Would You Trade Your Real Estate Tax Deductions For a Simpler Tax Code?

Tax, SDIRAs & Cost Segregation
16yFollow

Would You Trade Your Real Estate Tax Deductions For a Simpler Tax Code?

Bryan Hancock
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes

I am consistently baffled by the complexity of the tax code in the U.S.

What percentage of the tax "savings" that you realize each year go to pay for overhead associated with preparing returns, planning, advice, etc.? How much of a drag does this overhead present to your organization?

0Reply
183 views

Most Popular Reply

Mitch Kronowit
SFR Investor · Orange County, CA · Member since 2009 · 1k+ posts · 1k+ votes
16y

I hear there is going to be a super-simple tax return available next year for 2010. Only 2 lines!

_________________________________________________
1040 SUPER EZ

1. How much money did you make in 2010?.............._______

2. Send it in!
_________________________________________________

10Reply
See this reply in the discussion

39 Replies

Jump to latestLatest
  • Account Closed
    Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
    16y

    I would love to see a simplified tax system. They could then lay off a huge segment of the government that would become unnecessary.

    1Reply
  • Bryan Hancock
    OP
    Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
    16y

    Businesses could also lay off a huge portion of their advisors, preparers, etc. Think of how much more efficient everything would be!

    1Reply
  • Mitch Kronowit
    SFR Investor · Orange County, CA · Member since 2009 · 1k+ posts · 1k+ votes
    16y

    I hear there is going to be a super-simple tax return available next year for 2010. Only 2 lines!

    _________________________________________________
    1040 SUPER EZ

    1. How much money did you make in 2010?.............._______

    2. Send it in!
    _________________________________________________

    10Reply
  • Bryan Hancock
    OP
    Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
    16y

    I almost spit my drink all over my keyboard Mitch! You owe me money for a new keyboard ;-)

    Good stuff!

    0Reply
  • Marc Freislinger
    Flipper · Phoenix, AZ · Member since 2009 · 973 posts · 679 votes
    16y

    Tell your congressmen you want a simplified tax code. Hell, let's do away with income tax all together.

    http://www.fairtax.org

    2Reply
  • Mitch Kronowit
    SFR Investor · Orange County, CA · Member since 2009 · 1k+ posts · 1k+ votes
    16y
    Originally posted by Marc Freislinger:
    Tell your congressmen you want a simplified tax code. Hell, let's do away with income tax all together.


    And all those congressman as well!

    http://www.kickthemallout.com/

    1Reply
  • Bryan Hancock
    OP
    Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
    16y

    So I was doing some tax planning with my CPA this week over BBQ and was amazed at how small I felt with respect to the almighty tax code. I posted about the tons of changes that are happening next year and Charles knocked them out in a separate thread.

    Given that both parties want their own pet taxation changes how will we ever get to a simpler, less intrusive tax code?

    0Reply
  • Bryan Hancock
    OP
    Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
    15y

    We sent our tax returns in last week and I was still baffled by the volume of effort required to file them. Things seem to get more complicated from a taxation standpoint every year.

    I have heard rumblings about our legislators simplifying things. Please call them and tell them to do it!

    0Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    15y

    I like the FAIR TAX idea but it has problems in it's current proposed form.

    1.What is the rate going to be and would people agree to it??

    2.They talk about poorer people paying too little to no sales tax and wealthier people consuming more paying a bunch of tax.

    Seems like the ROBIN HOOD method which will never work.People that have money fight vigorously at all costs to keep it and not give to the government to waste.

    I certainly don't want to carry people on my back because some poor are really having hard times.Other are lazy,on drugs,have zero ambition and are gaming the system at the expense of others.

    3.The big problem is states,cities,and counties collect taxes.They want the say on taxes for their local areas. The states DO NOT want the Federal Government controlling with a national sales tax and having the FEDS dictate to the states how and where to spend their money.

    I don't see local government giving up control on allocation and collection of local revenues.This is just not going to happen.

    How many times does the FED promise the state something and the reneg on it?? All the time. The state turns around and does the same to counties which roll downhill to the cities.

    I would love paying one tax percentage and throwing out all the forms.No audits,no crazy forms,just here is the taxes paid of XX percentage.

    There are too many people on the Government gravy train to take off the wheels.

    Podcast Guest on Show #47
    NNN Invest53 Reviews
    WebsiteView Page
    1Reply
  • Marc Freislinger
    Flipper · Phoenix, AZ · Member since 2009 · 973 posts · 679 votes
    15y
    Originally posted by Joel Owens:
    I like the FAIR TAX idea but it has problems in it's current proposed form.

    1.What is the rate going to be and would people agree to it??

    Last I saw, it'd be around 23%. Anyone with a job already pays at least this much in tax, so I assume they'd agree to it. People living off the means of others shouldn't get much of a say imo.

    2.They talk about poorer people paying too little to no sales tax and wealthier people consuming more paying a bunch of tax.

    Seems like the ROBIN HOOD method which will never work.People that have money fight vigorously at all costs to keep it and not give to the government to waste.

    I certainly don't want to carry people on my back because some poor are really having hard times.Other are lazy,on drugs,have zero ambition and are gaming the system at the expense of others.

    You already carry the weight of the poor. The only thing that would change is the fact that you get to keep what you MAKE. You only have to pay taxes on the things that you buy.

    3.The big problem is states,cities,and counties collect taxes.They want the say on taxes for their local areas. The states DO NOT want the Federal Government controlling with a national sales tax and having the FEDS dictate to the states how and where to spend their money.

    I don't see local government giving up control on allocation and collection of local revenues.This is just not going to happen.

    How many times does the FED promise the state something and the reneg on it?? All the time. The state turns around and does the same to counties which roll downhill to the cities.

    I would love paying one tax percentage and throwing out all the forms.No audits,no crazy forms,just here is the taxes paid of XX percentage.

    There are too many people on the Government gravy train to take off the wheels.

    From what I've read, there would still be local taxes controlled by the local governments, they would just be on consumed items rather than income. Correct me if I'm wrong.

    0Reply
  • Bryan Hancock
    OP
    Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
    15y

    My wife and I both work and own businesses and we pay well less than 23% in effective federal taxes. I would gladly pay more for a reduced complexity in the code though. As it stands I pay a ton in wasted effort accounting for all of this crap and paying CPAs and lawyers.

    1Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    15y

    Hey Bryan have you figured out the TRUE cost of your taxes??

    In other words if you add up yearly the costs of paying your CPA's and Lawyers would it be 23% or higher??

    Even if not I bet the time it would free up for you would equal more earnings in doing more deals instead of keeping up with junk.

    Podcast Guest on Show #47
    NNN Invest53 Reviews
    WebsiteView Page
    0Reply
  • Rob Gillespie
    Specialist · Cleveland, OH · Member since 2011 · 1k+ posts · 852 votes
    15y

    YES! I hate spending time trying to learn the rules to the game while I am playing it. I would love to just focus on deals! If it costs me a little more, so be it. Our country needs to get back on track anyhow. I wont get political, I would like to not make enemies on BP! LOL!

    0Reply
  • Bryan Hancock
    OP
    Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
    15y

    I am guessing that the effective rate we pay is still less than 23% with all of the hassle. However, I would gladly pay 23% if things were simple and everyone paid the same thing.

    0Reply
  • Dave Toelkes
    Investor · Pawleys Island, SC · Member since 2008 · 1k+ posts · 837 votes
    15y

    My wife and I have a gross income in the low six figures, but after itemized deductions, personal exemptions, and certain tax credits, our effective tax rate is 0%.

    Why would I want to simplify the tax reporting system if it means paying 23% of my income in taxes when I pay nothing or nearly nothing now?

    I do my own research and prepare my own tax returns, so, the overhead dedicated to tax return preparation is just my time which does not cost me anything.

    2Reply
  • Bryan Hancock
    OP
    Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
    15y

    Thanks for the comment Dave. Your time does cost you something, but I can understand the reasoning.

    0Reply
  • Marc Freislinger
    Flipper · Phoenix, AZ · Member since 2009 · 973 posts · 679 votes
    15y
    Originally posted by Dave T:

    Why would I want to simplify the tax reporting system if it means paying 23% of my income in taxes when I pay nothing or nearly nothing now?

    Just to clarify, you wouldn't pay 23% of your income. You'd pay 23% of your consumption. Check out the website I posted earlier. They have a calculator for what your new taxes would be. If you'll end up paying more I'd be very surprised.

    1Reply
  • Bryan Hancock
    OP
    Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
    15y

    A consumption tax sounds like a horrible idea to me. How is taxing consumption going to propel the economy forward? You get less of things you tax.

    Am I missing something?

    0Reply
  • Dave Toelkes
    Investor · Pawleys Island, SC · Member since 2008 · 1k+ posts · 837 votes
    15y
    Originally posted by Bryan Hancock:
    Thanks for the comment Dave. Your time does cost you something, but I can understand the reasoning.

    Not really,

    There are 24 hours in a day. I only sleep about 4.5 hours a night. I am at the point in my investing where I don't have to work at a job and I don't have to chase a deal to put food on the table.

    I am financially independent. I outsource the day to day rental operations, and just get involved when I am needed to make executive decisions.

    I spend more time on my stock market portfolio than on my rental property portfolio. I doubt that my rental activity requires more than 50 hours of my time per year.

    0Reply
  • Bryan Hancock
    OP
    Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
    15y

    Yeah....I understand. You can still use that time to make money in some other way though.

    0Reply
  • Ebere Okoye
    Accountant · Hyattsville, MD · Member since 2011 · 120 posts · 44 votes
    15y
    Originally posted by Mitch Kronowit:
    I hear there is going to be a super-simple tax return available next year for 2010. Only 2 lines!

    _________________________________________________
    1040 SUPER EZ

    1. How much money did you make in 2010?.............._______

    2. Send it in!
    _________________________________________________

    lol, very funny

    0Reply
  • Bryan Hancock
    OP
    Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
    15y

    Yeah....I wish I could vote for the Mitch post again. Too funny!

    0Reply
  • Dale Osborn
    Mobile Home Investor · Spanaway, WA · Member since 2008 · 1k+ posts · 578 votes
    15y

    While stationed in Germany, I saw their system. Everyone pays a 20% sales tax on large items like cars, furniture, appliances, etc. This is then used to pay for free medical care for all citizens and they even had child care for workers. Seemed like a very simple process. However we have greedy people in charge who are not there to represent the people. They are in office solely for the graft and corruption of padding their own pockets. Social Security funds were raped so they could get 20% pay raises so whoever monitors the funds collected would have to be a robot or something. Any time you have money and power together - look out. These need to be kept separated.

    0Reply
  • Bryan Hancock
    OP
    Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
    15y

    Does anyone think there is any chance of a major tax overhaul to go along with fixing our budget problems? I have been hearing a lot of chatter about this recently.

    0Reply
  • Dave Toelkes
    Investor · Pawleys Island, SC · Member since 2008 · 1k+ posts · 837 votes
    15y

    Major, no. Closing some tax loopholes, maybe. When it is all over next month, we will still have our itemized deductions, capital loss deduction, general business credits, net passive loss allowance, and personal exemptions. In other words, all the complexities of the tax code that shelter my income from taxes will still be there.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free