Taxes

Easy Tax-Advantaged Note Investing

October 7, 2019

When it comes to investing, everyone looks for an angle – a way to “beat the market” and get sizable returns with little risk.

Unfortunately, with publically traded stocks and bonds, there is never an opportunity to make a purchase at a discount, below market, or at wholesale.  Of the almost $7 trillion in IRAs, almost all investors chose to invest in lockstep based on advice from paid advisors, money managers, or through personal research.  The fact that you are interested in notes, purchased at a discount, provides a great deal of separation from the masses.

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Common Misconceptions About 1031 Exchanges

March 1, 2019

There are several common misconceptions about the Internal Revenue Code 1031 exchange process.  To keep investors on the right track and focused on what is important to that investor, let’s clear up a few of these most common misconceptions:

Misconception #1:  To execute a 1031 exchange the investor may only file a form with the IRS and as long as the seller doesn’t utilize, spend or touch the proceeds from the sale of the property they are relinquishing, the investor can perform an exchange at any time.

Wrong!  THIS IS FALSE.   The investor may not have actual nor constructive receipt of the sale proceeds.  This action will trigger a taxable event.  Investors need to use a special non-related “middleman” called a Qualified Intermediary [“QI”] or Accommodator who is required to hold the sale proceeds for them and who then uses those proceeds to buy any replacement property at their express direction. Once the sale of the property the investor is relinquishing closes, funds must be directed to the investor’s QI until the purchase or “up-leg” portion of the exchange is completed.

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Unintended Consequences of Government Policy

February 5, 2019

Government policies have a strong influence on the economy and markets.  Those policies can accomplish both their intended results, but also create unintended consequences.  The specific government policies that we are referring to include zero interest rates, quantitative easing, excessive growth of government spending in excess of tax collections and GDP growth, tax cuts, tariffs, and restrictions on foreign governments.  All of these policies may have good intentions but they do not occur in a vacuum.  We believe there are three unintended or ignored consequences:

  • Government and corporate debt have exploded
  • Inflation may begin to accelerate leading to stagflation
  • The dollar’s international reserves status is threatened

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Roth Conversion: Tax Free Growth, Tax Free Withdrawals

November 29, 2018

 

Roth 101 – The Basics of Conversion

When the Roth IRA was created in 1997, it was a small footnote in the world of Pensions and 401(k)’s.  Fast forward 20 years, and the Roth is on everyone’s mind. The big question; Should I CONVERT my Traditional IRA to a Roth?

There are 3 main questions to ask yourself about conversion.

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Roth IRAs and Why They’re Your Secret Weapon to Retiring Well

October 2, 2018

When considering yearly income taxes, many enjoy the benefits of a traditional IRA or any pretax retirement account, largely because they are able to deduct the contribution on their tax return. This is part of a strategy used to secure a lower tax bracket. However, investors that self-direct often enjoy large gains making the Roth IRA their #1 choice – and for a very good reason.

When you contribute to a Roth, you pay taxes up front. You might be asking yourself, “What’s so great about paying taxes up front when you can’t deduct your contribution from your taxable income that year?” Well, when you pay the IRS up front, that’s it, they don’t get anything else. Yes, it’s true. That means no capital gains tax, and no forced distribution at any age. You can buy and sell stocks, bonds, real estate, crypto currency, precious metals, etc. all inside your Roth IRA. This leads to increasing your wealth, year after year, without owing any additional taxes.

Let that sink in for a second.

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Private Lenders and Note Investors: 3 Tips from an Industry Radical

April 26, 2017

Written by: Doug Smith, Portfolio Manager – Castle Rock Capital Management

For more than 25 years, I’ve had the pleasure of working with some of the best credit minds in the country. I’ve also had the painful experience of watching scores of private lenders and note buyers with no formal credit background whatsoever make fatal mistakes when underwriting private loans and notes for purchase. Making private loans or buying performing and non-performing loans can be a very fruitful and worthwhile proposition, but many lenders and investors don’t follow sound underwriting principals when making a decision about purchasing or originating a loan. Continue reading…

The #1 Tip for Communicating with the IRS

February 28, 2017

Written By: Tyler Carter

I might need to go into protective custody for what I’m about to announce to the self-directed IRA community but here it goes…the IRS isn’t all bad. I realize that’s like saying that the DMV is a fun place to spend an afternoon or that Pitbull has a few good songs. I know this sounds like an indefensible position, but hear me out. If you’re a taxpayer, you need to know about the Taxpayer Advocate Service. Continue reading…