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Real Estate Investors, Stock Traders, and Business Owners guide to preserve their wealth, protect their assets, and prosper in the future.
Episodes
Tuesday Sep 12, 2023
Tuesday Sep 12, 2023
In today’s episode, Toby Mathis, Esq. welcomes his long-time business partner, Anderson Advisor’s Michael Bowman, Esq., back to the show.
Michael shares four of the top mistakes he sees when people file incorporation papers to set up a business. From simple things like using a business (not your home) address, to utilizing the correct paperwork and formats, to keeping excellent records and bookkeeping, Michael and Toby discuss interesting real stories they’ve witnessed or been part of, to illustrate each point.
Highlights/Topics:
- Many mistakes will end up in court
- The top 4 repeated mistakes- incorrect address is number one
- Registered agents
- Banks need a business address in order to loan you money
- Organizational paperwork - By-Laws vs. Operating Agreements
- Co-mingling - Business vs. Personal
- Books and recordkeeping
Resources:
https://www.linkedin.com/in/michael-bowman-318492a/
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=aba&utm_medium=podcast&utm_content=costly-mistakes-to-avoid-when-creating-your-business-entity
https://www.youtube.com/c/tobymathisesq
https://andersonadvisors.com/
Thursday Sep 07, 2023
Thursday Sep 07, 2023
In this episode, host Toby Mathis, Esq., joins regular guest Eliot Thomas, Esq., Manager of Tax Advisors at Anderson Business Advisors, to discuss several options that can protect homeowners and investors from paying exorbitant taxes on the sale of property. Eliot and Toby share important information and tactics for passive losses, installment sales, 121 and 1031 scenarios, Delaware Statutory Trusts, UPREITs (Umbrella Partnership Real Estate Investment Trusts), and opportunity zone funds.
Highlights/Topics:
- Passive losses and gains
- Spreading gain over several years
- Can homeowners save taxes on the sale of their home?
- The 121 exclusion and its rules
- Changing your home to a rental property - 1031 exchange and the rules
- The DST Delaware Statutory Trust and 1031 exchange
- UPREIT- Umbrella Partnership Real Estate Investment Trust
- Qualified opportunity zones and qualified opportunity zone funds
- Recapping all the options
Resources:
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=aba&utm_medium=podcast&utm_content=how-to-avoid-taxes-when-selling-your-rental-property
https://andersonadvisors.com/
https://www.youtube.com/@TobyMathis
https://www.tiktok.com/@tobymathisesq
Tuesday Sep 05, 2023
Tuesday Sep 05, 2023
We’ve reached quite a milestone - our 200th episode! For today’s Tax Tuesday, tax experts Toby Mathis, Esq., and returning guest Jeff Webb, Esq., CFO of Anderson Business Advisors share their expert advice on tax strategies and navigating economic uncertainties, with a focus on rental property and financial diversification. You’ll hear about the complexities of non-recourse loans and taxation, myths and strategies for day traders, taxes on land flips, the best time to do a cost seg, and more. Three lucky listeners will receive copies of our ebook in the episode. Submit your tax question to taxtuesday@andersonadvisors.
Highlights/Topics:
- Is there a minimum net income where it would be beneficial for a single-member LLC to file as an S corp rather than a disregarded entity? - It depends on individual circumstances, but if your income is quite low, you may be able to save a bit if you file as an S-corp.
- Can my rental income be directed into a self-directed IRA and what are the advantages to doing that? - Yes, rental income can be directed into a self-directed IRA which offers several tax advantages.
- I don't understand the difference between owning rentals as a real estate professional (REP) or non-REP. And what, if any, disadvantages are there when buying a rental inside a Solo 401k using a non-recourse loan? - REP status offers tax benefits, while non-REPs face limitations. Buying a rental inside a Solo 401k with a non-recourse loan can limit potential deductions.
- How is the land flip taxed? Does land have to be held for a year like a house? - Land flips are taxed as ordinary income and there is no requirement to hold for a year.
- Is it acceptable for the IRS to trade futures from a 501c3 or a family foundation entity? Does the entity need to pay capital gains? –Yes, futures trading is allowed but can carry unrelated business income tax implications.
- If you form an LLC for rental property, is it best to report the activity on Schedule C or E? –Generally, it is better to report rental activity on Schedule E for tax purposes.
- When is the best time to do a cost segregation study? – The best time is usually after renovations are complete but it depends on individual circumstances, some you don’t have to wait on, like a pool.
- We fix and flip luxury homes and are thinking about keeping some to rent. We have held some in the past. We have an LLC but the accountant is saying to go to an S corp. - we disagree, investment property should not go into an S corp, it should go into a land trust/LLC.
- We are setting up a family trust in Florida and watch your video about trust Wyoming. The attorney says we don't need Wyoming, is this true? – The WY trust is a revocable trust. If you’re working on a living/grantor trust, your attorney is correct. Transitioning to an S corp may provide tax benefits.
- What is the best way to pay my children who actively trade in our fix flips bookkeeping? – Consider establishing them as employees and paying them a reasonable wage for their work.
- I understand anyone can gift to anyone in a year an amount not to exceed $17,000 per person. Can I gift from a family limited partnership Units not exceeding that amount, giving them a percentage of the LP units each year? Does it avoid the generation-skipping tax? – Yes, but your gift from your interest in the LP…it can be a viable strategy for tax purposes.
- Send us your questions, and check out the event schedule listed in the resources section.
Resources:
https://infinityinvesting.com/
taxtuesday@andersonadvisors.com
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=aba&utm_medium=podcast&utm_content=when-to-conduct-cost-segregation-studies
https://andersonadvisors.com/
https://www.youtube.com/channel/UCaL-wApuVYi2Va5dWzyTYVw
https://www.youtube.com/@TobyMathis
https://www.tiktok.com/@tobymathisesq
Monday Sep 04, 2023
Monday Sep 04, 2023
Welcome to Part III of our recession planning series. Toby Mathis, Esq. and Stefan Whitwell, Founder and Chief Investment Officer of Whitwell & Co., LLC, are back to discuss the facts, statistics, and future trends they see happening in the crumbling commercial real estate market. There are great investment deals out there, but you need to look at facts and numbers. Don’t fall for the bargain investment “story.” Enlist the assistance of a pro to make sure you don’t get in over your head.
Highlights/Topics:
- Commercial real estate – current stats and trends
- Interest rates are doubling
- Commercial building has slowed or stopped- increasing demand, but over 10 years
- Is the residential market next?
- REIT and risks
- Looking at numbers, not the story: history, past cycles and performance
- Invest with an advisor’s assistance, and don’t get greedy!
Resources:
https://whitwelladvisors.com/team/stefan-whitwell/
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=aba&utm_medium=podcast&utm_content=recession-planning-part-3-3
https://www.youtube.com/c/tobymathisesq
https://andersonadvisors.com/
Thursday Aug 31, 2023
Thursday Aug 31, 2023
In today’s episode, Toby Mathis, Esq. welcomes Stefan Whitwell, Founder and Chief Investment Officer of Whitwell & Co., LLC, back to the show for Part II of a three-part series. Stefan is a sought-after advisor who works closely with clients at the intersection of health, wealth, and purpose. Toby and Stefan discuss the shrinking assets and lack of funding from big banks and the private funding (as well as investment) opportunities that you might consider instead. Find a fiduciary who is a money manager and get access to these things the right way.
Highlights/Topics:
- Opportunities in this market
- Types of industries private funds are lending to
- Bank assets are shrinking
- Accessing private funds - different structures are providing new options
- Interest rates and rates of return
- Using IRA’s to avoid taxes
- Risks - higher returns
- Top 10 US Metro areas - Office building ‘physical occupancy’ is only at 50%
- Bailing out the banks - Feds messed it up badly by bailouts
- Be patient and watch for good opportunities
Resources:
https://whitwelladvisors.com/team/stefan-whitwell/
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=aba&utm_medium=podcast&utm_content=recession-planning-part-2-3
https://www.youtube.com/c/tobymathisesq
https://andersonadvisors.com/
Tuesday Aug 29, 2023
Tuesday Aug 29, 2023
In today’s episode, Toby Mathis, Esq. speaks with Stefan Whitwell, Founder and Chief Investment Officer of Whitwell & Co., LLC. Stefan leads the overall Firm and its investment practice. He is also a sought-after advisor who works closely with clients at the intersection of health, wealth, and purpose. Toby and Stefan reveal that the “bad stuff” is not over with big banking, and that we will continue to see bank failures and devastating client money losses … so make sure your money is protected, see a professional!
Highlights/Topics:
- The state of big banks today
- What happens to your $1 Million if a bank suddenly fails?
- Custodial accounts to protect your money
- SIPC insurance vs. FDIC
- Business owners and three things you need to protect
- You can end up on the hook to pay your employees
- Custodial accounts – you need to do your homework
- Bank debt and commercial real estate
- Stay informed, make sure your money is safe
Resources:
https://whitwelladvisors.com/team/stefan-whitwell/
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=aba&utm_medium=podcast&utm_content=recession-planning-part-1-3
https://www.youtube.com/c/tobymathisesq
https://andersonadvisors.com/
Tuesday Aug 22, 2023
Tuesday Aug 22, 2023
In today’s Tax Tuesday episode, tax experts Toby Mathis, Esq., and returning guest Jeff Webb, Esq., CFO of Anderson Business Advisors, discuss several interesting and complicated questions around collecting rent, refinancing your rental home, accountable plan reimbursements, and cost segregation. Submit your tax question to taxtuesday@andersonadvisors.
Highlights/Topics:
- "I am single-family home real estate investor… should I collect the rent in a separate checking account LLC” - a property management entity should be collecting and paying the LLCs. Don’t have renters pay directly to the ‘holding’ LLC. The way you’re doing it is okay.
- “If you refi a rental home can you start depreciating at the refi amount?” First of all, why would you refi now at 7%? But let’s say you do refi; your depreciation does not start over. Unless you get cash out to improve the home, that remodel depreciation starts anew.
- “Thanks for talking so much about S-corps, literally saving my business. If my business doesn’t have enough to reimburse me after the accountable plan” …no, you can’t deduct it if you haven’t been reimbursed. You can give the money to the company, creating a loss, then reimburse.
- “How do you determine the quality of a cost seg vendor… does it even matter.” - you need an actual person that stands behind the analysis, don’t just use software.
- “What are the tax benefits to writing off the rental property” - you can identify each part that is NOT 27.5 years… you’re supposed to do 5, 7 years, 15 years, for certain home element improvements.
- “I made a loan to an individual from my self-directed IRA. He wants to pay it back from a self-directed IRA. will this create a taxable event to either of us? - for you no, for him yes
- “I had a property vacant for repairs until April 2023…can I still claim my expenses?” - ‘ordinary and necessary’ can be, yes - roof replacement, repairs, etc. but not ‘improvements’. Put it into service first.
- “Can a self-directed IRA co-invest with you and not create a prohibited transaction, even if you self-manage, and may use the assets?” - yes you can set up a joint venture… but you can’t use the asset, you can’t buy a property and ‘use it’ or do any work on it.
- “What biz entity can leverage life insurance as an exec bonus plan for tax deduction?” - we can’t think of any way to leverage it, but there are ways to write it off. Talk to somebody who works on exec compensation plans.
- “When taking into account bonus depreciation on investment property - how far back and forward in time?” - net operating losses cannot be carried back…only forward, indefinitely.
- Send us your questions and check out the event schedule listed in the resources section.
Resources:
https://infinityinvesting.com/
taxtuesday@andersonadvisors.com
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/
https://www.youtube.com/@TobyMathis
https://www.tiktok.com/@tobymathisesq
Tuesday Aug 08, 2023
Tuesday Aug 08, 2023
In today’s Tax Tuesday episode, tax experts Toby Mathis, Esq., and returning guest Jeff Webb, Esq., CFO of Anderson Business Advisors discuss a number of common tax topics including IRA to Roth conversions, real estate depreciation deductions, LLC’s, S-Corps and Sole Proprietorships, gifting vs. inheriting property, and the title question about structuring your real estate business. Submit your tax question to taxtuesday@andersonadvisors.
Highlights/Topics:
- "If I move money from my SDIRA, which stands for self-directed IRA, to a Roth self-directed IRA, can I use bonus depreciation from real estate owned outside of my IRAs to offset the taxes I owe from the Roth conversion?" - It's really going to depend on where that depreciation is coming from.
- "I'm new to real estate investing and haven't purchased the property yet. Do I need to have an LLC to claim deductions this year on real estate–related expenses already incurred?" - An LLC really has nothing to do with taxes. It is strictly for liability protection, and asset protection.
- "I'm a small business owner with three other employees working for me. I'm trying to open a solo 401(k) or some other retirement plan for myself as an owner. I believe I need to offer the same to my employees as well, which I can but am not interested in offering any matching contributions to other employees. How does it work? What is the best way to set this up?" - yes, you can open up a 401(k) and have your employees participate assuming they're eligible to participate. However, you can't pay yourself a match and not pay them a match. You have to treat everybody equally.
- "I won $10,000 worth of furniture from a raffle or gaming event. How do I report this on my income tax?" - Whoever you won it from should be issuing you a 1099 miscellaneous with $10,000 of other income on it. You'll record it on your tax return as other income.
- "I'm a realtor operating as a sole proprietor. Should I be operating under a different entity to minimize taxes and liability? Over the years, I've received conflicting information and just don't know." - the math is 14.1% in addition to your state income taxes, in addition to your federal income taxes. The way you nix that is you run it through an S-corp or an LLC taxed as an S-corp.
- "At what point in my real estate operation should I move from a single-owner LLC to S-corp for tax purposes?" - If we're talking about investment real estate and rental properties, you don't ever want to put them in an S-corporation. It's a bad idea.
- "If I transfer my rental property into an LLC for the purposes of depreciation, will the LLC get a step up and basis to the current market value of the property? Or will the LLC inherit my lower basis? - If you contribute property to any kind of entity that you own, it gets your basis.
- “Do unrelated businesses have to have separate schedule Cs or LLCs, or can I rebrand myself on my Schedule C, DBA, JL Enterprises, and put everything together? What are the advantages or disadvantages?" -...most times I don't see a whole lot of advantage to grouping unless it's a real estate activity with an operation or something like that.
- "In my father's will, he's leaving me a house." Yes. "I've been living in it for nine years." "If he puts my name on the title now along with his name, will I have to pay more taxes? I prefer to do that now. What would the difference be? He does have a living will." - He would have to file a gift tax return for his basis in that half, or actually its fair market value on that half. I'm not a big fan of mixing things up under these circumstances…
- "We are fixing the downstairs area of our home to rent out as a short-term rental. Are there any expenses that can be used in tax deductions? Should we run it under an entity?" - The repairs that you're doing down there would be deductible. If you're doing improvements to the property, it would be depreciable.
- Send us your questions, and check out the event schedule listed in the resources section.
Resources:
https://infinityinvesting.com/
taxtuesday@andersonadvisors.com
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/
https://andersonadvisors.com/
https://www.youtube.com/channel/UCaL-wApuVYi2Va5dWzyTYVw
https://www.youtube.com/@TobyMathis
https://www.tiktok.com/@tobymathisesq
Tuesday Aug 01, 2023
Tuesday Aug 01, 2023
In today’s episode, Toby Mathis, Esq. speaks with some unique, socially-minded real estate developers - Kevin Cavenaugh and Sujata (Suja) Shyam from Guerrilla Development. Guerrilla is a Portland real estate company focused on creating inventive and experimental projects that use both hemispheres of the brain. Their buildings prove that good design and good financial returns are not mutually exclusive. Success for Guerilla is measured by the social capital their developments produce as well as by the asset value they generate.
Highlights/Topics:
- Guest intro and background, what Guerilla is all about
- Everything Guerilla builds is an experiment
- Stats on low-cost rentals
- Building neighborhood-friendly transitional housing in Portland
- Jolene’s First Cousin
- Public money and the strings attached
- Pre and post-pandemic costs and building
- Stick-built vs manufactured homes
- Working for the Oklahoma Housing Authority
- A place between food carts and restaurants
- Combining market-rate units and low-cost housing - investment returns
- Reverse/legal discrimination catering to certain professions - social workers, teachers, etc.
- Rentals for foster kids who have aged out of the system
- The American Dream/Your own home - not possible on the coasts or big cities anymore
- Affordable housing can be sexy!
- Reach out to Guerilla and help your own neighborhoods
Resources:
http://guerrilladev.co/
Participate! Get in touch with Guerilla
http://guerrilladev.co/investors-20-fall-2017
https://inf.link/iiwyt
https://www.youtube.com/c/tobymathisesq
https://andersonadvisors.com/
Tuesday Jul 25, 2023
Tuesday Jul 25, 2023
Welcome to Episode 197 of the Tax Tuesday show. Host Eliot Thomas, Esq., Manager of Tax Advisors at Anderson Business Advisors, welcomes CPA Kurt Bergfjord to help answer your questions. We send a big thank you to all our people online answering your questions today.
Today Kurt and Eliot answer listener questions on tax liens and wholesaling. They discuss the complexities of property tax implications, the benefits of a C-Corp for property flipping, and the tax implications of inheritance. The episode also answers inquiries about home office expenses, the intricacies of short-term rentals in real estate, and running an active business in a retirement account.
If you have a tax-related question for us, submit it to taxtuesday@andersonadvisors.
Highlights/Topics:
- “Are there any tax implications for wholesaling and tax liens?" - Yes, tax liens can lead to property auctions, affecting real estate investment strategies.
- “When I pass on and leave property to my children, are there estate taxes?” - right now estate exemption for a couple is 25 Million dollars. Better to let them inherit than to gift it to them…
- "I own properties in two states… any restrictions on travel deductions?” - The IRS would say as long as your trip is more than 50% business days, your travel is 100% deductible.
- "We have 8 properties to sell, no longer want to be landlords…but we want cash flow” - Calculate the capital gains…pay or defer, use a 721 exchange to turn rentals into units in an investment trust, which provides more stable cash flow and hands off investments.
- "What is the right way to deduct my personal residency expenses, such as mortgage interest, mortgage insurance, real estate taxes, homeowners insurance, depreciation, so on and so forth? How do I do that? Through an accountable plan as an employee of my corporation, or do I do that tax time on my personal return?" - An accountable plan requires a separate dedicated office space/room in your home…
- “I own a single member disregarded LLC, which in turn owns a rental property. The rental property provides me with tax Tax deduction, mainly because of depreciation. If I were to take the property out of the LLC as an owner-drawer distribution, would I be liable for any capital gains tax or depreciation recapture?" - In this circumstance, if you’re just pulling it out of an LLC that you own, that is disregarding to you, is not really considered a sale for the IRS purposes.
- “When you pay your kids, may that payment come from your personal bank account?" - Generally, it's advisable to pay from a business account for clarity and separation.
- "If I use a Sidra self-directed IRA to purchase short-term rental property, does that qualify for me as a real estate professional?" If I use the Sidra self-directed IRA funds plus a mortgage to buy a rental property, once the mortgage is paid off, is the whole property considered property of the IRA?" - No, activities in a retirement account don't qualify towards real estate professional status. If the IRA funded the purchase, the property belongs to the IRA.
- “What are the requirements to have a second home be considered a short-term rental? Will I be able to expense furnishing costs and other expenses? Also, how does cost segregation work in this situation? - If you're going to be using any property for more than 14 days or 10 percent of the fair market rental days out there one you have to allocate the expenses associated with the property between personal time and business time.
- “I formed my two LLCs last year but haven't funded them or used them in any way. I missed the tax return filing deadline this spring. Now what? File the returns and beg forgiveness to not have to pay late fees, close the business down, start over? So I got some LLCs set up not telling you anything about those LLCs, kurt, but I will tell you that I didn't file the returns. What am I going to do?” - How are these LLCs taxed? Knowing that answer will be the first step in determining what you need to do with your LLCs.
Resources:
https://www.linkedin.com/in/kurt-bergfjord-cpa-08873053/
taxtuesday@andersonadvisors.com
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/
https://andersonadvisors.com/
Anderson Business Advisors LinkedIn
https://www.linkedin.com/company/anderson-advisors/?originalSubdomain=fr
https://www.youtube.com/@TobyMathis
https://www.tiktok.com/@tobymathisesq