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, 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!
