Taxing times for states spells opportunity for real estate investors …

Most people think of tax season as January 1 to April 15.

After all, that’s when most people close the books on the previous year, issue and collect tax documents, prep returns, and settle up with the taxing authorities.

But for a host of real estate investors and entrepreneurs, the REAL tax season is right NOW.

It’s a HUGE opportunity to dramatically improve your bottom line. And it just got BETTER …

States Fail to Overturn SALT Deduction Caps in Court
Forbes, 10/1/2019

Yes, that’s a wonky headline that may not convey intelligible information … much less exciting opportunity for the casual reader.

But before you wander away bored, invest a few minutes to dig a little deeper

For those unfamiliar, the recent Trump tax overhaul put a cap on the amount of State And Local Taxes (hence, the acronym SALT) that a taxpayer could deduct from their federal income tax bill.

There’s some political disagreement about whether this is good or bad, or what the motivations might be … but the bottom line is it’s the current law, and for now the courts are upholding it.

So what does it mean?

In short, high-income earners in high-tax states are now bearing the full weight of their tax bills at the federal, state, and local level.

High-income earners in high-tax states are paying MORE taxes.

As you might imagine, they’re not happy about it. So while a few states banded together to fight the law in court, Main Street folks are fighting with their feet …

Americans abandoning New York, New Jersey, other high-tax states
Fox Business News, 4/25/19

But according to our friendly neighborhood tax strategist Tom Wheelwright CPA… this is largely unnecessary.

After all, your state tax liability is primarily derived from your federal taxable income anyway.

So the secret to reducing your federal tax is less about deducting state tax than it is about reducing or eliminating your federal tax liability altogether by carefully following the instructions provided in the tax law.

And just in case you think that’s unpatriotic and you’ll starve your deserving federal government from much needed revenue, consider this amazing admission …

The necessity … to tax … to maintain … solvency is true for state and local governments, but not true for national government.

Two changes … have substantially altered the position of the national state with respect to financing its current requirements.

The first … is … the … central banks. The second is the elimination … of the convertibility of the currency into gold.”

This remarkably candid admission is a quote excerpted from an article titled, Taxes for Revenue Are Obsolete, which contains the transcript of a speech made by then-Chairman of the New York Federal Reserve, Beardsley Ruml.

But if taxes aren’t needed for revenue because the Fed can print as much money it wants … what ARE taxes for?

Chairman Ruml says …

“Federal taxes can be made to serve … these purposes ….

… to express public policy in the distribution of wealth and income

… to express public policy in subsidizing or penalizing various industries and economic groups …”

So when Tom Wheelwright says the purpose of the tax code is to coerce you into doing what the government wants you to do, he’s not just making it up.

The good news is the government wants you to be an entrepreneur and investor.

They want you to start businesses and make investments in real estate and energy.

When you do, they reward you with huge tax breaks.

So much so, that when you do it right, you can eliminate virtually all your federal (and therefore state) income taxes.

And THIS is the time of year alert investors are making smart moves to capture those tax benefits before the end of the year.

Of course, as a savvy real estate investor you probably already know all about the tax benefits of real estate.

You might even be aware of how to use energy investments or a solo 401(k) to create big write-offs fast.

But MANY high-income earners don’t.

This creates a BIG opportunity for syndicators to put together tax advantaged deals to help high-taxed earners reduce their tax bills.

And if you happen to be one of those highly taxed high-income earners, before you back up the moving van, take a closer look at the tax law

… not as an obstacle, but as a road map to reorganize your affairs to reduce or eliminate your taxes.

When you do, you’ll realize owning a business and investing in real estate are two of the smartest moves you can make.

Until next time … good investing!


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Resort Rehab Riches

Houses aren’t the only properties in need of a little facelift. Hotels often need their own dose of tender loving care.

Like any investment property, resorts come in all shapes and sizes … and some have major management issues.

When a hotel is poorly the managed the result isn’t pretty … it’s often downright ugly. But that means YOU have an opportunity to add value, improve cash flow, and build equity.

Listen in as we visit with two hospitality investors who find fun and profit as they renovate resort properties.

In this episode of The Real Estate Guys™ show, hear from:

  • Your resourceful host, Robert Helms
  • His relaxed co-host, Russell Gray
  • Accountable Equity’s professional resort investors, Josh and Melanie McCallen

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Resort rehab done right

Resort properties offer some of the highest returns on investment of any asset class. They are an attractive real estate deal … but one that can easily be mismanaged.

When our guests, Josh and Melanie McCallen, see an ugly, non-performing resort property, they don’t see a failure … they see an opportunity.

Josh and Melanie’s team at Accountable Equity renovates and revitalizes resorts. By creating higher-quality resorts, they create more income … and more value.

But to correctly rehab a resort, you need a deep understanding of AND passion for the hospitality industry.

Most of us don’t have that. So, partner with someone who does.

The beauty of Josh and Melanie’s business model is syndication. You can be a passive partner with an active investment and see phenomenal returns.

Resort rehab done right means everyone wins … investors, staff, and guests.

Finding a home in hospitality

When they graduated from college, Josh begged Melanie to buy a duplex as an investment. They’d live in one home and rent out the other.

“I had to let go of the three-bedroom, white picket fence idea in my mind, but right away I knew what I got into,” Melanie says.

Over their real estate career, Josh and Melanie found themselves taking part in resort experiences across the globe and partnering with developers of specialty properties.

Then the recession of ’08 happened. Suddenly, Josh and Melanie were sitting on a beat-up 1970s beachfront hotel.

It was too risky to tear it down and start new development … so they decided to rehab the property instead.

“That first project was 18 months of getting our teeth kicked in, but we learned that hospitality isn’t just about the building,” Josh says. “It’s a living, breathing guest experience.”

The couple realized that they LOVED interacting with guests and putting smiles on their faces. They fell in love with hospitality … and decided to make it their life’s mission.

The benefits of a resort investment

A rehabbed resort is one real estate investment where the person paying the rent doesn’t begrudge writing a check at all.

When you’re on vacation, you want to splurge. You want to enjoy yourself and your experience … and you’ll gladly pay more to do so.

Hospitality professionals know that the happier you make guests, the more enjoyable the visit will be.

As an investor, YOU know that happy guests mean high returns.

Resorts also offer a unique opportunity to increase revenue.

There are two ways to make more money … find more people to sell the same thing to or find more things to sell to the same people.

The hospitality business allows investors to do both with relative ease.

And when you invest in a resort property, you have the added benefit of being able to enjoy your own investment … by taking a vacation.

The success of a syndicated approach

Josh and Melanie started Accountable Equity as a syndicated approach to resort rehab.

“The first thing you must do when thinking about buying one of these properties is find great investor partners,” Josh says.

Each month, Josh and Melanie host an investor summit. They bring together current investors, new investors, and prospects to tour the property and get a firsthand look at hospitality in action.

These summits are an invaluable time to help investors see how revenue from different parts of the resort build off each other.

When a party arrives for a wedding, they’ll book rooms. Since they’re staying on site, they might want to play a round of golf or spend time at the spa. They’ll need to eat, so they’ll hit up the restaurant and tasting room.

“We call it a cascade of revenue,” Josh says.

Syndication is a powerful approach to every aspect of hospitality. Beyond investment, the syndication spirit encourages team members to seek out experts in every field.

“In our current project, we’re bringing in a top winemaker for the winery. We found a golf executive on his 111th course to help with ours. It’s all syndication,” Josh says.

Teaming up for transformation

Accountable Equity’s current project, Renault Winery Resort, shows just how powerful … and profitable … revitalizing resorts can be.

As the third federally registered winery in America, the property has been in the hospitality business for 155 years.

The former owner managed the resort for 40 years, but over time began to let standards deteriorate under stress.

“We found this amazing property that needed some TLC. But we were willing to take a fresh approach, look at it differently, consider its legacy, and see its next chapter,” Josh says.

The team also studied market drivers in hospitality to determine if the resort could evolve to meet current and future needs.

With a millennial movement toward authentic experiences, a historic property … complete with a Prohibition-era speakeasy … spells out attraction.

And with nearly half of weddings taking place at a destination over the course of three days, a resort that caters to making happy couples’ special day extra special can generate big business.

It’s no small undertaking. Managing and rehabbing 120,000 square feet of buildings and 242 acres of vineyards, a golf course, and a spa requires a winning team.

“Our staff and our investors are our family. We all depend on each other, and honestly, it’s an honor to be a part of,” Melanie says.

Take part in a unique real estate niche with resort rehab investment. Learn tips and valuable lessons for getting started in a special report from Accountable Equity, 10 Steps to Resort Rehab Riches.

No matter your market of interest or area of expertise, consider what you can learn from the rehab-and-syndicate model of luxury hospitality investing.

What value can you add to your properties … and how can you leverage others’ expertise to increase YOUR bottom line?


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!