taxes

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In today’s meeting, we discuss the Wealth and Financial Freedom pillar. Our special guest is Kevin Basset. Remember, taxes saved are another income stream!

Wealthy Real Estate Investor Rob Rowsell teaches his secrets on how you can reduce tax drag. Maximize your investments and avoid tax losses the way rich real estate investors do. Learn the secrets in part 2 of this 2 part series!

Reduce Tax Drag - How Investors Can Cut Taxes to Save MoneyReduce Tax Drag On Your Investments Today

After wrapping up Part One of the Reduce Tax Drag series, Rob segued into the next two tips.

Set Up An LLC And Pay With Pre-Tax Dollars

Rob introduced the idea of Paying with Pre-Tax Dollars. This means you should push all legitimate business expenses to your business. This way, you will get an automatic discount. Business owners need to set up an LLC in order to run those expenses. When you’re a W2 employee, you pay taxes at the end of the year, and hopefully get a return from the government. LLC business owners can take out expenses on a lesser number. This means getting money back for deductions like fuel and your office utility bills. Robert Kiyosaki details this in his bestselling book Rich Dad Poor Dad.

Plan BEFORE You Play So You Can Reduce Tax Drag

As Rob has stressed many times over, you must Plan BEFORE You Play. Meet regularly with your tax strategist or CPA, so they are in the loop about your investment plans. Make sure your accountant knows your strategy in advance, so they can fill you in on the potential tax impact. This isn’t always fun, but the pain in order to potentially save and invest $50,000 instead of paying it in taxes is worth it.

Join Our Community

Do you own multi-family 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!

 

Wealthy Investor Rob Rowsell shares his ultimate tax saving secrets in part one of this two part series. Watch and read on to learn the first two of four tips. If you want to make the most of your investments and avoid tax drag, this is the series for you.

Tax Saving Secrets - Keep Your MoneyTax Saving Secrets, 1 and 2

Rob defines “tax drag” as the wealth draining resistance of taxes on your investments and earnings. It can cost you cash today, as well as robbing you of future compounded earnings from those lost dollars. In order to get ahead of this trend, you should meet with your accountant regularly. Specifically, a September meeting with them to report the financial moves you’ve made thus far in the year is a great idea. Once your CPA knows that, they can help you formulate strategies in the remaining three months to minimize the taxes you will owe.

Structure Over Deduction

The first of Rob’s tax saving secrets is Structure Over Deduction. Everyone looks for deductions at tax time. If you are not also structuring how you handle money year round, you won’t need to lean so heavily on deductions. Make sure to pay yourself tax efficiently. Rob’s financial advisor estimated that he should be earning a salary in a wide range. By paying himself on the low end of that range, Rob is being conservative monetarily. Remember, when it comes to your own taxes, you are the quarterback!

Tax Rate Arbitrage is another of Rob’s structure tools in his tax saving secrets toolbox. He formed a management company as a C Corporation, which received a fee from his real estate and automotive repair businesses for services rendered. The C Corp is taxed much more efficiently than his other businesses, so he saves himself cash all around. Entities have two reasons: asset protection and tax savings.

Another essential structure element is to Plan Your Exit Before You Go In. In the real estate business, the end game is often obvious. You may have a written three to five year plan for your multi-family properties investments. Whatever money you invest will help your tax advisor give you the right advice as your structure your businesses to save on taxes.

Tax Saving Secrets Continued: Invest Tax Efficiently

Rob continued with a game changing hack you can apply today. Savvy tax planning is the lowest risk way to immediately boost your investment returns. That includes knowing your end game and knowing which wealth bucket you are investing from.

Generally, long term capital growth investments go straight to your taxable accounts. This is because they are not taxed at the highest rates. “Ordinary income” cash flow investments go in tax advantaged accounts instead. Rob used the example of a short term loan he made to house flippers in his network. Using money from his Roth IRA, he was not taxed on the loan, and the returns could go back in his retirement to continue compounding.

Conclusion: Tax Saving Is A Revenue Stream

Remember, money saved on taxes is a revenue stream! Once again, tax drag is the opposite. It’s lost income from annual taxes paid. If you hadn’t paid those taxes, you could make compound returns on those funds over time.

Join Our Community

Do you own multi-family 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!

How does a successful real estate investor calculate their blended tax rate? Let Addicted to Life’s Rob Rowsell teach you the secret formula so you won’t pay more taxes than you have to!

Blended Tax Rate for Real Estate InvestorsRob Explains Blended Tax Rate For Real Estate Investors

Let’s do the math! Rob lays out a theoretical income amount for the group to consider. On a sample effective annual gross income of $400,000, Rob calculates a blended tax rate of 2%. That may sound small, but it in fact adds up to $8,000.

Jake Garcia asks our host for a clarification. Rob shows his work with a very simple equation. You start with your annual total gross income. Then divided it by all the taxes you paid at the end of the year. When you solve this equation, you will end up with your blended tax rate.

Finally, Rob makes sure to clarify that he does not hate paying taxes to his state and federal governments! Taxes are necessary for the United States to build roads, employ police officers, and provide equipment for the armed forces to defend our freedom.

As any business owner with many investments to look after would tell you, he just does not want to pay more than he actually owes by mistake. That means more cash on hand to invest in his family, his staff, and his eventual retirement goals.

Join Our Community

Do you own multi-family properties? If not, do you aspire to one day? Then you should consider joining our online discussion group, the Addicted To Life 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! Enroll today!

Last week, Rob offered a “Bathtub Analogy” detailing retirement investment ideas. What about retirement expenses that drain your money? This week, Rob explains five money drains that can eat away at your retirement savings and investments:

1. Ignorance
2. Taxes (Tax Drag)
3. Cost of Living (Lifestyle)
4. Compound Investment Costs (Fee Drag)
5. Inflation

Can you think of more money drains? How can you avoid (legally!) these drains on your wealth?

Retirement expenses may eat up your investment savings!Retirement Expenses Explained

Ignorance

When we discuss money draining retirement expenses, there are none more basic than ignorance. If you don’t do your homework before investing in that “sure thing”, you have no excuses.

Taxes

Rob quipped that “tax drag” was the main deterrent to long term wealth growth. When he said “tax drag” what did he mean? Every quarter, you need to review your finances with your CPA. Taxes may not seem urgent, but they will sneak up on you at the end of the year. Consult with a professional regularly to construct a tax strategy that will save your business considerably. A second opinion couldn’t hurt so you don’t end up making disastrous choices that eat into your investment earnings. In fact, you may have outgrown your advisor!

Cost of Living

Out of all of the retirement expenses, your cost of living could be the most uncomfortable topic. It may seem like a no brainer when we say you have to live within your means. You must draw the line where you know the number you need to live comfortably, but you don’t compromise your values. We all work hard, and deserve some creature comforts, but overspending today is a sneaky habit that can hurt our lifestyle in the long run.

Compound Investment Costs

Keep an eye on your Compound Investment Costs, or “fee drag”. These include the fees which you pay your advisors. When you make a lot of financial changes, the middle men and women always get their cut. Consider that when you are mulling your next investment move!

Inflation

Here’s a hot topic in the world of retirement expenses. As of this writing, inflation is climbing. The costs of goods and services are up in every industry. This may not be the biggest expense on the list, but you need to keep an eye on the markets to know where they are going and how you can benefit.

Join Our Community

Do you own multi-family properties? If not, do you aspire to one day? Then you should consider joining our online discussion group, the Addicted To Life 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! Enroll today!

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Kevin Bassett, Rob’s Financial CPA, was our Guest Presenter. He shared six tax strategies with the group.

Rob also did a Bathtub Review:

  1. Ignorance
  2. Tax without Strategy
  3. Lifestyle Values
  4. Fee Drag
  5. Inflation

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Preemptive Tax Strategies

Discussed in these eight concept slides:

  1. Entity selection
  2. Passive activity losses
  3. Control the timing of the sale or transfer of ownership
  4. Pension and retirement accounts
  5. Choice of entity formation location
  6. Cash without income
  7. Make sure your income is from the most tax efficient source
  8. Multiple entity strategies

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