TAXES!!
“Death and taxes. In this world nothing can be said to be certain, except death and taxes.” – Benjamin Franklin
I’ve spent a lot of time recently learning about taxes and how I can pay less of them. Over the last couple years, I’ve started to see how taxes can take a large chunk of earnings away from you if you aren’t smart about it. Yes, I’ve learned the hard way…again. However, if you take some time to learn about tax planning, take advice from people that are smarter than you on the subject, keep taxes on the forefront of your mind when conducting your business, and ensure you have a good team on your side, you can actually save a significant amount of money if you do it right. It boggles my mind when you hear about people like Donald Trump, or Robert Kiyosaki that say they pay very little to zero taxes every year. They make way more money than I do, but I seem to be paying more and more taxes every year. I think I’ve been doing it wrong!
As the year comes to an end, I’ve set a goal to start learning more about how to do proper tax planning. It’s probably too late for my 2017 filing, as I haven’t done a great job of keeping receipts and being purposeful about tax planning, however I have higher hopes for 2018. Here’s a few things I’m doing:
- Learning about tax planning the right way. Here are a few sources I’ve used recently:
- Tax Strategies for The Savvy Real Estate Investor by Amanda Han and Matthew MacFarland. This book is awesome and it opens up all kinds of ideas and strategies that will help you save money by deducting business expenses like a real estate pro.
- Taxes and Legal Discussion with Matt Owen. This video was made by our friends at Active Duty Passive Income and it is awesome. Matt Owens owns a highly successful turnkey company and he dives into tax and legal strategies with Markian Sich. Yes, you have to opt-in to see the video, but the education is worth it; you’ll probably learn something. Oh, and there are more videos about tax planning as a part of their Military Real Estate Investing Academy.
- Find an accountant that also invests in real estate.
- Referrals, referrals, referrals. Ask your network of real estate investors about who they use. I’ve interviewed a handful and have finally decided to go with one here in Denver. I’ll let you know how my 2017 filing goes. Hint: she’s on a Bigger Pockets podcast about tax planning.
- Set up my Estate properly and find a good real estate attorney.
- Again, get referrals from your network. This is important for so many reasons, but first and foremost I want to ensure my assets will go to the right people when I die. Additionally, this is a litigious world and I don’t want to get caught with my pants down if someone tries to sue. I’m ensuring my entities are properly set up, and I’m creating a Living Trust and re-doing my Will. All of my assets will be placed inside of the Trust so they will be protected from Probate.
- Get organized and put systems in place.
- I’m still trying to figure this one out, but here is a good article with some suggested tools to help get organized: 10 Apps to Use Now to Make Taxes Easier Next Year. I already use Quickbooks, but plan on getting it more organized. A few Apps I plan on using are MileIQ, TripIt, and OneReceipt. If you have others that you use, please recommend them below in the comments.
“I’m proud to pay taxes in the United States; the only thing is, I could be just as proud for half the money.” – Arthur Godfrey
I hope everyone had an amazing 2017 and here’s to making 2018 even more successful!
Do you have other tips and tricks for tax planning? Please post below in the comments.
Written by Stuart Grazier
Great article Stuart, thank you for sharing!!
Since we are on the topic of taxes, let’s talk 1031s. The benefit of a 1031 like-kind exchange is quite well known, but what can fractional-ownership bring to the table?
Please visit my post under the MIN Investments section titled “1031 — Tired, Stuck or Out of Luck???” posted on 15 JUN 2018 for more information on this topic.