Summary: If you want to succeed in real estate, your tax strategy will play a HUGE role in how fast you grow.<br> <br> A great tax strategy can save you thousands of dollars a year — and a bad strategy could land you in legal trouble.<br> <br> On today's episode we discuss some ways to maximize your tax deductions, Little known secrets to take control of your retirement money, clever ways to write off your kids, and so much more.<br> <br> If you missed our last episode, be sure to listen to the Maverick Mistakes in Real Estate Investing.<br> <br> Enjoy the show!<br> <br> - - - - - - - - - - - - - -<br> <br> Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.<br> <br> Get your FREE coffee mug by leaving us a Rating and Review on iTunes. Here's how.<br> <br> See our available Turnkey Cash-Flow Rental Properties.<br> <br> Please give us a RATING & REVIEW (Thank you!)<br> <br> SUBSCRIBE on iTunes | Stitcher | Podcast Feed <br> <br> <br> How to Pay Less in Taxes – Amanda Han and Matthew MacFarland<br> Welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli. Today we've got what might be perceived as a boring topic, and that is about taxes. But remember that taxes are your biggest expense throughout your lifetime. Not only do you need to choose your income wisely because your income, depending on how you generate it, will be taxed at different rates. But if you invest wisely, like with real estate for example, you can have some of the best tax breaks available through the IRS code in the United State.<br> <br> See, the more you earn through your job or through your business, the more you're going to get taxed. But the system is actually set up in a way that actually punishes people who earn employment income. This is your W9 and, to some degree, your 1099 income. It is designed to reward business owners and investors. Real estate, rental real estate, income producing real estate, falls in that I quadrant. That's all about investing.<br> <br> Wage income not only requires hard work but it gets taxed at a very high rate and on top of that, you have to pay what are known as FICA taxes, which have to do with your Medicare. It's just not the best way to protect yourself from the taxes that will erode and eat away at every paycheck.<br> <br> <br> <br> How do you protect yourself? The best way is through rental real estate, income producing real estate. Why is that? Because it has many tax advantages, especially over wage income. You got this capital gains rates that, on real estate, caps out at 15%.<br> <br> Now, that's assuming you've held a property for a minimum of twelve months, but you compare that 15% federal tax rate on the capital gains to the 35% or so that you would be charged on wage income. There's a huge difference right then and there. On top of that, you have state taxes, and then on top of that, some states even have further discounts on those capital gains income. It really adds up.<br> <br> Remember that capital gains requires that you hold the property for a minimum of twelve months. This does not apply to flippers. Unfortunately, if you're wholesaling and flipping property, you lose out on this capital gain benefit.<br> <br> Now, there's also that 1031 exchange, which is basically a way for you to roll your profits over from one rental property into another and defer those taxes. You could potentially defer indefinitely. Your tax basis in doing so actually just rolls from one property to another to another. This is the great thing about the 1031 exchange, it's a tax deferred exchange.<br> <br> Now, there are some rules you have to follow. You have to close within 180 days and you have to identify those properties within 25 days. We've actually talked about this in a previous episode not too long ago. You can go back and listen to that to figure out how this all...
