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How to SLASH Your IRA's Taxes on Flips & Active Income  |  SDITalk.com #294

How to SLASH Your IRA's Taxes on Flips & Active Income | SDITalk.com #294

FromSelf Directed Investor Talk: Alternative Asset Investing through Self-Directed IRA's & Solo 401k's


How to SLASH Your IRA's Taxes on Flips & Active Income | SDITalk.com #294

FromSelf Directed Investor Talk: Alternative Asset Investing through Self-Directed IRA's & Solo 401k's

ratings:
Length:
6 minutes
Released:
Jan 15, 2018
Format:
Podcast episode

Description

https://SDITalk.com/294 -- Hello, Self-Directed Investor Nation! Welcome to the broadcast of record for savvy self-directed investors like you, where in each episode, I help you to find, understand and profit from exceptional alternative investment opportunities.My friends, this episode – episode #294 – is almost a part 2 follow-up to yesterday’s brilliant episode in which I shared with you exactly why it can actually REALLY MAKE SENSE to perform taxable transactions in your IRA, even though the tax rate your IRA will face – something on the order of 40% or so – is painfully high.Now If you didn’t get to enjoy that episode, you really should do so right now, because this episode builds nicely on that one. You can get the link for that show on today’s resource page, SDITalk.com/294.So even in the high-tax scenario I described in episode #293, that strategy still makes absolute sense. And today, I’ll make that strategy even better by slashing that tax rate in half by using a bit of tax-planning savvy.As I do that, you’re welcomed to join the conversation by toll-free telephone at (833) SDI-TALK, by email at feedback@SDITalk.com or by visiting the resource page for this episode, episode #294, which is, of course, SDITalk.com/294.Ok folks, I’ve got to warn you… or some of you, at least: If you’re one of those folks who hates Donald Trump just because he’s Donald Trump, and you give no regard to the positive economic benefits his policies bring to your financial situation, then you’re going to hate today’s show.But if you have the ability to be smart with the hand you’re dealt, you’re going to see how to use the recent corporate tax cut to HUGE benefit in your self-directed IRA or 401(k).So here’s the deal: When you make investments in your IRA that are considered by the IRS to be “active businesses” – like real estate flipping – then your IRA will be subject to income tax. Since your IRA is technically a trust, your IRA is taxed at trust rates… and those rates are high. For all intents and purposes, you can think 40%, and that’s before your state tacks on more.So a clever self-directed IRA or 401k user might think… “Ok, let’s do the deal inside of the IRA using a more tax-efficient business structure.” You know, something like… let’s set up a corporation inside the IRA and use the corporation’s tax rates instead of the really high trust tax rates.Sounds like a good idea, right?Only problem with that is that, until the Trump tax cuts, the corporate income tax rate maxed out around 39%... basically identical to the trust tax rates. So there’d be no real tax advantage for doing your flips through a corporation in your IRA.But this is where the new tax law can give a huge boost to your IRA. Now, corporate tax rates no longer top out at 39%, but at 21%... basically HALF of what it was before. That’s amazing… HALF!So you might recall yesterday’s example where your IRA made $60,000 in one year by doing real estate flips, but the IRA actually lost 40% of that – $24,000 – to taxes.Well, simply by forming a corporation in your IRA and performing the flips within the corporation instead of directly in the IRA, the max federal corporate tax rate drops to 21%, which means your IRA’s tax hit plummets to a bit over $12,000 rather than $24,000.Yep, you heard that right… the tax cut bill that the press claimed was only for “corporate fat cats” can actually have a very substantively positive effect on your retirement savings via your self-directed IRA or 401(k)!Think about that difference… a difference of about $12,000. Not a huge amount, but it equates to about 2 year’s worth of maxed-out annual IRA contributions for most people. And what’s more, it’s plausible to experience that kind of result each and every year, not just one time.The difference can be HUGE.That’s all I’ve got for you today, but…Can I take 30 seconds and ask a favor of you? Would you be so kind as to stop by over at iTunes and give us a 5-star rating if you haven’t already? It’s
Released:
Jan 15, 2018
Format:
Podcast episode

Titles in the series (100)

Do you INSTINCTIVELY KNOW that Wall Street doesn't have your best interests at heart, and that there's a better way to grow and protect your money to build wealth for generations? Then this is the alternative investments show for you. Self Directed Investor Talk is America's ONLY Podcast exclusively for Self Directed Investors (whether using a Self Directed IRA, Solo 401k, or non-retirement accounts) who trust themselves more than they trust Wall Street. You'll get innovative investment strategies, deadly accurate market analysis, and uniquely vetted profitable investment opportunities that conventional financial advisers don't even know about. You'll receive a powerful new episode every day of the week... and each episode is 10 minutes or less! Check it out right now! See acast.com/privacy for privacy and opt-out information.