YOU WON’T BELIEVE WHAT YOU CAN WRITE OFF!
Disclaimer Disclaimer: We made assumptions and used brevity, simplicity and professional judgement in preparing this information. Your specific situation may vary. We recommend contacting a CPA and/or attorney prior to making any important decisions. We are not endorsers of any software mentioned in this presentation. Thank you! 2
The Heroes Group ACCOUNTING & TAX SIDEKICKS ● Our missions include accounting, tax compliance and planning, and payroll Our customers are our ● Heroes, we are their Sidekicks We support Real Estate ● Professionals, Small Business Owners and Startups 3
Who Am I? SEAN DIMERCURIO CPA CGMA ✓ Certified Public Accountant (CPA) ✓ Chartered Global Management Accountant (CGMA) ✓ Co-Founder of The Heroes Group ✓ Real Estate Expert ✓ Ice Cream Enthusiast 4
Who Are You? ROGUE FLASH The Real Estate Agent The Flipper LEX LUTHOR The Landlord 5
Agent, no Company ROGUE THE REAL ESTATE AGENT, NO COMPANY REAL ESTATE ROGUE BROKER Commissions 6
Agent, with Company ROGUE THE REAL ESTATE AGENT, WITH COMPANY REAL ESTATE ROGUE BROKER Paycheck & Commissions Distributions ROGUE P. A. 7
Landlord LEX LUTHOR, THE LANDLORD REAL ESTATE LEX LUTHOR BROKER Rent Paycheck & Commissions Distributions Distributions LUTHOR LUTHOR P. A. RENTS LLC 8
Flipping THE FLASH, THE FLIPPER REAL ESTATE FLASH BROKER Paycheck & Paycheck & Commissions Distributions Distributions FLASH FLASH P. A. FLIPS INC. 9
S-Corporation Strategy DOES AN S-CORP STRATEGY MAKE SENSE? It depends... ● Net business profit matters ● A must if you are flipping properties ● Don’t use it for rentals (loss limitation ● issues) Pay yourself a salary (it can be done ● unevenly and randomly during the year) Don’t forget about self directed ● retirement planning 10
Can I write that off? QUESTIONS FOR BATMAN’S CPA Gadgets & Accessories? ● The Batsuit? ● Gym Membership? ● Alfred? ● Batphone? ● Parties & Galas? ● Batcave? ● 11
Can I write that off? IRON MAN vs TONY STARK Ordinary and necessary ● Stark Industries ● Must separate expenses ● Deduction for Stark ● Tower 12
Can I write that off? BATMOBILE: OWN vs LEASE It depends ● Lease if you like a new car every few years ○ Own if you are a road warrior or like to buy & hold ○ Keep a travel log (it’s required) ● Use one that is automatic ○ We like Everlance, check our website for others ○ Actual costs are nearly always more than mileage ● Gas, service, car wash, repairs, tires, etc. ○ Must use actual cost in year 1 or not allowed to use it ○ in the future 13
Can I write that off? OWN vs LEASE Weight limits & Cannot depreciate ● ● passenger rules apply Lease payments deductible ● Personal use Must calculate an income ● ● Depreciation deduction inclusion amount for vehicles ● $8k bonus in Y1 that are valued at more than ○ $3k depreciation Y1 $19k ○ Purchase prior to year ● end via loan 14
Walk Me Through Your Day IT’S YOUR TURN! 15
Retirement Planning YES! SELF DIRECTED RETIREMENT PLANNING Defer up to $71k (employees - $18k, employers - $53k) ● Or $18k + 25% of salary after $18k deferment ○ Great for: ● Opportunity to invest in rental properties, investment ○ notes, etc. High risk when flipping homes/real estate in the plan ● Structure deals as passive income to avoid penalties ● Borrow from 401k plan (typically up to 50%) ● Must pay interest and make payments ○ 16
Tax Elections LET’S TAKE A LOOK Materially participating real estate professional ● Provide more than ½ of total personal services in real ○ property trades and 750 hours of service Typically determined separately for each rental ○ Election to aggregate rental activities ● Made once and finding for all future years ○ De Minimis Safe-Harbor Election ● Must be made yearly for each tax return filed ○ $500 per invoice or item allowed ○ 17
These Slides... DOWNLOAD THIS PRESENTATION www.theheroesgroup.com/kellerwilliams ● Other fun articles…. An LLC vs S-Corp: http://bit.ly/LLCvsSCorp ● Mileage Apps: http://bit.ly/THGmileage ● IRA Strategy: http://bit.ly/7QIRA ● 18
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