Big Tax Savings help build Real Estate Portfolio
Hey BiggerPockets, I recently have done a lot of reading about tax saving strategies for our business (we own a successful farming operation), and discovered multiple ways that we could save a TON on taxes - which means more money to put towards real estate!
Now, of course using real estate is a strategy on its own when it comes to taxes, but I also wanted to share how changing our business entity, and using the Augusta rule has saved us close to 50K in taxes this year.
By opting to have our LLC taxed as an S-corp we saved 15% on a large portion of our taxable income. In addition to that, we recognized we were using our home to host business meetings without ever charging our business to "rent" the space. So, now we rent our personal home to our business up to 14 times a year to host meetings and get to use it as a deduction on our business, but don't have to claim that income on our personal taxes.
Now, when we brought these strategies up to our CPA, he told us it would be a lot of paperwork, and tried to talk us out of it (because he was being lazy)... so we found someone new to work with. We found an Enrolled Agent whose focus was on proactive tax planning and strategizing, which is exactly what we were looking for. We knew there were more tax deductions available to us, and finally realized that our CPA wasn't actively seeking out ways to save us money.
So, the morale of the story is, don't settle for your CPA if they aren't working towards the same goals as you. We all know how valuable it is to have the right people on your team.
Do any of you have favorite tax deductions you utilize in your businesses?
@corrine Bordua great post! Thanks so much for sharing your tip and experience! I own 10 single family rentals and an insurance agency in PA I think I should look around and get a second opinion on my taxes lol I appreciate your sharing this 👊🏽
Originally posted by @Corrine Bordua:Hey BiggerPockets, I recently have done a lot of reading about tax saving strategies for our business (we own a successful farming operation), and discovered multiple ways that we could save a TON on taxes - which means more money to put towards real estate!
Now, of course using real estate is a strategy on its own when it comes to taxes, but I also wanted to share how changing our business entity, and using the Augusta rule has saved us close to 50K in taxes this year.
By opting to have our LLC taxed as an S-corp we saved 15% on a large portion of our taxable income. In addition to that, we recognized we were using our home to host business meetings without ever charging our business to "rent" the space. So, now we rent our personal home to our business up to 14 times a year to host meetings and get to use it as a deduction on our business, but don't have to claim that income on our personal taxes.
Now, when we brought these strategies up to our CPA, he told us it would be a lot of paperwork, and tried to talk us out of it (because he was being lazy)... so we found someone new to work with. We found an Enrolled Agent whose focus was on proactive tax planning and strategizing, which is exactly what we were looking for. We knew there were more tax deductions available to us, and finally realized that our CPA wasn't actively seeking out ways to save us money.
So, the morale of the story is, don't settle for your CPA if they aren't working towards the same goals as you. We all know how valuable it is to have the right people on your team.
Do any of you have favorite tax deductions you utilize in your businesses?
Thanks Brian - glad to help! If you don't find anyone local to work with, our EA helps clients virtually nationwide. Keep rocking it with your agency and portfolio building !!
Originally posted by @Brian S.:@corrine Bordua great post! Thanks so much for sharing your tip and experience! I own 10 single family rentals and an insurance agency in PA I think I should look around and get a second opinion on my taxes lol I appreciate your sharing this 👊🏽
@Corrine Bordua awesome post! Do you have any more info on the Augusta Rule? I'm guessing there are limitations to how much rent you can charge to your business?
Quote from @Jon Fletcher:
@Corrine Bordua awesome post! Do you have any more info on the Augusta Rule? I'm guessing there are limitations to how much rent you can charge to your business?
It has to be for an actual business use (like you're actually hosting employees for an event, or something business necessary) and you can deduct fair market value for the space.
Quote from @Corrine Bordua:
Thanks Brian - glad to help! If you don't find anyone local to work with, our EA helps clients virtually nationwide. Keep rocking it with your agency and portfolio building !!
Originally posted by @Brian S.:@corrine Bordua great post! Thanks so much for sharing your tip and experience! I own 10 single family rentals and an insurance agency in PA I think I should look around and get a second opinion on my taxes lol I appreciate your sharing this 👊🏽
I'm on the same boat. @Corrine can you share experience how you found an EA to help. TIA