Epic Real Estate Investing - The Coolest Tax Savings Idea Ever! | 415

Episode Date: June 26, 2018

Do you know how to wipe out 30% of your tax liability in the blink of an eye? Learn the coolest tax savings idea ever (that 95% of the population is unaware of) with Tim Berry and Matt Theriault this Tax Hacker Tuesday! Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey, Rockstars. Welcome back. Glad you're here for another episode of Tax Hacker Tuesday. And real quickly, I don't know if you listened to last week's episode, but Tim put together something very special for the audience right here at Epic. And he put together his tax hacker blueprint. I mean, a blueprint, literally, a custom blueprint just for you on how to hack the tax code in your favor, ethically, honestly, legally, and even with Uncle Sam's blessing. So it comes with five specific elements to create this blueprint. And it's all custom. just for you. He's going to give you a one-on-one consultation to establish where you are and where you want to go. He's going to give you a custom tax action plan organized into easy-to-follow steps so you can keep all of the money that's rightfully yours. He's going to give you an asset protection plan organized into easy-to-follow steps so you know how to protect everything that you want

protected as he puts it so the bad guys don't come and get it. And then he's going to give you an accelerated retirement strategy so you can enjoy life while you're still young enough to do so. This working 40 to 50 years, it doesn't have to be that way. And he's going to position your life and position your assets into a format that really will accelerate your retirement strategy so you can go kind of against the norm, go against the grain and beat everybody there. And then he'll also give you quarterly check-ins to keep you on track toward your goals. So that's the tax hacker blueprint. It's normally $3,000 a year that he charges for this level of planning and consulting.

The introductory offer is half off just for you here at Epic for $1,500. And if Tim and his team can't save you at least double that, then it's totally free. pay nothing. So go to taxhacker.com, grab Tim's free book on how to navigate the loopholes and Trump's new tax plan. And then after, you'll have an opportunity to schedule some time with Tim and his team and just let them know. You heard this on the epic real estate investing podcast.

No questions will be asked. That introductory offer will be yours. And then tell him that you want your tax hacker blueprint. Go to taxhacker.com and everything you need, it's right there. All righty. Now on with the show. 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. All righty, welcome to the epic real estate invest.

show. It is Tax Hacker Tuesday with my attorney and friend 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. And then on Tuesdays, we show you how to actually Tim shows you how to keep it. And if you have a question for Tim, you can go to taxhacker.com forward slash questions and post it there. Hello, Tim. Hey, Matt. How are you doing, sir? Doing fantastically well. Cool. And a lot of hubbub on last week's discussion about trusts. Indeed.

Pardon me? I said indeed. Indeed. I said neat. That too. So some other stuff that came up and we got to talking about it and another type of trust. And it kind of related to, I think we referenced the medical field a couple different times.

And then two weeks ago, three weeks ago when you weren't here, one of your buddies came on and answered that question about the attorney, or not the attorneys, the doctors with the high income. how to save taxes, they had to pay off their loans and all that stuff. And you had another idea, something I've never heard of. Yeah, this is probably one of the coolest tax savings ideas out there. And you said you weren't aware of it. 95% of the population isn't aware of this. But this is a great way how you can wipe out 30% of your tax liability and the blink of eye, just a super neat, super effective way to get some massive tax deductions. 30%. 30%.

Got it. So that's 30% of your tax liability, not if you're in the 30% tax bracket, you make it zero. Correct. Exactly. It's going to wipe out 30% of your tax liability. But the cool thing is, let's see if you're making $100 million a year. Well, that's not a good example. Let's say you're making $300,000 a year. Yeah, let's not talk about me on this show. Let's make it more about it. I know. I'm not supposed to talk about your finances. I'm sorry about that, Matt. Yeah, yeah. Let us love. What can I say? Oh, that's good. So if you're making $300,000. and we wipe out 90,000 of it, that's probably going to throw you in a lower tax bracket. So we're not going to take it down to zero, but we're probably going to drop your down your tax bracket, which is going to be another little savings tool. So it's pre-bracket savings.

Pre-bracket savings. Let's say that went five times fast. I bet nobody said that today. Yeah, yeah. Talking about PBS, huh? The PBS, yeah. All right, so what is this do-hicky? This do-hicky is called a charitable lead trust. And the way this charitable lead trust works is that you set up the trust, and then you hardwire into the trust a stream of payments that you're going to make to your favorite

charity or charities for the next 30 years. And so, for example, you say, on year one, I'm going to give out $200 to my favorite charity. In year two, I'm going to give $240 to my favorite charity. year three, I'm going to give 20% of 240, whatever that would be, 288 or something of that nature, to my favorite charity. And we build this all the way up for the next 30 years. We increased 20%.

So that's probably going to be a $20,000 payment or something like that in 30 years. But you hardwired that inside this trust document. And then what happens is at the end of the year, you go through and you analyze, you use something called a net present value analysis. And you take the net present value of all those payments and you say, okay, at the current interest rate, the IRS is used in the interest rate right now of 3.4%. At the current interest rate, I would have to invest $100,000 today to make all these payments. So I get $100,000 tax deduction. And here's the cool thing. And people just stop and listen to this a couple of times.

If you've downloaded this recording, you're going to play back a good. couple of times because it's going to move a little bit fast, but if you get the $100,000 tax deduction this year, how much was the payment required in this year? $200. $200. And next year was $2.40. And yet you got a tax deduction of $100,000. Let's say you're in a 30% federal income tax bracket and a 10% state. $100,000 tax deduction is equal to $40,000 cash in your pocket. You with me there, man? I am. Okay, cool. In the 40% tax bracket. right? Yeah. So you just got paid $40,000 cash, and yet you're only putting out there $200 this year. And here's the other cool thing in this one. We're using an interest rate of 3.4%. That's what the

government thinks is a fair interest rate right now, 3.4. I'm hoping, Matt, that your listeners can make a little bit more than 3.4. If they can make 10%, my guess is their actual net present value of those payments is about $25,000. as opposed to the 100,000 the IRS says. If they're making 15%, I think it's right around $10,000. So the IRS in this year gave you a tax deduction that's equal to $40,000 bucks cash in your pocket. And yet your true cost at 10% is right around $25,000.

So you just made $15,000 on this little arbitrage on this deal, and yet you helped out your favorite church or charity, too. How cool is that? And if you're making 15%, your cost was only $10,000, so you got paid $30,000 to do this. So this is just a super cool strategy to utilize. Is that way too complicated? Yeah, we're going to walk through it and break it down.

Okay, cool. Talk to me like I'm five years old. Okay. And all right, so we create this trust over the next 10 years. We're going to start with $200, and it's going to increase 20% every year. Yeah, and we're going to make it 30 years because if we want the time valued money to work for our benefit. So we want to drag it out as long as we can. Okay. And then that final payment could be right around, what, $20,000, right?

I'm just tossing that figure out, but yeah, let's say $20,000. Okay. So the $100,000 deduction comes from what those payments will be over the 30-year period. Correct. Okay. So you are going to pay $100,000, but we get to take the deduction this year when we're only paying $200. Exactly. All right. I got it. Can you take, so the next 29 years, there's no deduction to take, right? There's no additional deduction to take. This thing's on cruise control. Got it.

All right. Now, when we were talking about the return thing, that's where you lost me. So if the listener could get a 10% return, what are they getting the return on? Oh, I see. Okay. I'm sorry. Right now, the IRS thinks that the average listener is going to go out there, knock on the door of B of A and say, B of A, can I put my money, my $100,000,

inside of a CD paying 3.4%. Got it. And that's the return. That's my investment return. And so they're saying the person's going to make 3.4%. And if that money is invested at 3.4%, they'll be able to make enough to make these payments. But I'm hoping, Matt, your listeners have the ability to take money, the $100,000, let's say,

and invest it and make a higher return than $3.5%. point four percent. I see what you're saying. And so now if they invest it and the return on that money is 10 percent, their true cost of these payments is roughly, like I said, about 20,000 bucks or so. All right. So slow down. Okay. First of all, where's this bank that's paying 3.4% on their same? Oh, so true. So true, Matt. Good point. But, um, okay, so let's come back. So you get the $100,000 deduction. Yep. which means $40,000 of real cash in your pocket. Correct.

Right? So you have to put that $40,000 to work to make these payments for the next 30 years. Correct. That's what you're talking about. Correct. All right, got it. Because you kept saying the $100,000, I was like, well, it's not really $100,000 that you have to invest. Well, one thing with the trust is you have to put a dollar amount that is equal to the amount of the tax deduction inside the trust.

So if you're going to get $100,000 tax deduction, you're going to put $100,000. into the trust. Okay. Oh, okay. So there's $100,000 in there. So there's $100,000 in there. Did not get that. All right. Now, where does the $40,000 come from? That's tax savings. So off the $200,000 that's left that you're getting taxed on? Correct. Got it. Are you able to invest that $100,000 while it sits in the trust? Of course. Okay, so that's where it happens. That's where the magic happens, so to speak. All right. So it's kind of like, for example, kind of serve as kind of like a self-directed IRA type thing. Like you can self-direct that money invest it.

You can self-direct that money. And a simple example, let's say that somebody needs a hard money loan, $400,000. Trust, you're the trustee, you write a check to the person, you make the hard money loan. If you can make 10% annually, your true cost of making all these payments out to the charity over that time frame is only about $20.000. thousand bucks. All right. So let's say we have this $100,000 in this, CLT, charitable lead trust.

That's what's called lead? Charitable lead trust, yeah. Charitable lead trust, okay. You invest in that. Let's say over the 30 year period, you doubled it, right? So there's $200,000 in there. Oh, you're going to do more than double over. No, but I'm just saying.

Yeah. But you're only responsible for the hundred. What happens that other hundred? Does that go to the charity too, or do you get to keep that in some way. It goes in your pocket. Goes in your pocket. Goes in your pocket. Is that, is that whenever you want or is that at the end of the term? The simple answer is at the end of the term, the realistic answer is so long as you're making enough to fund those payments, that excess money can go in your pocket. Got it. Okay. I totally understand now. Totally understand. There you go.

Now I see why it's slick. Yeah. It's. It's a lot. It's, So this is my not be your initial investment strategy. This is if you have extra money you're trying to, quote-unquote, hide. You'll hide such a nasty word. I know, it's terrible. You're trying to put it in a tax-protected environment. Well, let's make it even more simplistic. If you're looking to wipe out 30% of your tax liability for the year.

And here's the other cool thing about this. It's kind of a procrastinator special. So long as you set this up by 1159, I'm sorry, so long as you set this up, up by December 31, 1159 at night, you sign the document and fund this trust, you get the tax deduction for the entire year. So this is something if you can wait to the very end of the year and say, gosh, I made a hell of a lot more money than I thought I was going to. This is great, but I'm going to have a big tax liability. Let's set up this lead trust. Got it. So you kind of like in the real estate world, you've put this hundred grand in there and now you get to be your own lender,

lending to yourself. Exactly. You can even do flips inside here. You can do flips. You can do lending. You can do rentals. You can do whatever you want to. That's great.

So much smarter after I talked to you, Tim. You must have got a good edge of commation. Oh, I wouldn't go that far at all. Sweet. All righty. So if you want to download Tim's free book, you go to how to take advantage of five loopholes in Trump's new tax plan, the mainstream media isn't sharing with you.

I would call this big loophole. Maybe it's something that could really impact and emphasize the loopholes that there are there, right? And it could cost those loopholes. I'll have to do an edit here. Or maybe we won't. It could cost you a small or large fortune is the title of the book. It's really long. It's a mouthful.

So forgive me. I only said it nine episodes in a row, so I should have it down by now. So after you've downloaded Tim's book, you'll have the opportunity to schedule some time with Tim. and either he or one of his cronies will get on the phone with you for a short five to 10 minute call, be really quick, and they'll assess your situation. If there's a good fit, if they can help, they'll take you to the next step to help you there. And if there's not a good fit, they'll share some alternative resources to where a better fit for you can be made. Either way, Tim and his team are committed that you are better off after the call than you were before.

That's just Tim, that's team and Tim. That's what he does. Cool guy. And Tim, save me here, buddy. Any last thing, guys? No, I think you're doing fantastic on your own, Matt. All righty, sweet. I will see you next week.

And that's it for Tim and myself. We'll see you next week, like I just said, for another episode of Tax Hacker Tuesday on the epic real estate investing show. 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-sweetradio.com.