Epic Real Estate Investing - How to Wipe Out Up to 30% of Your Adjusted Gross Income THIS Year | 539

Episode Date: December 11, 2018

Today, we’ll tell you how to use a trust to wipe out up to 30 percent of your adjusted gross income for this year. Learn what a charitable lead trust is and how it functions, as well as how you can keep the control over your asset even after moving it into the charitable trust. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. Did you know that up to 50% of your lifetime income will be wiped out by taxes? What if you could stop this madness? Isn't it about time you play on a level playing field with the wealthiest 1%? Now you can. Tim Berry, attorney at law, shares here each and every week current tactics and strategies that anyone can implement to hack the tax code. Protect your assets and keep what's rightfully yours.

It's time. for Tax Hacker Tuesday. Hello, and welcome to the Epic Real Estate Investing show. It is Tax Hacker Tuesday with my attorney and friend, Mr. Tim Berry. On Mondays here at Epic, we show you new and creative ways as well as time-honored ways of making money using real estate. On Tuesdays, we show you how to keep all of that cash. So welcome, Tim. Thanks, Matt.

Thanks for having me. Yep, it's always a pleasure. It's one of my favorite days of the week where I just don't have to think too much because I just let you do it at the thinking. I thought it was Taco Tuesdays. That's why you liked it. Yes, so we've got Taco Tuesdays and Tax Actors. We had one upper Tuesdays a couple weeks ago. Tuesday is just the best day for everything.

It is. So we've been talking about, we've been talking about over the last few episodes, of different things that you can do during the fourth quarter to minimize your tax liability. And I know you got another hot one for us today. So what do you got, Tim? What I have for you today is a fantastic trust.

And we've talked about this before that you can use to wipe out up to third. 30% of your adjusted gross income for the year. And the cool thing is about this trust is you've gotten until 1159 at night on December 31st, just to sign the paperwork and set it up, and you'll still get the full tax deduction for the year of, once again, up to 30% of your adjusted gross income. Wow. That's a biggie.

Yeah, no, I absolutely love this thing. And now, I love this thing, and I'm excited by it, but now let me turn off the audience whenever I say what the name of this trust is. You ready? Uh-huh. it's something called a charitable lead trust a charitable lead trust and i say this is going to turn off the audience because even though a lot of people talk a good game as soon as you mention anything with the word charitable in it interest just plummets uh everyone says oh no well charity begins at home i want

to keep the money in the family blah blah blah blah blah blah hey that's cool i get it yeah the bleeding hearts all the hearts go cold they do all the hearts go cold i mean uh even the blood that was oozing out of those hearts. It's frozen. It's caught in the valves. Right. Yeah. So, yeah, that's typically what happens, seriously. And so what we've got to do is the benefits of the lead trust are astounding if you can outperform 10% on an annual basis on your money. So once again, this lead trust, really cool thing. And Matt, I might have to recreate the magic from last week. Last week, what did we call those tax-exempt trusts? The epic trust. The epic trust. So we might want to call these things the epic trust because they truly are epic if you can outperform that 10%.

Epic trust on steroids. Epic trust on steroids. I always look at the initials of things with that EPOS. It'll be the EPOS trust. The EPO trust. There you go. And let me ramble on a little bit more about these things and why they are so cool. What you do is whenever you set up the trust, you have to move assets equal to the value of what you.

you want for the tax deduction. So let's say you made 500,000 bucks for the year and you want to get your 30% tax deduction. So you've got to move assets worth $150,000 into the trust. And notice the weasel word I'm using here. I'm not saying cash, you've got to move cash. You've got to move assets. So if you got a real estate property that's worth 150, cool, move it in there. If you've got a 30% interest in a property that's worth 450, and is that 150% percent? No, I was wrong. If you a property worth 500,000 and you want to move a 30% interest of that property in there, cool, you can do that. Just a portion of it.

Yeah, just a portion. If you've got a promissary note out there that you loan someone some money of 150 and you want to move the promissory note in there, cool, you can do that. So this doesn't even have to be funded with cash. You can fund this with assets you already have. Okay. So if you take this asset and move it into the charitable lead trust, how does that affect ownership. Well, the trust is now the owner of that asset, but the cool thing is you're the

trustee. You're the one who gets to make all decisions for it. So let's say you transferred over a piece of property, some real estate, a single family residence. Okay, cool. You as trustee can sell that property and now the asset stay inside the trust and now you can reinvest that property in the way that you see fit. And the cool thing is you get the taxee. this year for 150,000, but the trust is probably only going to have to distribute. I don't know the numbers off the top of my head, probably about 300 bucks for this year. So literally, you get a tax deduction of 150. If you're in a 40% state and federal tax bracket, that's $60,000 cash in your pocket.

And yet you only have to pay out to your charity or charities, I don't know, $300 for this year. And then next year, that's going to increase by 20%. So then next year you're going to pay out $360,000, and then next year you're going to pay out $420. And yet you got that tax deduction in year one of $60,000. If you reinvest that tax deduction of $60,000 at let's say 10%, that's generating $6,000 a year of income more than enough to pay off these measly payments you got to make. Okay. All right. I get it, I think. So where does the charitable part come in? charitable part is you're making payments to your favorite charity or charities over the next, let's say, 20 or 30 years through this trust. And so they get their whopping 300 bucks this year.

They get their whopping 360 next year. And Matt, you're probably thinking in the back of your mind, well, gosh, even a bleeding heart liberal could like this because this isn't overly charitably inclined. They're really getting pennies on the dollar. And to a certain extent that's true. But if you want to ramp up the payments, by all means, we've got some. clients who prepay, you know, the next five years of payments. So they'll actually give their charity, gosh, $5,000, $6,000, $7,000 right up front. If you're someone who tied, you do give your 10%. Cool. Let's front in load all those 10% for the next 10 years into this trust. You're

going to give the money out anyway. Why not get a deduction right now today for all those payments? Got it. So does the charity, like say it was a house or an investment property is the charity own the house now? No, the trust owns the house. The charity just gets income generated by the house. Okay, and it could be as little as that 300 bucks or whatever. It could be as little as that 300 bucks. And then you get whatever's left over. And you get whatever's left over. Okay. Now it's starting to make sense. Yeah, it's a cumbersome subject, a little bit convoluted and confusing. But, you know, just go to the website, ask for more info. We're more than happy to share with you more info because quite honestly these things are probably one of the biggest greatest tax savings

tools out there and not only is it a great tax savings tool but it's also going to ultimately help out the community so why not you know utilize it no okay I like it I was thinking like here's how you minimize your tax liability give all your stuff away there you go the more you give the better you get is that the right phrase got it I have but but you can still sell the property and you still get the cash flow from the property you just give an a port to charity every year. That's all you're doing, giving a portion to charity each year. Now it sounds much simpler that way.

Yeah. Well, you're the marketing guy. I'm just the dweeb. Well, we have to make you sound smart on here, so people think they need you. It's a tough one to do, too. Very tough. I know. I'm working hard over here.

It's wet running down my face. Super. All right. Well, that's good. If you moved this $150,000 asset in there, took that, that, that, $60,000 deduction, right? And is there a limit on when I can sell that property now? Oh, man, I was afraid you're going to ask that question.

No, there's no limits. So I could sell it the next year. You could sell it the next year, you could sell it the next day, you could sell it the next second. And I don't have to give that deduction back. You don't have to give that deduction back. I think we'll leave this in. That sounds even better. No, it's a fantastic tool.

The challenge with the charitable lead trust and the reason why more people don't use them is they're kind of hard to understand. It takes a lot of math to look at the numbers and everything. But once you understand them, they're probably one of the greatest tools out there. Super. Well, that's why we have you so you can explain that to people. Hopefully I can explain, if not just bamboosal them, you know? Perfect. So whenever you're ready to have Tim customize a tax hacker blueprint for you or if you want to talk about this charitable lead trust,

go to tax hacker.com, answer a few questions about your situation. Tell Tim what you'd like to have happen, and his team will take it from there. And then they'll even give you a copy of his free book all around Trump's new tax plan, specifically what the press isn't telling you. We're going to have a new book for the new year, though, Tim. Okay, so what should we make it? What's a good, exciting subject for everybody? I don't know.

I guess we'll wait until after, well, by the time you're hearing this, the elections have already passed. How about New Year and New Opportunities? New Year and New Opportunities, something like that. I think so. All right, perfect. All right, you go to taxhacker.com and get everything you're looking for there. And we'll see right here next week.

Take care. You too, man. Bye. That's it for today as we dream of a tax system that works just for you. But until then, you have Tim Berry. See you next Tuesday for another episode of Tax Hacker Tuesday. This podcast is a part of the C-suite radio network. For more top business podcasts, visit C-Dashore.

sweet radio.com