1) for the purpose of avoiding any penalties that may be imposed on the taxpayer by any governmental taxing authority or agency, (2) promoting, marketing, or recommending to another party any transaction or matter addressed herein. The information contained within is provided for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant. Before making tax or business decisions, please consult your professional tax advisor. This message (including any attachments) contains confidential information intended for a specific individual and purpose, and is protected by law. Any disclosure, copying, or distribution of this message, or the taking of any action based on it, is strictly prohibited. *****Copyright © 2011 by Keystone
CPA, Inc.
(877) 975-0975
Essential ResourcesEssential Resources
�� cashcash
�� cash flowcash flow
�� creditcredit
�� equityequity
�� timetime
�� talenttalent
�� strategic relationshipsstrategic relationships
�� control of an opportunitycontrol of an opportunity
LIMITED
INFINITE
LIMITED and INFINITE
�� cashcash
�� cashflowcashflow
�� credit (other peoplecredit (other people’’s)s)
�� equityequity
�� timetime
�� talenttalent
�� strategic relationshipsstrategic relationships
�� control of an opportunitycontrol of an opportunity
Traditional IRA
Self-Directed IRA
TAX DEFERRAL
How to SelfHow to Self--Direct Your Retirement SavingsDirect 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.
WhatWhat’’s the Difference?s the Difference?
Typical IRATypical IRA
•• StocksStocks
•• BondsBonds
•• Mutual FundsMutual Funds
•• CDCD’’ss
SelfSelf--Directed IRADirected IRA
•• Rental PropertyRental Property
•• NotesNotes
•• Private StockPrivate Stock
•• LLCLLC’’ss
•• Tax LiensTax Liens
•• Foreign PropertyForeign Property
•• Raw LandRaw Land
•• Etc.Etc.
What Are The Limits?What Are The Limits?
A SelfA Self--Directed IRA can invest in anything EXCEPTDirected IRA can invest in anything EXCEPT
1.1. Life Insurance PoliciesLife Insurance Policies
2.2. CollectiblesCollectibles1.1. ArtworksArtworks
2.2. CoinsCoins
3.3. Collectible CarsCollectible Cars
4.4. AntiquesAntiques
5.5. GemsGems
6.6. StampsStamps
7.7. RugsRugs
What if your funds are with your What if your funds are with your
current employer?current employer?
Your plan will probably NOT allow you to self-direct
Must wait until you leave the companyTo rollover retirement plan
You can request an “in-service” transfer from your current plan administrator.
Prohibited TransactionsProhibited Transactions
(IRS Publication 590)(IRS Publication 590)
•• Borrowing money from the IRABorrowing money from the IRA
•• Selling property to it.Selling property to it.
•• Using it as security for a loan.Using it as security for a loan.
•• Buying property for personal use (present Buying property for personal use (present or future) with IRA funds.or future) with IRA funds.
Disqualified PersonDisqualified Person
•• Disqualified persons include your fiduciary and Disqualified persons include your fiduciary and
members of your family (spouse, ancestor, lineal members of your family (spouse, ancestor, lineal
descendant, and any spouse of a lineal descendant, and any spouse of a lineal
descendant). descendant).
Qualified PersonsQualified Persons
•• Aunts & UnclesAunts & Uncles
•• CousinsCousins
•• Brothers & SistersBrothers & Sisters
•• Unrelated friendsUnrelated friends
•• Nieces & NephewsNieces & Nephews
Prohibited TransactionsProhibited Transactions
•• Neither you nor any disqualified people Neither you nor any disqualified people
may benefit from IRA may benefit from IRA
•• Cannot buy, sell or exchange property Cannot buy, sell or exchange property
between plan and between plan and
–– Self or Self or
–– Disqualified peopleDisqualified people
•• Cannot provide goods, services or facilitiesCannot provide goods, services or facilities
SelfSelf--Directed IRA Directed IRA -- StructureStructure
•• YouYou
•• Your IRAYour IRA
•• TPATPA
•• CustodianCustodian
Buying Real Estate With Your IRABuying Real Estate With Your IRA
ProsPros
1.1. Capital gains are tax freeCapital gains are tax free
2.2. Positive cash flow is tax free Positive cash flow is tax free
3.3. No time limit for holding propertyNo time limit for holding property
4.4. IRA can borrow moneyIRA can borrow money
–– Leverage your investmentLeverage your investment
5.5. Potential to earn a larger rate of return on Potential to earn a larger rate of return on
invested capitalinvested capital
Buying Real Estate With Your IRABuying Real Estate With Your IRA
ConsCons
1.1. No tax advantages of owning real estate No tax advantages of owning real estate
2.2. No deduction for capital lossesNo deduction for capital losses
3.3. You are solely responsible for all gains or You are solely responsible for all gains or
losseslosses
4.4. You cannot replace lossesYou cannot replace losses
Buying Real Estate Buying Real Estate -- The ProcessThe Process•• Open a selfOpen a self--directed accountdirected account
•• Shop for a propertyShop for a property
•• Remember, itRemember, it’’s the IRA that is the buyers the IRA that is the buyer
•• Custodian to sign Custodian to sign ““Offer to PurchaseOffer to Purchase””
•• Submit a Buy Direction Letter for earnest money Submit a Buy Direction Letter for earnest money
depositdeposit
•• Funds wired to closing from your IRAFunds wired to closing from your IRA
•• Fund & RecordFund & Record
•• Rents are made payable to your IRARents are made payable to your IRA
IRAIRA--Owned LLCOwned LLC
““Checkbook IRACheckbook IRA””
•• IRA purchases shares of a newlyIRA purchases shares of a newly--formed formed
LLC formed for this purposeLLC formed for this purpose
•• LLC receives funds in itLLC receives funds in it’’s checking accounts checking account
•• LLC follows same rules as IRA for LLC follows same rules as IRA for
investinginvesting
3 Types of Plans3 Types of Plans
•• IRAsIRAs–– Individual Retirement AccountsIndividual Retirement Accounts
–– What you are doing for your own retirementWhat you are doing for your own retirement
•• Qualified PlansQualified Plans–– ERISA controlledERISA controlled
–– Typically, what an employer provides youTypically, what an employer provides you
•• Other PlansOther Plans–– EducationEducation
–– HealthHealth
Types Of SelfTypes Of Self--Directed PlansDirected Plans
IRAsIRAs Qualified PlansQualified Plans Other PlansOther Plans
TraditionalTraditional 401K/ 457/ 403b401K/ 457/ 403b CoverdellCoverdell
RothRoth Defined BenefitDefined BenefitHealth Savings Health Savings
AccountAccount
SEPSEP Profit SharingProfit Sharing
SimpleSimple Individual KIndividual K
SpousalSpousal
How Do I SelfHow Do I Self--Direct?Direct?
1.1. Complete an applicationComplete an application1.1. Provide copy of driverProvide copy of driver’’s licenses license
2.2. Copy of statementCopy of statement
2.2. Fund your accountFund your account1.1. Annual ContributionAnnual Contribution
2.2. TransferTransfer
3.3. RolloverRollover
3.3. Tell us what you want to invest inTell us what you want to invest in
KaarenKaaren Hall, PresidentHall, President
uDirectuDirect IRA Services, LLCIRA Services, LLC
(866) 538(866) 538--35393539
[email protected]@uDirectIRA.com
uDirect IRA Services, LLC2522 Chambers Road, Ste 100
Tustin, CA 92780
Michelle C. LermanLerman Law Partners, LLP
Copyright 2010 -2011@ Lerman Law Partners, LLP All Rights Reserved
Tax Avoidance Through Estate Planning
• Certified Specialist in Estate Planning, Trust and Probate Law by the California State Bar Board of Legal Specialization
• Super Lawyers of Northern California for 2009 and 2010• Marin Estate Planning Council• Co-founder/head Mentor Group, Marin County Bar
Association Estate Planning Section• Frequent lecturer• Voted #1 Favorite Lawyer - The “J.” Newspaper Readers’ Poll
2007 Marin and Sonoma Counties• UCLA, BA, magna cum laude 1980, USC- JD 1983
Michelle C. LermanLerman Law Partners, LLP
Copyright 2010 -2011@ Lerman Law Partners, LLP All Rights Reserved
Disclaimer
This seminar is offered with the understanding that neither Michelle C. Lerman, nor Lerman Law Partners LLP is engaged in offering you legal or other professional advice, and we have no attorney-client relationship with you unless you sign an Engagement Agreement. Any actions with regard to the information contained in this seminar should be undertaken only upon the advice and counsel of competent legal, tax and estate planning professionals.
IRS Circular 230 Disclosure Nothing contained in these presentation materials was intended or written to be used, can be used or may be relied on for the purpose of avoiding penalties that may be imposed under the IRC of 1986, as amended, and may not be used to support the promotion or marketing of or to recommend any federal tax transactions discussed in this presentation.
Copyright 2010-11 @ Lerman Law Partners All Rights Reserved
CRITICAL END-OF-YEAR ESTATE PLANNING
CRITICAL PROVISIONS OF THE 2010 TAX ACT
1. $5M BASIC EXCLUSION
2. 35% FLAT RATE FOR ESTATE
AND GST TAX
3. SUNSET AT END OF 2012
Copyright 2010-11 @ Lerman Law Partners All Rights Reserved
THE “GIFT TAX BONANZA”An Extra $8 Million!!
LEVERAGE THE GIFT!
• INSTALLMENT SALE
• QPRT
• LIFE INSURANCE TRUST
ANNUAL EXCLUSION GIFTS
• BY DECEMBER 31
• AGAIN IN JANUARY 2012
PAYMENTS FOR TUITION AND MEDICAL EXPENSES
• UNLIMITED AMOUNT
• PAY DIRECT
Michelle C. Lerman
Lerman Law Partners, LLP
• Los Angeles
• San Francisco
• San Mateo
• San Rafael
(310) 295-1951
(415) 454-0455
www.lermanlaw.com
Jeffrey H. Lerman, Esq.
T M
www.RealEstateInvestorLaw.com
Year End Tax Strategies for
Real Estate Investors
White List: [email protected]
FREE REPORTSCOPY OF SLIDES
VIDEO OF PRESENTATIONCONTACT INFO FOR ALL PRESENTERS