Utah Real Estate Investors Association

"You don't pay taxes – they take taxes." - Chris Rock

Up till now, whatever you made on eBay, Etsy, and the like might have seemed like tax-free cash. But now, the IRS will be in the know more and more regarding those sales… and that’s something you’ll want to keep in mind going forward.

Lowering the limit

Rules that were in effect until this month said that if you sold goods or services via platforms like eBay, Etsy, and Uber and if that platform used third-party transaction networks (think PayPal), you received a federal tax document called a 1099-K, and your income was reported to the IRS.

Thing is, you didn’t get that form unless you had at least 200 transactions worth a combined twenty grand or more.

Now, that limit’s been lowered.

Payment apps such as PayPal, Venmo, Zelle, CashApp, and other third-party e-payment
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In our final blog on self-direction, we’re going to cover taxation your retirement account might be subject to. Many people are surprised to hear that if they self-direct the account in real estate that it will have to pay a tax. But it’s true! This is because the types of investments your account makes with a broker (stocks and bond, etc.) would not have to ever pay taxes on the income. But in real estate, you can make money in other ways that ARE taxed.

And if you are subject to this tax, then your retirement account must pay that tax in the year, or years, that it incurs the tax. And this means, the account itself, NOT YOU, pays the tax. And if don’t have enough funds in the account (because it’s invested elsewhere), you may have trouble paying it.

There are two types of taxes that you might face. For simplicity we’ll just call them the “business tax” and the “leverage tax.” Both are really part of what is called the unrelated business income tax (UBIT).

The business tax applies to any business your retirement account engages in. Remember that if you invest in stocks, your IRA is not “engaged” in the business; it just “owns” part of a business. If you want to do flips with your IRA and if it’s “regularly and consistently” engaged in doi
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“Americans: Time to gather up those receipts, get out those tax forms, sharpen up that pencil, and stab yourself in the aorta.” - Dave Barry

On November 15, 2021, President Biden signed the Infrastructure Investment and Jobs Act into law. You’ve probably heard of it as the trillion-dollar-plus infrastructure bill. It has a lot to do with bridges, roads, drinking water, climate improvement, public transit, and internet broadband. It’s being called a “once-in-a-generation” law, and, yes, it is big news.

A few of the new law’s tax provisions are high-flying: extending some highway taxes, tinkering with taxes for superfund sites, and allowing bonds for some broadband projects and climate-friendly facilities.

There’s also a provision to extend relaxed funding requirements for employer-sponsored retirement plans. (We can tell you more about that one.)

But the Act also tweaks taxes you and your business might pay. Let’s take a look at some of the biggest changes.

Credit discard

The Infrastructure Act will have a big impact on small businesses that planned to take advantage of a popular pandemic-related tax break.

The Employee Retention Credit (ERC) was a real goody, a tax credit for a big chunk of the wages paid by companies that the pan
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Previously, we discussed retirement accounts in general and how to turn them into self-directed accounts. Once you’ve gone that far, you’re ready to invest. You can use those funds in the exact same way you’d use your personal cash to do any deal. There really is no limit to the kinds of investments you can make. However, “how” you make those investments IS a big deal and can get you into trouble.

NOTE: Self-direction is an advanced real estate investing technique with a lot of nuances. This blog is meant as general information and not legal, tax or investing advice. You will certainly need more education and advice to truly understand this amazing technique.

If you do what is called a “prohibited transaction” you could face the possibility of incurring penalties, which for an IRA could be add up to the entire amount of your IRA. So this is a very important topic. And not one that can fully be explained in a short blog. This is meant to bring your attention to the issue. I always recommend seeking legal counsel if you are unsure about a certain investment.

At it’s core, the IRS does not want you to unlawfully make a contribution to or take a di
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This is Part 2 of our 4-part series on self-direction. In our previous blog we covered retirement accounts generally. Here, we’ll cover how to make them self-directed.

NOTE: Self-direction is an advanced real estate investing technique with a lot of nuances. This blog is meant as general information and not legal, tax or investing advice. You will certainly need more education and advice to truly understand this amazing technique.

First, if you self-direct (we’ll call it “SD” from here on) an IRA, that account MUST sit at (be deposited with) an IRS-approved SD custodian. There is no way around this. So, your first step is to set up an account at a SD custodian. This is pretty easy, or even done online. You then either make a contribution and/or move (rollover) your current IRA money. Then, your IRA money is in place that will allow you to invest it in real estate immediately by “directing” the SD custodian to make an investment in your IRA’s name. This is usually a form to fill out, submit to the custodian that will then facilitate the transaction. SD custodians typically charge a yearly fee and transaction fees for each deal. You can lower these fees with a
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“Master the topic, the message and the delivery.” - Steve Jobs

Growing a prospect list starts with your current customers – and the ones you like working with most.

Look at them. What makes these folks special? What do they have in common when it comes to your business? Is there one service they use a lot or a product they always buy? Are they all in the same industry, or do they live in the same area?

Any prospect who has a lot in common with your best customers is going to be a hot prospect indeed.

Quick note: A “prospect” is not a “lead.” A lead is often little more than somebody’s contact info. A prospect is somebody who, for whatever reason, is a whisker more likely to want to do business with you.

Prospects also don’t even have to be interested in buying right now. They just have to fit the general characteristics of the folks who already buy from you.

Another way to find good prospects is to see what markets are doing well in your area. “Market” can mean a lot of things, from more people moving in-- to more businesses opening. Sometimes all it takes to spot an opportunity is taking the time to look.

And of course, what’s the competition up to? Probably most times you look at the other guy with envy that th
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“Don’t wait to buy real estate. Buy real estate and wait.” -Will Rogers

Why is real estate always so popular? Well, ever heard of “alternative” investments? Usually, this means coins, gold, art, and so on. Real estate is a kind of alternative investment – and a good one, too.

For one, real estate isn’t hitched to the stock market. Wall Street’s one-off bad days (and boy are there a lot of those) often don’t faze real estate holdings.

You can also get a lot of tax breaks with real estate.

In short, real estate can be a good place to park your money. Let’s look at some options.

It’s your choice

RE investing is like the buffet at a rich cousin’s wedding: Everybody can find a favorite. It all depends on how much money and time you’ve got, your taste for risk, and how much you want to learn new w
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This blog begins a 4-part series on the real estate investing technique of self-direction, which creates the ability to use retirement accounts for real estate investments. This first blog will cover retirement accounts generally.

NOTE: Self-direction is an advanced real estate investing technique with a lot of nuances. This blog is meant as general information and not legal, tax or investing advice. You will certainly need more education and advice to truly understand this amazing technique.

Self-direction is when a person uses their retirement account money in investments outside of typical brokerage investment products. It is often used by real estate investors looking to use their retirement money to invest in real estate, which is not offered by their broker. In other words, they have greater ability to “direct” their money into different investments. Self-direction, then, requires more work and education on the part of the investor.

Really, any kind of retirement account can be self-directed: IRAs, 401Ks, SEPs, SIMPLEs, 403(b)s and the like. Because most Americans have IRAs and 401Ks, those are the two that will be the focus of this blog. First, let’s talk Roth v. Traditional accounts.

The terms “Roth” and “Traditional” are applied to many types of retirement accounts. Both IRAs a
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In our last blog, we covered being a better landlord on your buy and holds. Here we’ll discuss a few tips to make working with contractors a little easier, whether on a flip or rental.

First, set a plan before starting, and stick to it! The plan should have a good, clear outline of how you want the project to finish. This includes materials and a budget. Many newer investors either don’t set a budget or blow past it. This is a recipe for disaster.

Second, contact your entire list of possible contractors and get bids. Many investors, to save time, may only talk to one contractor or sub. Take the time to really explain what you’re looking for, provide the plan & budget you’ve set, and get several bids. It’s worth your time.

Third, take the time to compare and contrast the different bids. Make sure you are comparing apples to apples. You’ll need to understand how and where the contractor is making money. Is there a line-item fee? Is the contractor “padding” materials or labor? Does the contractor include labor & materials in one line-item? You may need to go back and get more specific information from the contractor. Take the time to do this.

Fourth, ask and learn how the contractor handles changes, whether those come from you or them. This seems to be one of the bigges
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This blog is going to cover some tips to make being a landlord a great experience. Owning rental properties means dealing with tenants. Many investors either don’t like or don’t want to deal with tenant and property issues, so they will hire a professional property management company. But if you decide to self-manage, here are some things you should understand.

First, remember asset protection. Title to your rental should be held in a well-designed, protective LLC. Not all LLCs are created the same! What you get online is not sufficient. It should be created by a competent asset protection attorney. This will protect you and your personal assets from tenant slip-and-fall lawsuits.

Second, have really good lease agreements. There are numerous free forms available. So I would recommend getting at least 3 or 4 options and read through them. See what clauses are in them and which are important to you. If you need to amend or revise one, you should work with an attorney to draft it as you may accidently do something that might hurt you.

Third, make sure you have the appropriate liability insurance. This is the one you get from your insurance agent and not t
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