Every time you make a profit on your real estate investment the tax man has his hand out. To keep the majority of the profits in your pocket where they belong you must have a personalized tax action plan to reduce your taxes to the minimum. Would you automatically accept the highest bid from a contractor when another contractor could provide the same quality of work for a lower price? Of course not!
Congress offers you the same deal... You are in control of the amount of taxes you pay. Do nothing and willingly pay the highest amount of taxes or, do your research, find a professional (real estate) tax adviser and you will dramatically shrink the taxes you are now voluntarily overpaying. Is it worth the effort? Here is just one example; The maximum SE tax (15.3% - 2008) is assessed all the way up to your first $102,000.00 of income. That means that
you are forking over $15,606.00 of your hard earned bucks. By selecting the proper business entity you can easily wipe out paying self employment tax on a big chunk of your income. So, if $70,000 could be distributed to you without paying SE tax then you would keep in your pocket $10,710.00 This is just one of many ethical and legal strategies that exit in the tax code.
Here is another crown jewel of your personalized tax action plan...
As a real estate investor you may qualify to sock away a combined $102,000 in retirement monies per year for both you and your spouse. Paying yourself first will result in shaving thousands more off of your tax bill. This new found money can then help you to pay off those money sucking credit cards, save money for your child's college education, invest in more real estate, even take a family vacation (remember those?). A real estate friendly retirement plan even has a liquidity provision where you can borrow up to $50,000 for life's little emergencies or opportunities. In fact the right type of retirement plan will guarantee you will never, ever have to pay the tax man a penny no matter how much money you amass for the future.
During the last 15 years David Cole has built a nationwide reputation as a professional speaker and trainer providing services to tax professionals, Realtors and their client investors. He specializes in small business tax strategies for solo entrepreneurs.
Mr Cole is an expert in structuring self administrated individual 401k plans for real estate investors since these plans are highly flexible and real estate friendly.
Over the years Mr. Cole has gathered a consortium of professionals of other disciplines consisting of CPA s, Enrolled Agents and Tax Attorney's to better serve the diverse needs of his clients.
Mr. Cole is President of Financial Design Group, LLC located in beautiful Sedona Arizona.
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