Epic Real Estate Investing - When Making Less Money is a GOOD Thing | 521

Episode Date: November 20, 2018

Learn when less is more! Listen about our 3 strategies to pay less money in taxes and implement them already this year! Brush up on how renting out for less than 14 days can save you from paying taxes, why you are first a marketer and then an investor, and how to take that training you need to develop your business and save your tax money. 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. All righty, welcome to the Epic Real Estate Investing show. It is Tax Hacker Tuesday with my attorney and friend Tim Berry. Hey, Tim. Hey, Matt. How are you doing, sir? Doing well.

I've missed you, buddy. It's been a while. It certainly has. It has. Good. I can't wait to make up for lost time. So on today's, or Mondays here at Epic, we show you new and creative ways as well as time-honor ways of making money using real estate.

On Tuesdays, we show you how to keep it. So if you have any questions specifically for Tim, you can go to taxhacker.com forward slash questions. You post your questions there, and we will answer them here live on this show. And here we are in fourth quarter, Tim. And there's what I found is, and from my experience, and you can share with me if I'm accurate or not, that people like to do all of their tax planning on April 13th. And it's kind of too late by then, right? Well, you know, you're being very generous. Most of my clients is normally April 14th, 1159 at night. Yeah, I don't know why the tax day of April 14th was in my head, and I knew it was 15th after I said 13th.

I was like, oops, I messed that. That's what I meant to say. Well, I think really the listeners, you're used to your listeners who are ahead of the curve. So they were a day early. They were a day early. Exactly. We prep them well over here. But if you're going to make any sort of impact on this year's taxes, it has to be done before, basically the stroke of midnight in most cases. You might have some exceptions. But let's go over what people need to be focused on the fourth quarter. You know, fourth quarter, it's really all about, and this is just going to be a truism, I guess, is lowering your income and accelerating your deductions.

That's what you really want to do on the fourth quarter. And then as well as line some things up so that, you know, maybe next year you can get some deductions for stuff and apply it to this year. But all about fourth quarter is increasing your deductions and lowering your income. Really simple stuff. Got it. Okay. So lowering your income, does that mean you just stop working? Well, you know, you kind of joke about it, but why not?

I'll give you an example. Right about now, I tell my clients that I want to make sure I do a really good job for them, so I'm not going to bill them a single dime until I'm fully completed with everything. And gosh, I move a little bit slow, so I may not be done until January 1st, January 2nd. So I'm still working, but my pipeline has been, this sounds weird, has been clogged until January 1, so I don't want any more money. Don't pay me this year. I'm begging you. Don't give me a dime.

Now, a lot of your people will probably have rental properties, maybe they have installment notes, things of that nature. Gosh, maybe they let it, you know, be known that, you know what, we know Christmas is coming up. We know that it's a rough time. if you want to defer payment for a while, go for it. I see what you're saying. Yeah. Giving your tenants the maybe November and December off. Yeah, November is probably already come and gone, but December,

if they want to be late by 30 months on payments, or 30 months, that's hilarious, 30 days on payments, it might work out for everybody's advantage there. So how much, say if you had three rental properties, how much of an impact would that have on your tax implications? It's really nothing exciting. Three rental properties, let's say, $1,000 each, that's a whopping $3,000 is going to lower your taxes. And then if you're already making over $150 a year, husband and wife,

you're not going to be able to deduct it. So in the larger picture, that's really not exciting. Got it. So what's another example? Other examples. And by the way, Matt, and for the listeners today, this isn't going to be the most exciting stuff. There's some really neat stuff we can do, but today is just about the bare bones basics.

And then we can hop into the more advanced stuff later on. One cool thing I've always found is get paid to party like it's 1999. Or am I dating myself here? I'm timely with that. I get it. But one of the coolest things of the tax code, and once again, this isn't going to be massive numbers, but it's kind of neat. It says that if you rent out your house for less than 14 days throughout the year, you don't have to pay any taxes on the rental income you receive. So let's say that you got a business and you're going to have a holiday party and you're a cheap skate like me and you also want to build up a deduction.

Your business could rent your house, have your holiday party at the house, the business pays you that money and you don't have to pay taxes on that income. Hmm. That's a good one. Go ahead. Well, and let's go to double bonus round with that. I've got a good buddy who has a bunch of employees and all that other stuff and he wants to give them year-in bonuses, but everyone complains about, hey, the year-in bonuses are going to cost too much. Okay, cool.

Maybe you have multiple holiday parties, and one of the parties is the key employees place, and you pay them, I don't know, how much is the hotel room go for now, about $3,000 or so? Oh, like a banquet room or something like that? Yeah. Yeah. That's probably right. Let's say whatever you pay them, whatever the fair market value is for the use of a similar bankrupt room with kitchen facilities.

If that's a couple thousand, that's a nice little bonus the employee just got. And how much do they have to pay in taxes? Nothing. All right. Yeah, that's a cool little thing. By the way, you might get some fun and entertainment out of the whole thing, too, or you might get some embarrassment out of it. Depends on how good of a party it was, you know?

Right. The holiday party is always good for camera opportunities. Yeah. Is that though? Right? Other neat one. Let's say you're on the fence. You haven't done it yet, but you know there's, I don't know, a training course you've got to sign up for and or a marketing course or there's some marketing expenses.

Sign up for those now. You don't have to attend the thing right now. The attendance doesn't have to be in 2018, but you can sign up now. Encourage that expense, hell, better yet. Throw it on a credit card, get air miles and take your time paying the thing. as long as it's using credit card. But now you can take that tax deduction in 2018, even though A, you don't pay it off till 2019,

or B, you don't attend until 2019. So if you're sitting on the fence with something, rack that thing up, get that tax deduction right now. Got it. Hey, on that note, because I had this question come up, someone that was considering working with us and they had a big tax dilemma

of whether they should do it now or after the new year, if they don't officially have the business but they want to create the business, does that have any impact on when they can deduct their education or their training? Yeah, you've got to have the business up and running before you can deduct that. The business has to be up and running. What's the definition of up and running? Well, if you're going to be flipping houses, the definition is by a house. That's what the IRS has said in previous cases.

But here's the thing, Matt. Your stuff is a lot different than most people I see out there, and your stuff is all about marketing. So maybe your business or the students' businesses or the people who want to hire, you get education, they have a marketing company. And a marketing company could be as simple as throwing up that website and doing some basic marketing,

throwing up the Facebook page and doing some basic marketing. Walla, you're now in business. You're out trying to get leads for people who want to sell or buy real estate or do whatever. Does that make sense? Yes, yes. So it's just a little bit of a change in viewpoint. A lot of people get caught up on, oh, I'm a real estate investor.

I'm a flipper. I do this, that or that thing. Oh, no, you're not. Your main thing is marketing because you're not going to be able to do anything unless you have the inventory and all that other stuff. So you've got to go on there and market. It's just a little bit of a twist on definition, shall we say. Sure. Well, it's actually 100% accurately.

We've said that more than once on this show that you are a marketer first before you're an investor. because if you can't market and generate leads, then you can't invest. Yeah, exactly. And so now what's the definition of up and running? Setting up that Facebook page, that's pretty tough. Setting up the website, oh, that's even tougher. We do that for them, so that's a whole lot of nothing.

Right. Okay, cool. They can have those deductions. And that just kind of goes to it is the big thing is limit your income and then prepay expenses. And by the way, if, I don't know, you have an office, front load at the office, pay off the rent for the next six months. You have various expenses, your cell phone bills, if they'll let you pay off some early.

So it's just a function of prepay as many expenses as you can and limit the income that's going to be coming in. Got it. Makes sense. Super. All right. So I think you had something planned for today, and we just went off. I took you down a rabbit hole over here with lowering the income. Well, no, no, no, no.

That's pretty much what I had planned for today was just that little truism of just talking about, you know, the basics ones, lower the income, prepaid the expenses. I mean, the stuff next week we can really bore people about the more intricate stuff to get, you know, the tens of thousands, if not hundreds of thousands of deductions. All right. I think we'll end with that. Stay tuned for the next boring episode of Tax Taggart Deep. Is that great marketing or what, Matt? Yes, yes. I've got a class for you.

How to bore your audience. Right? Very good. All righty. So whenever you're ready to have Tim customize a tax hacker blueprint for you, go to Taxhacker.com, answer a few questions about your situation. Tell Tim what you'd like to have happen. And then his team is going to take it from there.

And he'll even give you a copy of his free book all around Trump's new tax plan. This will be the first year. We actually get to put that into practice. And specifically, it's all about what the press isn't telling you. So go to Taxhacker.com and we'll see you right here next week. All righty, Tim. I'll see you next week. Okay, Matt. Take care.

You too. 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-sweetradio.com.