Slash Your Tax Bill and Shield Your Wealth! My Real Estate CPA and Attorney Explain How
Apr 9, 2024
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Amanda Han & Mauricio Rauld, experts in real estate tax strategies, discuss LLC formation, avoiding tax surprises, accelerated depreciation, when to involve a CPA/attorney, S Corp benefits, minimizing liability for flippers, and more. They share insights on managing businesses, running multiple LLCs, and the benefits of real estate professional status. The podcast covers habits, books, and personal reflections for a BetterLife.
Establish LLCs for asset protection and transfer properties for full coverage.
Avoid overcomplicating entity formation and seek advice from legal experts.
Timing LLC creation after property purchase can streamline financing processes.
Engage legal and tax experts early for setting up LLCs and tax planning.
Consult a CPA for entity setup, legal agreements, and tax structures.
Becoming a real estate professional offsets passive losses for tax efficiency.
Deep dives
Starting with a Vision and Clear Goals
It is important to begin with a clear vision of what you want to achieve in real estate investing. Understanding your long-term goals, whether it's generating passive income or actively flipping properties, is crucial to charting the right path.
Prioritizing Insurance and Asset Protection
For new investors, starting with insurance coverage can provide an initial layer of protection against unforeseen liabilities related to properties. Establishing LLCs for asset protection is recommended, along with properly transferring the properties into the LLCs for full coverage.
Avoiding Overcomplication and Costly Mistakes
New investors should avoid the temptation to overcomplicate entity formation and seek expensive structures without fully understanding the costs and benefits. Balancing the need for protection with the actual risks involved can prevent unnecessary expenses and legal complications.
Timing Entity Creation and Property Transfer
Timing the creation of LLCs after property purchase and rehab can help in streamlining financing processes while maintaining asset protection. Lacking proper tax planning and activity filings can lead to penalties and additional costs for new investors.
Consulting with Legal and Tax Professionals
Newbie investors should engage with legal and tax experts when necessary, such as setting up LLCs and understanding tax implications. Collaborating early on ensures a solid foundation for future real estate endeavors and minimizes risks of costly errors.
Importance of Legal and Financial Planning for Real Estate Investments
When starting out with rental properties, securing legal agreements specific to the state and later consulting a CPA for entity setup and tax planning is essential. Understanding the need for proper documentation and tax structures can lead to cost-effective solutions for property ownership and management.
The Significance of Setting Up Entities for Real Estate Investors
For individuals entering the real estate market with ambitions of scaling their investments, setting up LLCs and seeking advice on managing entities becomes crucial. Making decisions based on current net worth, scale of expansion, and long-term goals impacts tax savings and liability protection.
Maximizing Tax Benefits through Strategic Real Estate Professional Designation
Becoming a real estate professional involves meeting specific IRS criteria related to time spent in real estate activities and material participation. Qualifying for this status enables investors to offset passive losses against income from various sources, ensuring tax efficiency.
Challenges and Lessons Learned from Personal and Professional Health Crisis
Facing a severe health crisis that led to multiple surgeries and extended hospital stays, the experience prompted a reevaluation of business strategy. Transitioning from a solopreneur to building a self-sustaining company with a focus on scalability and operational independence, allowing for continued growth and resilience.
Excitement for Scaling Business and Legacy Planning
I am excited about scaling our business to allow more freedom for family time and personal growth. Legacy-wise, I want to instill values in my kids and generations with financial security and strong family bonds.
Scaling Business and Impacting More Lives
I am eager to scale our firm to create more time for family adventures and other pursuits. Legacy-wise, I wish to impact more lives positively by changing perceptions about taxes to enable financial growth and understanding.
Connecting with Audience and Growth Strategies
To delve deeper into tax strategies and connect with the audience, visit KeystoneCPA.com or follow Amanda Hahn CPA on Instagram. For insights on real estate, taxation, and personal development, check out Marish's YouTube channel or follow him on Instagram at Marish Reolds.
Amanda Han and Mauricio Rauld are Brandon’s personal CPA and attorney, respectively. They both work with real estate investors of all stripes to help them avoid taxes (legally) and protect their assets.
In this episode, they speak directly to 6 different types of investors ranging from newbie to syndicator – and break down how each type of investor should approach their tax strategy, entity formation, insurance, estate planning, and more.
Amanda and Mauricio also talk about: - LLCs: how, when, and where you should form them - How to avoid a nasty surprise tax bill (common LLC mistake) - What accelerated depreciation is and how to use it to supercharge your returns - How to know when it’s time to bring in a CPA or attorney - When to consider an S Corp structure - How flippers can minimize their liability - Whether your rental properties need to be in separate LLC’s - What real estate professional status can do for you - What Mauricio learned from a near-death experience - How they run their businesses and the habits that let them live a BetterLife - And much more!
Amanda’s charitable cause - Animals for Armed Forces, her nonprofit which covers the cost of pet adoption for veteran families https://www.animalsforarmedforces.org/
Show Sponsor: - The BetterLife REI Summit May 3-5 in Denver, CO. The most actionable “how to” real estate event for new and experienced investors. Grab your tickets here: https://reisummit2024.com/
