Dec, 2024

Reducing Tax Drag: Structure Over Deduction

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Successful Multifamily Real Estate Investor Rob Rowsell outlines his Tax Reduction Strategy. The tax reduction program consists of four strategies business investors like you use to reduce their tax expenses. Remember, reducing your taxes IS a source of additional earned income!

Tax Reduction Strategy For Successful Investors Outlined

Rob has spoken previously on how much of a wealth drain that tax drag can be. Some listeners request that he expand on his tax reduction strategy. It boils down to four principles:

Structure Over Deduction: Finding tax deductions in your records is important. However, making sure your business is properly structured is more so. Setting up your business as an LLC ensures not just legal protections. It also sets up the advantage of tax treatment. Make sure you hire a CPA and business consultant to help you properly structure your business.
1. Pay yourself tax efficiently. A good accountant will advise you to pay yourself a conservative salary as a safe harbor against audits.
2. Plan your exit before entering into any project. Knowing the end game before you structure your business will save you time and money in the long run. Restructuring can be a real hassle.
Invest Your Money Tax Efficiently.
1. Savvy tax planning is the absolute lowest risk way to quickly boost your investment returns.
2. Invest your money in the right places. Generally, long term capital growth investments go into taxable accounts. “Ordinary income” cash flow investments should be deposited into tax advantaged accounts. These accounts may include retirement accounts such as Roth IRAs.
3. Leverage unrealized gains to compound tax free. This means using equity in your business to acquire needed tools and even add a second location.
Pay with PRE-Tax Dollars.
1. Push every legitimate business expense to your business. This way, you will get an automatic discount every time!
Plan BEFORE You Play.
1. Plan the tax impact before you make any big business decision.
2. Meet regularly with your CPA. Keep them in the loop on your plans as soon as you possibly can.

Join Our Multifamily Investing Community Today

Do you own your own multifamily rental properties? If not, do you plan to do so one day? Then you should consider joining our online financial group, the ATL Inner Circle Community! Each month, investing pro Rob Rowsell will teach you what you must do in order to build wealth in the real estate business. It’s not quite as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Sign up today!

Sep, 2024

4 Principles To Reduce Tax Drag

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Successful Multifamily Real Estate Investor Rob Rowsell is here to explain the answer to a burning question. How can YOU can cut tax drag that is sapping the returns from your investment portfolio. Do you want to invest your money wisely? Then you need to take the time to reduce your tax expenses. That is a key component in any multifamily real estate investment strategy. Watch, learn, and then apply this knowledge. Then, you’ll start saving on your precious investment taxes!

Cut Tax Drag On Your Investments Safely And Legally

Rob starts out by explaining that there are a few major expenses that we all want to avoid as investors. Tax drag is way up there on top of that list. There are just four key ways that our favorite multifamily magnate Rob Rowsell recommends for all investors to cut tax drag:

Choose Structure Over Deduction

First of all, you must make sure that you will always pay yourself tax efficiently on payday. Do you earn a W2 income working for a business that you own? Then your CPA will tell you that you must pay yourself a typical salary range for that position. However, you will want to pay yourself based on the low end of that salary range. That way, you will pay much less in both your income and your payroll taxes. If you are a smart business owner, then you should be able to afford to live on that smaller salary amount.

This practice of paying one’s self tax efficiently is a key component of tax rate arbitrage. The concept of tax rate arbitrage means you use different types tax rates within your business in order to lower your overall tax bill.

Finally, you will need to make sure that you will plan your exit before you go in. This means that you will decide the proper legal entity for your business, such as an LLC, S-Corp, or C-Corp. None of these corporate entity designations are wrong in and of themselves. You must decide which one is the right choice for your specific industry and your intended pursuits.

Cut Tax Drag By Investing All Of Your Taxes Efficiently

Without a shadow of a doubt, savvy tax planning is the lowest risk way for you to immediately boost your investment returns. Rob repeats this important mantra often: saving on your taxes will create another income stream! Rob has saved well over $250,000 in a single year, all because of his CPA’s savvy tax planning strategies.

Most of the time, you will want to put your long term capital growth investments in your taxable accounts. Your ordinary income cash flow investments, on the other hand, should all go in your tax advantaged accounts. A Roth IRA account is one example of such a tax advantaged account.

Last of all, in order to invest tax efficiently, you should leverage your unrealized gains so that they will compound tax free. Your unrealized gains might include the value of your property increasing after you purchase it. Perhaps you bought a business and then you increased the income that it is generating. You are not taxed on that business income. That way, you could take out some low interest loans from your lender against those numbers. You could use that money in order to scale your business, so you can realize even greater success!

Pay With Your Pre-Tax Dollars

Rob’s third principle to cut tax drag is that you should pay your expenses with your pre-tax dollars. What does that mean for all of us investors? Make sure that you will push all of your legitimate business expenses into your business. When you do that, then you will earn your business an automatic discount. Unlike your employees who are paid and then taxed, an LLC business owner can pay their expenses before they are taxed on their earned income.

Plan BEFORE You Play

Finally, you will need to plan what the tax impact will be of each and every potential investment that you intend on making. Once you reach Rob Rowsell’s high level of real estate investment savvy, you might just know by June what you will pay in taxes at the end of the year! That is one of the many advantages of regularly consulting with an experienced, hard nosed CPA on your investment plans.

Just make sure that you meet with your CPA in order to plan your tax strategies regularly. Keep them in the loop as early in your planning process as possible. When your CPA knows all the machinations of your plans, they can stop you from making costly mistakes. Many plans can change when you are drawing up investment strategies. Whenever your plans take a left turn, call your accountant immediately, so you can make the necessary adjustments.

Join Our Multifamily Real Estate Investing Community

Do you own your own multifamily rental properties? If not, do you plan to do so one day? Then you need to consider joining our online discussion group, the ATL Inner Circle Community! Each month, Rob Rowsell will teach you what you must do in order to build your wealth in the multifamily real estate business. It’s not as easy as it looks from the outside! Property taxes, liens, and costly legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! So sign up today!

Sep, 2024

Money Terminology You MUST Know!

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Successful Real Estate Investor Rob Rowsell explains money literacy terms in common language that investing beginners can understand. Master these financial concepts and terms as a step one in your wealth journey! No money making glossary is complete without this terminology to guide the way.

Money Literacy Terms – Net Worth and Income

Rob starts strong out of the gate with one of the foundational money literacy terms. When you subtract everything you owe from everything you own, you arrive at your Net Worth. In other words, your assets minus your liabilities equal your Net Worth.

Next, Rob explains the three different categories of income. Active Income means money that you are actively earning. If you work at a W-2 job or earn 1099 income, then all of that money qualifies as Active Income. Passive Income is money that you accrue without working a regular job. Some examples include Capital Gains from the sale of assets and the appreciation of the assets you own. Finally, Passive Residual Income (aka Horizontal Income) includes stock dividends, rent collected from tenants, royalties, and more. You may have taken one step to set up this “mailbox money”, and you enjoy earnings it brings you regularly without additional effort.

Important Financial Formulas

To truly succeed at the wealth game, you need to know your Vitality Factor. This is your true cost of living before you pay taxes and donate to charity. The Vitality Factor formula consists of adding your personal expenses to your deductible business expenses. This number is a key factor in planning for retirement.

Your Horizontal Income Score is the best measure of your ability over time to convert your Net Worth to Horizontal Income (Passive Residual Income). When you divide your Horizontal Income by your Net Worth, you get the Horizontal Income Score. For example, if your Horizontal Income is $100,000 annually, and your Net Worth is $1 Million, your score is 10. Rob estimates that the average number is around 3.5.

Most people subscribe to the Nest Egg Theory of investing. Summed up, the theory says that “Freedom is a number”. Typically, it’s the number of dollars in the bag of money saved in a 401k retirement savings account. The flaw in the theory? It is likely we will outlive the bag of money! Then, we may have to go back to work in order to pay our bills and maintain our lifestyle. If you truly want to keep working, great. If you have to work in order to survive in your golden years, not so great.

Finally, the Financial Freedom Formula is the most important of all formulas we’ll discuss on this list of money literacy terms. When you divide your Horizontal Income by your Vitality Factor, you get this number. If you arrive at 1.3 or greater (including taxes), then congratulations – you are financially free!

Tax Terminology

Your Blended Tax Rate means the average rate at which you are taxed on all of your income sources. Tax Drag means the wealth draining resistance taxes make on your investments and earnings. Cut this number as much as you can legally in order to avoid losing out on future compound earnings!

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Join Our Community

Do you own multifamily properties? If not, do you aspire to one day? Then you should consider joining our online discussion group, the ATL Inner Circle Community! Each month, Rob Rowsell will teach you what you must do in order to build wealth in the real estate business. It’s not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Sign up today!

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