CREPN #160 – Tax Free Investing with Scott Smith

CREPN #160 - Tax Free Investing with Scott Smith

CREPN #160 – Tax Free Investing with Scott Smith

Tax Free Investing? [x_audio_embed][/x_audio_embed]   Real Estate Investing provides unique tax strategies not available in all asset classes. Scott Smith is an attorney and the principal at Royal Legal Solutions, based in Austin, TX.  His clients are strictly real estate investors. This narrow focus allows him to dive deep into specific aspects of real estate investing and help investors safely navigate their options for maximum tax savings.

Tax Free Investing

Traditionally, the phrase “tax free” investing may better be thought of as tax deferred. Whether you invest in a traditional 401k that taxes the upon withdraw, or a Roth IRA which taxes the funds prior to use, there is tax, but the difference is when the tax is paid.  Real Estate Investing truly provides some opportunities to generate cash through a nontaxable event. The conversation with Scott Smith focused on how to accelerate the growth of your retirement account using two different strategies available to anyone who qualifies.  

Solo 401k

If you have non W2 earnings, and can demonstrate that you are “active”, you may qualify for a Solo 401k.  There are multiple advantages available if you structure the entity properly and can demonstrate that you are active in the operations.
  • The ability to deposit up to $50,000 annually into this Solo 401k.
  • Opportunity to borrow upto 50% of the balance without creating a taxable event.  Note: the loan must be repaid prior to retirement.

Self Directed IRA

A Self Directed IRA provides investors the opportunity to select the investments you want to invest in, except for “prohibited transactions” .   If you are a W2 employee looking to invest in a real estate syndication for example, but do not have the savings to do so, you might be eligible to use your employer sponsored 401k.

For more go to:

Podcast: The Real Estate Nerds Podcast

[author title=”About the Author”]]]>

J. Darrin Gross
[email protected]