Today’s REI Classroom Lesson

Today, Dmitriy goes over how you can reduce the amount of tax you owe by taking advantage of SDIRAs for those who are self-employed.

REI Classroom Summary

By lowering your take home income, you’re able to pay less taxes and build wealth at the same time.

Listen to this REI Classroom Lesson

Real Estate Investing Classroom Show Transcripts:

Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.

Dmitriy: Hello and welcome to REI Classroom show. My name is Dmitriy Fomichenko. I am the founder and president of Sense Financial Services, and today I’m going to be your host. And the topic of today’s program is going to be how to reduce your tax bill by $10,000.

Mike: This REI Classroom real estate lesson is sponsored by UglyOpportunities.com.

Dmitriy: So how can we reduce your tax bill by $10,000? And you can do that by utilizing what’s called the Self-Directed Solo 401(k). A Self Directed Solo 401(k) plan is a type of retirement plan that is designed for those people who are either self employed or own a small business without full-time employees.

And one of its main benefits is the ability to contribute large amount of earnings into a retirement plan. It actually allows you to contribute up to $59,000 per year per participant. So if you’re a husband and wife business you can potentially shelter up to about $118,000 of your income from taxes.

So let’s look at the numbers specifically. Let’s suppose you have an income of about $150,000 this year in 2016, and you’re actually allowed to contribute the maximum of $53,000 if you’re under 50 and plus an additional $6,000 if you’re over 50 years of age.

So let’s suppose that you’re in a 25% tax bracket and you contributed $40,000 into your retirement plan out of 150. So that brings your taxable income down to $110,000, and essentially you can save about 25% on your contribution. So 25% of $40,000, that’s $10,000.

Instead of paying to Uncle Sam, you can actually set up your own retirement plan and you can make contributions to your own retirement plan which will enable you to grow your wealth in a tax deferred environment while helping you right now minimize your taxes. So it’s an awesome strategy.

That’s one of the main benefits of Self Directed Solo 401(k) plan is the ability to make large contributions. That’s just one of the number of great benefits. If you want to learn more about that you can visit our website sensefinancial.com. I do offer a free consultation, and I would love to help investors. I’m an investor myself.

And again one of the important things when it comes to investing, it’s not really how much you earn, but it’s how much you keep. And so utilizing strategies like that will enable you to keep more of your money and grow your wealth much faster.

Thank you again for joining us today, and I will see you next time.

Mike: HomeVestors, the We Buy Ugly Houses folks, is a franchise system of hundreds of real estate investors that have purchased over 65,000 houses. If you’d like to learn more about the most powerful real estate investing system in existence, whether you’re a pro looking to take your business to the next level, or whether you have no experience at all but a burning passion to be successful in real estate investing, please visit FlipNerd.com/ugly to learn more.

Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers, or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.

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Dmitriy is the founder and president of Sense Financial Services LLC, boutique financial firm specializing in self-directed retirement accounts with checkbook control. He began his career in financial planning and real estate investing in 2000. He owns multiple investment properties in various states and is a licensed California Real Estate Broker. Over the years, he has instructed hundreds of investment and financial planning seminars and has mentored thousands of investors.