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Updated over 1 year ago on . Most recent reply

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Pixel Rogue
  • PA
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Building a tax advantaged retirement plan...best ways to invest extra funds...

Pixel Rogue
  • PA
Posted

Building a tax advantaged retirement plan...best ways to invest extra funds + smart exit strategy from rentals.. We may decide to return early...

We are looking to build a retirement that minimizes tax obligation, lowest future tax bracket. Here is what we have, and/or are planning:
• Retirement savings are Roth across the board. We max opportunities annually. If this doubles in 10 years, all good here.
• We will likely do a 1031 of an investment property to a primary forever home, renting it out for the first few years
• Funds from sale of primary home, likely municipal bonds as best tax advantaged options? - might be able to this to 1m w/savings.
 (what other options here, that keep from paying future taxes)

------
Investment properties (looking forward to less landlord/maintenance hats, less tenants.) 
- Considering creating a company to manage each of the investment properties, charging a monthly fee which is then active income that can be transferred to tax sheltered investment (ie Roth) (as this exit plan will take a while)
- Thinking of 1031s to crowdsourced investment opportunities that accept 1031s, then in a few years convert to REITS then cash out. 
- Another option but not caring for what I'm learning, DST...low rates of return and seem secretive in how they are established..and private.
- Thinking of setting up a trust, and assigning the trust as president/member of each LLC.
  (would that work, no need for change stop financing, transfer fees etc?

Appreciate any responses, especially from those who are not seeking new clients or promoting a book.

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Chris Martin
  • Investor
  • Willow Spring, NC
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Chris Martin
  • Investor
  • Willow Spring, NC
Replied

@Pixel Rogue I went down a different investment path, leveraging Form 3800 ITC (Investment Tax Credit) favored development. The ITC numbers, basically, provide in year one 30% ITC and the accelerated bonus depreciation deduction provides a roughly 70% equipment write-off. For instance, a $400,000 investment (excluding land and other non-contributing expenses) in a solar farm (probably works for wind farms too but I'm not in that space) allows for $120,000 for the ITC General tax credit and $280,000 loss via bonus depreciation. These carry-forward if not used. For any given year, electricity production is taxable, but I offset that income with the bonus depreciation loss carry-forward and ITC carry-forward for 20 years. 

New rules, apparently, under the iRA (Inflation Reduction Act) will allow developers to sell Renewable Energy Tax Credits to other taxpayers. Historically I've kept all ITCs for myself (I am selfish) but that may change if I start doing more development. 

Just a thought.

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