How a SDIRA can both save you money on taxes and help build your wealth.
Who likes paying more taxes than they’re supposed to? I think the answer would be no one! That is why I want to bring up an often-overlooked strategy when buying, renting, or selling real estate that might help you reduce your taxes.
The Self-Directed Individual Retirement Account (SDIRA) is a great tool for building wealth. Remember that I am not a CPA or an attorney, so this isn’t tax or legal advice. However, I can tell you that you have to pay taxes on what you report to the IRS as your net rental income, and there is a tax on your long-term capital gains. In many instances, you’re giving up almost a quarter of what you’ve made in income to the IRS! However, the SDIRA allows you to avoid both the tax on the rental income and the long term gain when you sell.
In its most simple form, you would buy the property in the name of the SDIRA, then all rents and expenses would go under its umbrella. Just like any other retirement account, there are rules and guidelines, and you won’t be able to take the money out right away. When you sell the property, the money has to stay in the account until you are of age. Still, the point is to build wealth for the future.
I wanted to explain this concept because I got into SDIRAs this year. After having bought a whole slew of properties personally outside of a SDIRA, I’m glad that now I’m set up to avoid taxes on future deals! If you have any questions about how to make it happen, I’m here to help. Call or email me, I’d love to hear from you!