Wealth Tactic 16
by Ed Barriskill (Co-Founder, 37th Parallel Properties)
Why not take advantage of the tax advantages and loop holes that the Rich and Wealthy do every day?
I have been a Real Estate Broker selling residential real estate as well as owning and managing rental properties for over 34 years. For 27 years, my wife and I paid the Government over $2,000,000 in income tax. Like you, we worked long, hard hours in our businesses (we were both in real estate sales) and through the years we paid approximately $130,000 in income tax each year! For many of those years I wish I had known the difference between a CPA and a Tax Strategist.
As many of you may know, I continually read investment books, listen to investment CD’s and attend investment seminars in order to learn more and more about real estate investing. During this continuing education process, I would occasionally find interesting information about Tax Strategies. In 2003 I called my CPA and asked him if I could take advantage of a tax strategy I had read about, and he said he would check it out and get back to me. Several days later he called back and said “sure you can.” During that year I asked him more several times if I could use other tax strategies I had learned about and each he said “sure you can.” I finally asked him why he wasn’t informing me about these legal tax loop holes and he then told me something that changed our financial life forever.
He told me that his job as a CPA was to be an operational accountant where he works primarily on my books, to make sure my records are correct and accurate for that tax year. His job was to complete annual returns, coordinate quarterly payments, review our rental profit and loss statements and at the end of the year accumulate all my monthly income and expenses and complete my tax return.
He then informed me that I should be working with a Tax Strategist. I learned that a Tax Strategist is someone who can be both an attorney and a CPA and who specializes in entity investment planning, and tax strategizing. Their main focus is normally on the tax laws and creating a tax strategy for their clients. Their main goal is to allow their customers to legally avoid paying as much of their tax bill as possible.
Since 2003, our Tax Strategist has saved us a lot of money and has also made us a lot of money as an investor. With the 9 commercial properties we now own and manage, our Tax Strategist has analyzed each property to be certain that we have the correct entity structure and goes over all the numbers for the investment. Unless he gives us his Stamp of Approval, we will not move forward with the investment. (Indeed, this is one of our “Money Rules.”)
You will find that a Tax Strategist will become a valuable member of your team. Through his advice, my wife and I learned to become “Professional Investors” and we have had to pay zero income tax for the last five years. I recall one specific situation where we had gone past the time limit of 180 days (or six months) to exchange a property and discovered we would have to pay $104,000 in taxes. I called my Tax Strategist immediately and explained the situation and within two days he called me back and told me he had found enough depreciation so we wouldn’t have to pay any income tax!
This year my Tax Strategist called me out of the blue and asked me to send him my 2003 tax returns. He explained to me that he had learned of a tax credit in the new Obama Stimulus Act where if a small business owner like myself had a business loss in the last five years the government would give me a tax rebate. He called me back within two days and told me in three months I would receive a check from the government for $57,750! Of course I know how the government works so I said to myself I will believe it when I see it. Well two weeks ago we received that check from the government. Without my Tax Strategist I would have never realized I had the opportunity to recoup the money owed me!
I wish I had known about a Tax strategist 27 years ago. Financially, Kathy and I would have been miles ahead and would have been able to invest another $2,000,000 into real estate, instead of giving it all to Uncle Sam. Regardless, over the past 7 years our Tax Strategist has become an invaluable member to our investment team.
At 37th Parallel Properties we are here to give you our 54+ years of knowledge and practical experience. We are here to help you gain information you can’t always learn through books, but through some of the life experiences we have already encountered. If you are a member of our 37th Parallel family we want to share our failures and successes so you don’t have to learn by making your own mistakes. Learn by our example so you can work faster toward achieving your financial goals and reach that ultimate goal of Financial Freedom.
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