All Forum Posts by: Thomas Rutkowski

There are a lot of people on BiggerPockets intrigued by the Concept of leveraging the cash value of a Maximum Funded Life Insurance Policy to invest in real estate. The concept goes by many different names: Infinite Banking, Be Your Own Bank, etc. This concept allows you to put your money to work in 2 places at 1 time: The Double Play.

This is the second of a once a Week, 20-Minute Webinar series covering every key aspect of Life Insurance and "The Double Play". Webinars will be every Thursday at 1pm Eastern.

Thursday February 13th @ 1pm Eastern

Register Here

There's still time to register for Feb 6th Webinar:

Intro to the Double Play: A High Level Overview

Register Here

Future topics will include:

The Business Case for Leveraging Cash Value 

We're going to take a close look at the business model that I use to compare putting $X amount per year into life insurance and leveraging the resulting cash value to invest in Y growing at Z% against simply taking $X and investing it directly in Y and skipping the life insurance. Its an apples-to-apples comparison of using life insurance vs not using it.

2/20/2020 – The Business Case for Leveraging Cash Value

Recordings of past webinars will be available on YouTube and at innovativeretirementstrategies.com/Webinar Library

@Gebson Pinheiro

A 1031 exchange is not going to help you. That only works if you want to keep your assets invested in real estate. What might work for you is using what the IRS terms an intermediary installment sales transaction. When you couple this with a monetization loan, you can essentially defer the taxes on the capital gains for 30 years while still getting cash at closing that can be redeployed elsewhere. And even if you remain in real estate, this approach allows you to start over with a fresh depreciation schedule in the new property. 

The present value of that increased depreciation may be greater than the advantage of perpetual tax deferral in a 1031. The result will differ for every deal, but it should be taking into consideration.

There are a lot of people on BiggerPockets intrigued by the Concept of leveraging the cash value of a Maximum Funded Life Insurance Policy to invest in real estate. The concept goes by many different names: Infinite Banking, Be Your Own Bank, etc. This concept allows you to put your money to work in 2 places at 1 time: The Double Play.

This is the first of a 1X per Week, 20-Minute Webinar series covering every key aspect of Life Insurance and "The Double Play". Webinars will be every Thursday at 1pm Eastern.

Thursday February 6th @ 1pm Eastern

Register Here

Future topics will include:

Life Insurance 101: The basics you need to understand before we can dive deeper.

The Business Case for Leveraging Cash Value

Which is better for the Double Play: Indexed UL or Whole Life?

Minimum vs Maximum Funded Life Insurance Policies

Debunking the Common Myths About Life Insurance

Premium Financed Life Insurance: Flipping the Double Play on its Head

Understanding the Costs in a Life Insurance Policy

The #1 Costliest Mistake Most People Make When They Set Up a Policy

Is Buy Term and Invest the Difference Really Better? Let's Analyze the Numbers.

3 Things to Look for in a Properly-designed Policy

3X the Income from the Same Amount of Savings: Life Insurance as a Retirement Plan

Understanding Indexed Universal Life: Caps, Floors, Crediting Rates, and Myths

What Companies are Best for Double Play Policies?

Why you Shouldn't Use a Policy Loan. What to do Instead

Understanding Life Insurance Illustrations

Common Tricks Agents Use on Illustrations

Understanding Fixed, Variable, and Indexed Policy Loans

Understanding the Guaranteed Rate in a Life Insurance Policy

How to Get the Most Cash Value in a Policy

When is the best time to use a policy loan?

The Advantage of an IUL for the Double Play

Recordings of past webinars will be available on YouTube and at innovativeretirementstrategies.com/Webinar Library

If you answered $85,000 read on, this announcement is for you. You understand the power of compounding interest.

There are a lot of people on BiggerPockets intrigued by the Concept of leveraging the cash value of a Maximum Funded Life Insurance Policy to invest in real estate. The concept goes by many different names: Infinite Banking, Be Your Own Bank, etc. This concept allows you to put your money to work in 2 places at 1 time: The Double Play.

This is the first of a 1X per Week, 20-Minute Webinar series covering every key aspect of Life Insurance and "The Double Play". Webinars will be every Thursday at 1pm Eastern. 

Thursday February 6th @ 1pm Eastern

Register Here

Future topics will include:

Life Insurance 101: The basics you need to understand before we can dive deeper.

The Business Case for Leveraging Cash Value

Which is better for the Double Play: Indexed UL or Whole Life?

Minimum vs Maximum Funded Life Insurance Policies

Debunking the Common Myths About Life Insurance

Premium Financed Life Insurance: Flipping the Double Play on its Head

Understanding the Costs in a Life Insurance Policy

The #1 Costliest Mistake Most People Make When They Set Up a Policy

Is Buy Term and Invest the Difference Really Better? Let's Analyze the Numbers.

3 Things to Look for in a Properly-designed Policy

3X the Income from the Same Amount of Savings: Life Insurance as a Retirement Plan

Understanding Indexed Universal Life: Caps, Floors, Crediting Rates, and Myths

What Companies are Best for Double Play Policies?

Why you Shouldn't Use a Policy Loan. What to do Instead

Understanding Life Insurance Illustrations

Common Tricks Agents Use on Illustrations

Understanding Fixed, Variable, and Indexed Policy Loans

Understanding the Guaranteed Rate in a Life Insurance Policy

How to Get the Most Cash Value in a Policy

When is the best time to use a policy loan?

The Advantage of an IUL for the Double Play

Recordings of past webinars will be available on YouTube and at innovativeretirementstrategies.com/Webinar Library

I'll take this angle a little further. Every time life insurance is mentioned, people freak because they heard that life insurance is a rip off. I'd like to make it clear that a maximum-funded, high cash value life insurance policy is the polar opposite of the "whole life" policies that everyone thinks are full of high fees. These policies are designed for minimum death benefit and fees so that most of the premium goes to the cash value and the cash value is hit with as little fees as possible. These policies are designed to only barely meet the legal definition of life insurance. But, since its still called life insurance, the uneducated masses still think its a ripoff. 

When your cash is not working in a deal, it can be earning dividends or interest-crediting in a properly-designed policy. When you want to get back into a deal, you can borrow against your cash value as a source of funds. Done properly, the interest is a tax-deductible business expense, so you have the added benefit of minimizing your taxable income while you literally put your money to work in two places at one time.

More on this approach is in this thread...

https://www.biggerpockets.com/forums/519/topics/245380-paradigm-life-infinite-banking-whole-life-insurance?page=3

@Bill Exeter

The text of your own post proves you wrong. 

The FTB is aware of certain arrangements in which a 1031 Exchange investor and/or Qualified Intermediary attempt to convert proceeds from the sale of the investor's relinquished property that is part of a failed 1031 Exchange

FAILED - past tense. This would be a contract that has reached 180 days without a transaction. This does not refer to any transaction between 45 and 180 days.

It was made clear by the FTB that these arrangements do not qualify for a deferral of gain recognition under Sections 453 or 1031 of the Code since, among other reasons, these sections and the federal doctrine of constructive receipt do not support such a deferral of gain recognition.

The whole point of a 1031 exchange is to insure that the seller never has constructive receipt of the sales proceeds. The intermediary is holding the sales proceeds. After the 180th day the intermediary has to fulfill the contract and that is when the seller has constructive receipt. All the FTB is stating is that any effort to recharacterize the transaction at this point is disallowed.

the California FTB will impose failure to withhold penalties against the Qualified Intermediaries who actively participate in these installment sale transactions where boot or proceeds from a failed 1031 Exchange are converted into an installment sale or note or similar arrangement in which payments are to be paid out over two or more years.

Again, past tense is used. The transaction has not failed until the 180th day is reached.

Sorry, but I'm going to trust the opinion of tax attorneys, not a 1031 provider who is spreading disinformation to protect his own business.

@Bill Exeter

We've gone over this in another post, yet you keep distributing misleading information. 

The difference that you are failing to note is that there is a difference between rescuing a "FAILING" transaction versus a "FAILED" transaction. A 1031 exchange that is between the 45th and 180th days HAS NOT FAILED and can be converted to a DST or MIS.

You will get no argument out of me about converting a failed 1031. It can't be done. 

When advisors speak of rescuing a 1031 exchange, they are speaking about saving it before the clock runs out.

How much is your capital gain? Unless you got the house for free, you have some cost basis in it. 

The HELOC will give you access to the equity without selling the property. But if you sell it, the loan has nothing at all to do with the capital gain calculation. Debt over basis is a separate issue, though.

Correct. The syndication IS the GP's business. i.e. raising money to fund real estate investments.

@Ronak Shah I don't believe a passive interest in a business will be looked upon as a business interest. Business implies an active role in the business. You have a security.