The deadline is looming. What smart tax saving moves will you be making before the end of the year?
Winning the money game is as much about minimizing taxes and avoiding wasting money as it is about investing for gains. If you stop the waste and stop overpaying on taxes, you’ll keep more and have a lot more to invest. Here are 5 ways to do that in the next few weeks. Obviously, seeking personalized advice from a CPA is highly recommended. And to be transparent, I am not a licensed tax professional. So please do not take this as professional tax advice.
Contribute to Self-Directed Retirement Accounts
Are you missing out on the tax savings and bonus returns provided by tax protected retirement accounts? Contributing to your 401(k) and IRAs can lower your annual tax burden. By rolling over into a self-directed plan, you can choose your own investments, i.e. real estate. Then your gains become protected from taxes and are able to snowball your returns and wealth. Make sure you are maxing out your allowable contributions before the deadline is up.
Pre-Pay for Business Items
If you need more deductions and write-offs, look for ways to spend now for what you will need next year. The upcoming holiday sales are an excellent way to compound these benefits by getting what you need for less — and gaining more breaks. This can apply to office supplies, travel, marketing, subscriptions, and related services. For example, maybe you want to redesign your real estate website, but haven’t finished the specs yet. Pay for it and get it started now. You can still polish it in the new year.
Make New Investments
The above also applies to making new investments. Invest bonus money, self-directed IRA funds, and other surplus funds into new investments before the end of the year. If you have liquidated or are planning to sell other investments, then find out about the tax savings a 1031 exchange might offer. I personally do not like seeing too much of my personal capital sitting in the bank. I put it to work in order to make more.
Real estate investors really shouldn’t be investing without an LLC, S Corp, or other entity to protect their privacy and minimize their tax burden. Too many put it off and then expose themselves to higher tax liability by trying to transfer assets later.
Get Your Accounting in Order
One of the biggest areas of loss for real estate entrepreneurs is failing to keep their books organized. They don’t record all of their expenses and miles. Use all the apps you can to close this loop. You’ll save on tax preparer fees and get the maximum deductions. This is a task I would recommend delegating, as I’ve stated before. Upwork is an excellent resource for finding someone to handle this.
Investors: Which of these tasks will you be performing? Anything you’d add to this list?
Let me know with a comment!