All Forum Posts by: Account Closed

@Redgy Saint-Germain He is NOT your realtor - he belongs to the person whose property he contracted to sell.

He is in breach of contract by refusing to show a prospective buyer the property.

A really great guy operating illegally not showing properties and working for buyers instead of sellers?

@Adam Craig You should use a 401k instead of an IRA - better benefits and you can borrow out 50% *up to $50,000 Massive Tax benefits when you do max with matching employer contributions.

The problem with Accountants is they are Not Economists - which is what you need when investing. 

Know why accountants wear Brown Shoes? .... To give them personality :) 

@Account Closed You should never have double tax unless you pay dividends - which you should not. There are plenty of other ways to clear out earnings pretax instead. There may at times be tax to yourself from Directors fees and Consulting fees - and there are very generous tax deductions and other benefits with a C. Do the research instead of dismissing it! 

Also Asset Protection is a must and a C does it better than LLCs.

typo - should have said Transfer of memberships of an LLCs is cumbersome (not Corps)

P.S. C Corps are ideal for Estate Planning - when you know how - assets do not need to be sold triggering gains tax - they can remain in tact. That can be a Massive Tax Benefit - but there is specialized know-how needed for this!

@Josh Prince Not all CPAs are in the dark on the advantages of C Corps. Have a look at the videos by them on Youtube to see the reasons the good ones back C Corps. 

LLCs can be used to put real estate in as you say - but there are no major tax advantages there, and little in the way of asset protection. LLCs can not issue shares - every time you add a member requires a special meeting and approval of ALL other members. C Corps is simple - just issue additional share.

Transfer of memberships of a C Corp is cumbersome - whereas for a C Corp all that is needed is to transfer the shares.

Control of a C Corp can be altered without any transfer of shares - just dilute the shareholding by issuing additional shares.

Long term capital gain occurs when shares are sold (after 12 months).

Ask the CPAs to find out details of medical deductions, and how to use 401k to a) reduce employee tax, shelter corporate profits, retain earnings and transfer LLC profits to a tax friendly state via management fees to the C Corp.

Banks do not like LLCs as borrowers - Finance is more easily obtained by C Corps. LLCs can not obtain Interest Free money without tax - IRS deems 4% as an interest rate and taxes Interest Free Loans. Whereas IRS does not mind when a Corp receives interest free money.

Tax free capital can be raised by a C Corp by issuing shares - and there is no liability attaching to the funds received. There are a heap of different classes of shares which can come in to play to suit, such as Redeemable Preference shares, Convertible Notes and any other particular type you care to utilize. 

The above is not an exhaustive list of why Corps make senses - do your research to discover more about their advantages.

@Bart H. Cost of Options is expensive - so too is the loss of capital when things tank, There are ways to hedge using options very cheaply - around 4% of what you insure. 

Note: you do not need 100% insurance as it is unlikely a property will go down in value to zero. So decide how much insurance you want. $100,000 or $200,000 might be all you need - depending on the value of your properties. 

People insure their houses against other risks, such as fire and storm, and their incomes.  It is a simple choice of whether to risk losing $100,000 or paying $4,000 or less after tax

If you have borrowed money it makes more sense to take insurance as loans can be called in or interest rates zoom. In either instance you might be forced to liquidate in a hurry in a down market. 

For Cash Buyers there is an economic cost of not leveraging - far greater than the cost of interest on loans and options combined. The Economics of BHP are daft!

@Linda Weygant Obviously a bit of work needs to be done in how things are structured and how gains can be taken as capital instead of income. My comments are meant to enlighten people as to what may be possible - without laying out every detail. 

People who are sufficiently interested in learning how can do as I did - 30 years of University Degrees and Post Graduate Courses, and the same amount of time working as a professional in Urban and Regional Planning, Real Estate, Securities Dealing and 20 years in Corporate Finance as a lawyer. 

It is impossible to dilute all there is to know in to a few minutes read on an  online forum.

You should have a separate LLC to hold each property. Having one in each state you own the properties would avoid possible adverse consequences as to whether you are regarded as doing business in the state. However technically you may escape that interpretation when you only hold property - so going for Delaware might work - but consult an attorney in each state to see their take on it as interpretations vary.

You will need a C Corp. structured above the LLCs - which can be paid management and other fees - and for tax purposes Delaware is fine. 

@Linda Weygant It will depend on the nature of the deals - there should be a separation of entities - those for doing flips and others for holding as investments. Certainly flipping will usually result in profit being tax as income. However, for certain types of acquisitions cost base structuring and deferred payments of part sums can avoid that.

The investment properties gains will be taxed at gains tax rates - and it is that activity the money investors should be paid for. Properties do not even need to be sold for them to be paid - as their positions can be sold as capital receipts and not income.

Obviously a bit of work needs to be done in how things are structured and how gains can be taken as capital instead of income. My comments are meant to enlighten people as to what may be possible - without laying out every detail. I see little reason to cast further pearls on a flock which has little understanding of Corporate Finance and who have entrenched ideas.

@Chris Purcell - there are ways to structure deals to make it work when buying from owner occupiers. (It is proprietary - if you are a JV partner then you will be shown how)