Tax Planning for your Rentals

Two and one. Welcome, everybody, to this week's live broadcast on small business Tax savings, asset protection, privacy, world peace. Well, not world peace. My name is Mark Kohler. I'm a CPA attorney and senior partner in a law firm and accounting firm and a trust company helping people self direct their IRAs. We're live on YouTube, Facebook and Instagram. Right. We're going to. Does someone need to push a button somewhere? Okay. All right. We are cranking now. We're going to talk about real estate investors. First, I want to always start with a tip. Try to help out here. Give everyone something to think about in their master plan to control the universe. But then it's all Q and A. It's all for you. I just want to answer questions around the country. I've already got a bunch of questions in here from Instagram, but please down below, type her up. We'll do the best we can. Now, I've got my guest here with me, a co host, if you will, Darren Charrington, one of my tax attorneys here at the office. He's awesome. You can't see him on camera. He'll come out. He's got some questions.

We've got a camera here. You'll see me eventually.

Yeah, we'll see you eventually. I might give away some books here. We'll see how it goes. I want to keep this as interactive as possible and I want to say thank you for paying attention here because it's truly we. This is what we do. We help our clients save money, protect it, save taxes, build it, grow it, blah, blah, blah. So I hope to wow you today. Now, if you want to read more about this tax strategy of owning real estate, let me give just a few general caveats. First, my book, the Tax and Legal Playbook, has a whole chapter dedicated to real estate and the real estate professional classification. That's the tax side of it. We also have the asset protection side. And I'm going to do some diagramming here in just a couple minutes. The next thing I want to say is today's broadcast is not about why you invest in rental real estate. I got other podcasts and YouTube videos and all those goodies on that. Today is really about how do I structure it. I'm going to buy real estate, Mark. I'm all in. But where? Where do I buy? How do I buy? How do I hold it? What are the tax benefits? What can I write off? Please bring those questions. We kind of want to keep it real estate centric today. Now, of course, we've done lives on cryptocurrency, lives on S corps, lives on restaurants, importing. I tried to cover it all, but today is kind of real estate. Now if you have a question that's not real estate related, we'll hit it. We'll do the best we can. Now if you see a comment down there in the YouTube feed or the Facebook feed from a Darren, Darren Charington, he's a real tax lawyer here on my team that's gonna be trying to answer some of those questions. There he is.

He looks like me, just dressed up a little fancy.

We're here together, we're rocking it. Okay, want to say thanks to Corey, our producer, director, cameraman and my marketing director Jack over here telling us what to do. We're good. Any problems, we're live. Okay, we're cranking. All right, real estate investors, let's just talk structuring for a moment because I think the tax piece of this is easier once we talk about big picture. Alright, now here's what I'm we got to go to the trifecta. This is what we want our clients looking like. Whenever you meet with one of my tax lawyers or CPAs, we're going to try to build a diagram for you of your master plan. And we want to start out down here with your 1040 and your revocable living trust. Now your trust is going to be comboed with a will, powers of attorney and we're using this for privacy. We're not setting up a trust for asset protection or taxes. It's to hide your assets. It's to protect them from a grimy family members when you die, or courts or lawyers. We want to try to distribute your wealth in the most creative manner, keeping cost to a minimum and fights to a minimum. So the trust is really going to do that. All right, so that's a topic for another day as well then. What we do is we divide your life from two sides. Remember? And some of you may have a day job W2 or your spouse or your partner, whoever you're hanging out with. So you may have a day job or not and you may have a side hustle. And I want all my clients having a side hustle to create tax write offs, build extra wealth, make more money, yada yada. But eventually a lot of my clients end up with a full time operation, some sort of business that they can really start to build into the future. Now you may keep the day job, I don't know. But we're going to take the side hustle that usually starts out as an llc and eventually we're going to be an S corp. Now, in the real estate realm, this is kind of my developer. This is the fix and flipper. I'm going to put F and f fix and flipper. This could also be my realtor or broker. So in the real estate world, this is what we're doing and we're funneling it all through an S corporation. Now, rental real estate is on the other side. This is my asset side. This is the operations side. All right, so when it comes to tax planning and rental real estate, I want to build this so that we can really make sense, kind of get rid of that. So we make this a little prettier here. And as we answer questions today, this trifecta is going to help us a lot. So you've got a 1099 coming in. Again, you might be fixing and flipping property. And so your operations, I want to get this a little prettier here and this is important. So operations are over here and assets are on the right hand side. So in our trifecta, your income is coming down here, off this side through your S corp, through your llc, your side hustle, your day job, coming down to your tax return. And this is where your personal bank account might be down here, but you also have a business bank account. And so personal bank account and business bank account up here. Now, the asset side is going to be built up of really two sides. You're going to have your 401k, you might have your Roths, you might have regular IRAs, all sorts of tax deferred strategies. So I'm going to put tax strategy stuff. All right, let's just kind of leave that there for now. But over here is where the rental properties typically go. So this, you know, I wanted to zoom in on this, but this is typically where you're going to see your revocable living. Trust is going to own your llc, your trust is going to own your personal home, and then your trust is also going to own your S corp or LLC on this side. So this is the trifecta. And my clients that are worth $50 million or $5,000 just getting started, we want to build this structure so that we're efficient, we're making money, we're saving money. And this is really, really important because the write offs that I want to build, all the tax write offs are either going to be here, right? Because I want to, I want to write off here. I'm going to write it out. Tax write offs. I want to write off Home, office, cell phone, dining, computers, electronics, iPads, books, education. But a lot of times your side hustle can also be your rental property. So I want to put over here my rentals. And these rentals are going to have a lot of great write offs to travel. Being a big one, you might buy rental properties where grandma lives, where your parents live, where your kids are going to college, whatever. So rental properties are going to be over here. And again with this red, we're going to write off as many strategies as we can. These two sides of the equation. I'm going to kind of clean this up a little bit. This is a work of art, people. And when I meet with clients, we really try to build a diagram that comes together for them. So we have our LLCs, our LLCs and S Corps flow down into our trust, our 1040, our LLC here, all of our 401ks and Roths and IRAs flow down and we're building this structure that all flows down into our 1040 tax return on our trust and all these write offs. And this is what we're talking about today. I'm going to write off expenses here in my small business and expenses here in my rentals. Boom. Okay, that's the big picture, Darren. Feeling it.

Absolutely.

Okay, now that's for asset protection. I'm only going to set up LLC where I have rental properties. I'm going to keep it simple. I might put two or three rentals in one LLC. I'm not just going to go pay $50 at the state and get an LLC. You need to have an operating agreement, membership minutes, stock certificates, I should say, or membership certificates, a tax ID number, a bank account. You got to treat this LLC like legit. You can't just say, oh, I have an LLC online. Nope. We got to make sure we maintain it. If you live in California, but your rentals in Arizona. If I have a manager for my LLC out of the state of California, I can avoid registering in California. I don't want to pay that $800 minimum tax. But I typically have to have an LLC where my rentals reside. If I live in California, I gotta have a N LLC in freaking California. You can't just go set up in Wyoming or Nevada and hope you get lucky. It's not going to happen. And what I do a lot of times with clients is they have their trust and they might have maybe some rentals in Tennessee. So we have a Tennessee LLC with two or three rentals and then they might have an Illinois LLC for their Chicago rentals. And both LLCs are owned by your trust. That's okay. Now, you might have a partner in this one, so you each own it. 50, 50. But this one you may own 100%. So every person's situation can get a little different. But I want to try to keep it efficient and not set up more LLCs than I have to. I want to get, keep it tight. All right, now we're going to go to Q and a here in one moment. The next big topic is everybody says, should I be a real estate professional? So I'm going to write that in blue. A real estate pro. Okay, this is, this is a big question. Now, here's why. Let's go back to our trifecta. I'm going to try to keep it simple. Here, here's your trust. You have an llc, boom. You've got a day job and you have a small business. Okay? What happens is a rental property loses money on paper, even though it's cash flowing. We love this. I have rental property myself. I've got duplexes, some low income housing, some commercial properties. I don't own 50 properties. I don't, but I have five or 10. And I'm trying to encourage my clients every year, look for a partnership in a rental or buy a little rental every year I want my kids to buy rental property as they start building their wealth. This is what rich people do. They buy rentals as part of an overall strategy. I'm not saying we're putting everything in crypto or we're putting everything in real estate or putting everything in the stock market. We want a well balanced approach. I meet with wealthy people every day. I meet with people making good decisions and people that are making stupid decisions. I want to try to help you. Okay? Now, when you have rental property, they make cash flow, but you're writing off depreciation and mortgage interest and travel and home office and auto and computers and electronics. And your rental business will lose money on paper. Even though it could be cash flowing, this loss is a big deal. People want to write off this loss against their day job or their side hustle. So these losses, let's put a little loss here, a little minus, people want to write that off. Now if you're not a real estate professional, you can write off the first 25,000. But once you make more than 150 grand in your life, your adjusted gross income, once you hit 150k, the 25 is gone. It's lost forever. Or Israel, is it? No, no, no, no. It's not Lost forever comes back and goes into this bucket. In this bucket of losses, you get to carry forward for the rest of your life. Some clients go, yeah, Mark, I make too much money. So I don't, I don't track all my write offs from my rentals. I'm like, no, track them all. Because you get to carry them forward. You might have three or four rental properties. You sell property number three, you can dump the bucket out on any rental. So your rentals grow based on all of your rentals, but you can dump out the losses against any one property. So if I have three rental properties, I can dump out the loss. We do this for clients all the time. Okay? So that is if you are an active real estate investor. All of my clients qualify as active. I qualify as active. You don't have to be a realtor, you don't have to be a contractor. All you have to do is make decisions. It is so freaking easy. If your accountant has you classified as passive, you got the wrong freaking accountant. And if you're playing around on TurboTax with rental properties, you may want to get a professional helping you. That's the idea. I don't freaking re plumb my kitchen. I may screw around with painting and something, but when it gets complicated, I hire a frickin professional. Be careful trying to hack this out on LegalZoom and Turbo. And you may say, well, my accountant sucks. Get a new freaking accountant. All right, now what happens if you're a real estate professional? Then there's no bucket. The bucket goes away. I'm going to in fact even race it here. No bucket. All of your losses, they come straight over and they're 100% deductible against your other income. All of them. And if you're married, you could have a day job and have a stay at home dad. That's the real estate professional. So husband, wife. The wife has the day job, the husband manages the rentals, qualifies as a real estate professional. All of these losses you can deduct against spouse's W2 and your income.

Boom.

And this is where people don't pay a lot in taxes. Now I know I'm going to say a name here that half of you are going to love and half of you are going to hate. So just freaking chill out. Donald Trump. Now, a lot of people were mad that the year before Donald Trump became president, he paid $600 in taxes. $600? Why? How did he do something bad? He had millions of dollars of income over here. Millions from the Apprentice And TV shows and his retail stores and from Miss America and Miss World and Miss Universe and whatever. He had tons of income but he also had tons of write offs from his real estate. And because he qualified as a real estate professional, because that was his main business, he took all these losses and wiped out his other income. Zero in taxes, made millions. You can do this too. Don't be mad at Donald Trump. Say freaking A, I'm going to do the same thing. That's what real estate professionals do. Most of my realtors don't pay taxes. Most of my contractors don't pay taxes because their rental properties are generating depreciation and write offs. That wipes out their other income. And what do you think they retire on rental income from their rentals that generated losses when they were making money to buy more rentals. So they get write offs, make more money, buy more rentals, get more write offs, make more money, buy more rentals. You do this for 20 years. I've got clients that are 70 years old with 30 rental properties paying cash flow now and they didn't pay any taxes getting there. Now some point you're going to pay some taxes. If you sell a rental or you have passive income and no ordinary income, it's good. I can't guarantee no freaking taxes forever, but this is a cool deal. So in summary, I want to combine good asset protection with the right amount of LLC in the right states. With what classification as a real estate investor are you, are you active or a pro? Is your spouse active or a pro? And if I can bring those two together, it's not a get rich quick scheme, it's a plan over several years to build your real estate wealth and save taxes. Oh. Now how do you qualify as real estate professional? Husband or wife? Either one qualifies. You both qualify. So what's the test? Number one, you do 750 hours a year doing real estate. Now you don't have to be a licensed realtor, broker or contractor. You could be a fix and flipper or just manage your own frickin rentals. But you have to be at least doing 13 hours a week in real estate. That's number one. You can't just say I'm a real estate professional. You got to put in the time and plus it's not or it's and you have to 750 hours a year and your primary occupation has to be real estate. Now you could be a part time pharmacist, 20 hours a week, but you better show me you're doing at least 21 hours a week doing real estate. So primary occupation. Now, again, that could be doing your own rentals, being a contractor, being a realtor. But you can't be a plumber and say, I work on real estate. Not going to happen. Got to be a gc, a general contractor, Realtor, broker. And you can't be a W2 working for a property manager. Oh, I work in real estate. I have a job working for a property manager. Nope. You've got to be at least a 10% owner in the business if you're going to say, I'm in the primary occupation. Ooh. Got to figure out what I'm doing here. All right, look at all these notes. Look at that trifecta. That looks cool. All these cool notes. All right, I don't know where I'm at here. Okay. I'm going to start a new one. Should I just do that, Corey? There we go. Oh, there I am. I'm getting better at this, huh? Corey? I just. You know, all these millennials come around here and go, you are a freaking nightmare when it comes to technology. And I'm like, no, I'm not. I'm getting better. Okay, Q and A. Darren, you have a good one. Yeah, I've got some Instagram ones I'm going to come back to.

Okay, so I'm actually kind of interested in this one, and. All right.

I'm married. Oh, sorry. Okay, okay, okay. Sorry.

So from. From YouTube. We'll just call him. Kool Aid asks, Can I take 1031 Exchange Investment Property funds into a primary home?

Okay, well, what do you want to say? You want to give it. You want me to answer? Do you want to go for it?

I can go for it.

All right. Okay. I'll diagram it here.

Yeah. And you correct me.

Okay. Okay. We have an LLC with a rental, right?

So we've got a rental over there.

Okay? Tell Everybody what a 1031 is.

A 1031 exchange is, essentially, you're going to buy that rental property. Ideally, you're going to have some appreciation in that property, right? So over time, it's going to go up in value. So let's say you buy it for 100 grand, okay? It goes up to 200 grand. You'll have $100,000 of gains.

Okay?

Now, when you sell that property, that's when you're going to realize those gains and have to pay the capital gains on the sell of the home, okay?

Or.

Or if you want to defer those gains to a later date, you can 1031 exchange. You can 1031 exchange. And essentially it's called the like kind exchange sometimes. And you're pretty much trading that property for another property or multiple properties of equal value. Equal or greater value.

Okay, all right. Now that's on the face of it. But LL Cool J here or Kool Aid.

Kool Aid says, I don't want to trade for another rental. So I'm going to take this rental and trade for another one. I want it to be my personal residence. Well, the IRS says you got to trade for another rental and hold as a rental for at least 12 months. There's kind of some wiggle room here. So you've got your revocable living trust. I would keep the new rental in the LLC for at least 12 months because you got to show its investment property for investment property. Then after that we would deed it out to your trust, and now your trust owns it and it becomes your primary at that point. So I'd say the answer is it depends. And you got 12 months to keep it as a rental.

Right. I think the big thing that they're looking at is really the intent right when you're doing that 1031 exchange. So that 12 months is essentially to show this is an investment property going to another investment property.

Cool.

Let's jump over to Instagram tax. This is from Hire. Hirik Gay says tax pros and cons of being a real estate agent and landlord investor. Well, Haier. Hey, er. I'm just going to call him Haier. So Haier says, mark, let's just diagram it out again. So we got our RLT down here, and you're going to be a Realtor. Now, if you're a Realtor and you make more than 40 grand a year, you're going to be an S corp, period. I've been teaching that for years. Even if it's an llc, you're going to be taxed as an S corp. So all my Realtors become an S corp. Now, my daughter Sydney, she's in California and she's an LLC right now because she's starting out as a Realtor. As soon as she makes at least 40 grand net, boom, we're going to do an s election. That's a 2553, a form 2553. We charge 150 bucks. Very easy and simple to do. Make sure you do it right. And we're going to backdate it into an S corp when the time's right, man. Let's say city has a rental property. So she's also Got a rental. And this is the trifecta. Very, very common rental. Realtor, restaurant, restaurant owner, building, dentist, lawyer building. See, this is very, very common. I want to put your assets on one side, your operations on the other, and hire says, well, or hayer says, what is the con, man? I love my realtor clients. It's hard to say there's any cons. I'll say, being a realtor, you live sale to sale. You're going to have ups and downs in income. That's. That's a challenge. But you're going to be seeing deals out there, and I want you picking up rentals. My realtors buy rentals every year once they get things figured out and their incomes up and down. That's probably the biggest con. The trick here is marry someone really boring. I've told my. I've told my daughter, Sydney, I want you to marry chiropractor, an engineer. They're really boring.

That's what my wife did.

Darren was an engineer before he came along.

He thought it's boring, so might as well add the lawyer thing to it. But, you know, but the real combo. This is why I'm going to set up a website called taxmatch.com. i want to. I want to put you together.

I want my realtors married to a day job. I want my day jobbers dating, real realtors only that combo match made.

So. All right.

I just can't see many pros and cons from a tax perspective.

It's.

You want to be both?

Nick, I'm going to do one more.

This is Nicolo Brasso. 19 says, Is there a cap on the dollars you can write off against normal income if you're a real estate professional? No, there's no cap.

Donald Trump wrote up millions in real estate depreciation losses against millions of other income. There's no cap if not a real estate professional. The cap is 25 grand, but it carries forward in a bucket, so you'll get to write it off someday, track it, but there's no limit. Okay, who else you got there?

All right, I've got one that I like here, so let's go with this one. Short and sweet. So from David. He says, I just rehabbed a rental. Can I deduct rehab costs?

Oh, good question. All right, do you want to start

it out or do you want me

to go for it?

I could start it out. Yeah.

There's our rental right here, and it's

a fixer upper, so we've got our purchase price. How much are you going to put into it.

You choose for sites Midwest, go 50 grand, another 50 for rehab later.

So it's a low income housing deal. Yeah, we're buying it for 50k and we're going to put 50k in rehab. Can you write the whole thing off

if you're okay? So from what I understand, maintenance.

Yeah.

If you're, if you're maintaining the property, you can write it off.

Okay. So what happens is your accountant's going to divide it into two pieces. So let's make this a little bigger. So you got a purchase price of 50k and your accountant's going to take all of your expenses.

Yeah.

And they're going to go, okay, what'd you do? Repairs and maintenance are generally immediately deductible.

But what's the word where you cannot. You're going to have to capitalize. It starts with an I. Improvements. So if I put in a water heater, I'm going to have to capitalize it. I'm going to depreciate it. If I go and paint, that's a repair, that's a. Or a maintenance. I'm going to go out and maybe fix the sprinkler system or things like that. But improvements are going to be a new roof, adding square footage. I like that. New walls. I think appliances and carpet are going to be typically depreciated. Now, a lot of times you can do what's called cost seg. Now it gets a lot of press. It's called cost seg where you can write off stuff faster, like all at once through bonus or 179. Now I'm getting a little deep here for some of you, but you can do a 179 or a bonus. But think about this, everybody. You want the real answer? I think cost seg is a bunch of crap half the time. Because let's say Darren or I, we're lawyers and I go out and buy a fixer upper and I go out and do a cost segment. Do I get to write it off, Darren,

I get to write it off.

But do I get to take it against my ordinary income?

No.

No.

So what hell did the cost seg do me? Did it do me any good?

Yeah, the cost seg is sitting there in a buck.

So there's promoters out there that are, oh, you need to do a cost seg. If you're not a real estate professional, who freaking cares? Because it's going to go in your carry forward bucket. Now if you or your spouse or a real estate professional and I've got Income over here that I want to write off. Oh, I'm loving the cost sec. So that's the difference. So whenever you do improvements in a renovation, we at an accounting firm, we have highlighters and we go through and go repair, repair, maintenance, improvement, improvement. And we bifurcate them and we put them in the right column. That's what accountants do. So the answer is. It depends Again, it's kind of you get a little of both. Alright, let's go over here. Cory, can you give me My kids win as a real estate agent, what are the perks of buying rentals? All right, boom. Let's hit some. This is some candy. This is eye candy right here. My kids win. Why buy rentals? Okay, now he said realtor or she said realtor. So what's a realtor? It's a real estate professional. So if I buy rentals, I get 100% write off against all expenses. 100% write off with all expenses. Okay, Darren, you give me one. Why should a realtor? I'm going to go freaking anyone. Why? What are the perks of buying rentals? Give me one.

Should we go with the big D? The appreciation on it?

Okay, Depreciation, I'm going to ask you is kind of the write offs.

I'm going to put that in number one. So number one, you get 100% write off of all expenses with depreciation. Number two, you get tax deferred and sometimes tax free growth. Because you might do a 1031, you might die with the real estate and get stepped up basis. So whenever you buy a property, you're not paying taxes. When it grows, it's going to grow. You're going to build equity. Build equity. Okay, Darren, give me another one. What? Do you like rentals? Yeah.

If you do it right, you're going to have some cash flow too.

Oh, I love it.

Cash flow. Cash flow is typically tax free. Why is, why is rentals tax free? Because the losses first wipe out the direct costs.

So even if you're not a real estate professional, all these write offs, you get to write those off first is what do you get to do with the loss. So you get tax free cash flow 90% of the time. I have tax free cash flow on my rentals. Now I can't take the loss against other income, but I'm not paying taxes on most of my rent. Okay, I'll give you number four. You get to use leverage. See if I want to go out and buy crypto or I want to go out and buy stock. Let's say I want to buy 100 grand of Lululemon stock. Well, I better come up with 100 grand. But when I want to go buy a rental, there's this unique thing called mortgages and banks. Fannie Mae, Freddie Mac, blah, blah, blah. I can put down 20% and go buy the same rental for 100 grand rather than stock. Now, I know there's margin accounts and stuff like that, but you got to have money somewhere else to get a margin account. But on the face of it, the rest of us Americans, I can put down 20 grand but get the benefits of $100,000 investment. It's called leverage. I love that. That's another benefit of rental real estate. You got another one?

Want me to keep going?

We talked about appreciation. Have we talked about that?

Well, we did tax deferred equity.

So I'm going to equity with appreciation. All right. Then equity as well, with mortgage pay down.

Oh, mortgage pay down.

Yeah.

Now that's a tricky one because it's almost part of the leverage. But the beauty is the renters are paying the mortgage for you.

So I love that. That's why rich people buy rentals for a reason.

Okay, so renters pay the mortgage for you. Number six, going with depreciation and some

of these write offs. I'm going to, I'm going to say this. You get travel, love travel, home, office, auto. These are ones because you're going to buy rentals where you go buy rentals where your kids are going to college. Which number seven is I want family renting your property. If their family, you're going to pay their rent for them anyway, let them pay rent to you. I have some clients that buy their parents home so they can start qualifying for maybe Medicaid and they want to look for some state assistance. Now there's a look back period. But a lot of times I have family buy mom and dad's house and then rent it back to them so they can qualify for other aid to be helpful. Family renters. Do you have another one? I can keep going all day?

Yeah, as long as one. The nice thing too is if it's your personal right, as long as it's not in a retirement account, you can be able to go in and use it every now and then. So the vacation rental or something like that, a beach house strategy.

Good one.

Go and use it.

Go there, Darren. Good one.

You can buy rentals and go travel to fix them up on occasion and still call them 100% rental.

Now I hate that freaking Augusta rule that's another day for another topic. But buy Airbnb and go visit them, check on them. Number nine, leave a legacy. Teach your kids about rentals. Pass on rental properties to the next generation. Number 10, rent a commercial building from yourself. In our law firm and accounting firm, one of our first goals was to buy our own building. Rent from yourself with your commercial business. That's a great strategy. I'm building a little storage unit right now because I'm sick of paying rent to someone else that owns a storage unit. So rent from yourself when possible. Oh, man. The list can go on and on. Let me see. Leave a legacy. Airbnb, Family renters, Travel Home office mortgage renters, Cash flow tax, Deferred growth equity. Oh, you get ten 31s. Opportunity zones. Kind of get little extra strategies that only are there for real estate investors. Ooh, Charitable remainder Trust. Love those. I don't know. We could go on and on. All right. Okay, let's go to our next question. My kids. What's the name of theirs? My kids. Whatever. Hopefully that helped you out. You got a question or should I go to Instagram?

Yeah, yeah, I've got one.

Okay.

Okay. I'm curious what you think on this one, Mark. So someone here from Florida, Laura from Florida, owns a property in California and is thinking about doing a 1031 exchange to buy properties in Florida.

Oh, I like that a lot.

Is she going to have to pay California tax or the state tax is going to be deferred as well.

State taxes are deferred as well. California has been trying to put in legislation to tax people when they leave California, but a 1031 exchange is deferred. And that's a tricky one because Laura's down in Florida with no state tax, but she has a rental up here in California. Now, a California CPA that maybe is knee deep in this may tell me, Mark, you're wrong. But I'm a California cpa. So some of you might really question my intelligence here when I say this, but laws change all the time. But currently, according to my understanding, that rental in California in your LLC, I would sell it 1031 to another rental in Florida with a Florida LLC, and then I would shut down my California LLC, get rid of my California rental, move it to Florida, move it, pay no tax. I'm good with that. I don't have a problem. Okay. Talk to your advisor. Always get a second opinion. This is a live broadcast. If you do screw this up, do not sue me. This is your disclaimer. These are just general answers. That I think are 99% correct. But everybody's situation could be a little different. Hopefully that's helpful. Okay, I'm going to go over to Instagram and Corey, can you minimize that so I can see what's going on? I'll go to Rents due out on YouTube. Rents due says, can real estate LLCs be structured as disregarded entities to avoid having to file multiple federal and state tax returns? The answer is yes and no. Okay, so let's go to our trifecta. Now, we've got several situations going on. Let's say Corey, my producer says, hey Mark, I want to buy a rental property with you. Well, oh, Mark, we'll just do a JV and it can be in your name and not Corey's and blah blah blah. People do not screw around with that. It's a lawsuit waiting to happen. And there's going to be general partnership and general liability issues when Corey and I are really partners behind the scene. But it's in my name. Bullcrap. Watch out. So what are we going to do? We're going to form an llc. Now, some of you are like, well, Mark, I can use a land trust and I've already written chapters in my book on that one. Watch out for the land trust strategy. And I really get hate mail about this all the time because I'm not a fan. Alright, so what are we generally going to do? Cory and I are going to form an LLC and we're going to go own that rental. That's not a disregarded entity. I'm going to have to do a 1065 tax return. That's a federal tax return. And I hate to say rents due, but you've got to do it whenever you have a partner. There's no way around it. Now, I know you're asking about disregarded entities, but chill out. I'm trying to build a baseline here. Now also let's assume this rental property is in Arizona. I'm going to have to do a tax return in Arizona. Now you may say, well, I live in Florida, but Corey lives in Washington state. Well, there's no state tax in Florida or Washington, but our rentals in Arizona. So we're going to have to file an Arizona tax return. Okay, Now, Rents Due says, well, Mark, I'm going to form an LLC in Arizona, but I own 100% of that LLC. So that LLC is 100% owned by me. What we call that is a single member LLC and it's called a disregarded llc, meaning there's no federal Tax return required and no state LLC tax return. But I still have a rental in Arizona. So you're going to have to file this on your 1040. So on your 1040 you're going to do a schedule E and that Schedule E is going to report the income and expenses for your rental. So rents due and any of you out there rentals do. With a single member llc, I can avoid a state and federal tax return for the llc, but I'm still going to report it on a schedule e on my 1040. So it does save some costs. Now some people may say you want an inside tip here? Some people say, okay, Mark, I got a 1040 husband and wife and my accountant said to do an LLC. That's 50, 50 husband and wife. Well, why don't we just do a single member LLC owned by the husband or wife. It's still marital property. I'm not ripping off the husband, I'm not ripping off the wife. But why don't we do a 1065 for that rental property in Arizona and do an extra tax return. Now I'm not going to put Jack or Corey or Darren on the spot. This is from 20 plus years of experience and I'll throw it out there. Why? Let's see if I get some comments here. Corey. Let's scroll me down to the bottom on YouTube and Facebook, people. I'm going to give away a book, tax and legal playbook to the person with the right answer. Why would I do a 1065 for husband and wife and file a federal and an Arizona tax return? You're like, mark, it's going to cost me 1000 bucks to do that. Why would I do it? The answer, first one to answer this correctly wins a free book and I'll sign it right here for you. Okay? Cost of living says, you know, taxes based on purchase price, not debt. Right People, when you buy rental property, tax strategy and depreciation are based on the purchase price. Debt doesn't matter. Hubby and super Cooper says hubby and I are doing a similar asset strategy with aircraft rentals. What would be the difference in the benefits of real estate rental properties versus aircraft operations in a C Corp Assets in an llc. They didn't know. The Super Cooper's not answering my question, but that's okay. Aircraft rentals are going to be the same strategy as real estate rentals. I'm not going to use a C Corp. Hell no to a C Corp and I'm not going to need an S Corp either. I'm just doing rentals whether they're airplanes or rental property. Same story. Dave Corid says to save money doing an LLC tax return does not save money. Scott says why? There's a reason. Ledero says to save self employment taxes. Ladero, there are no self employment taxes with rentals. So do Jamie Lewis says because you said to do it. That's close. I almost gave you a book for that one. Matt says tax savings. No, everybody with a look at this with a 1065 tax return, Arizona and Fed. I'm still going to pay the same in taxes. Why would a husband and wife go to the headache of doing a federal and state tax return when I could do a disregarded and not have to do the tax return? It cost me money, it doesn't save me money. And the tax result is the same. I knew I wouldn't need your book. Jennifer. I don't get that one. Oh, if I knew I wouldn't need your book. Thanks Jennifer. That's funny. Tax against the business and not hit the personal taxes on 1065 for the married couple example. Nope. There's no extra taxes and there's no extra tax savings. Why would I do this? Establish corporate credit? No, because I don't need corporate credit with a freaking rental property. I establish corporate credit on this side to do fix and flips and rehabs. I never use corporate credit for rentals. Doesn't work. Oh, rentals do. Rentals do. By the way, Clarissa says a partnership does not pay tax on its income but passes through. Sure, but why am I doing this? Rentals due gets it. Less chance of an audit. Your chance of getting audited with an LLC tax return audience are 15 times less. 150%. No, 1500% less chance of an audit by doing a 1065. I have clients that are pretty damn aggressive with those renovations, with the travel, with the home office, the auto. And they got their kids living in a rental property down at ASU and they're like I'm going to do a 1065 tax return because I'm being pretty aggressive. Less chance of an audit. You don't save taxes, it costs you more. You're not going to cost you more in taxes. I can still get privacy either way. It's because it's less chance of an audit. Reynolds due gets the book. Okay, so he already says he has all my books. Well, you get to give it away to someone. Reynolds do make sure you email Corey coreyarkjkohler.com Coreyarkjkler.com and if you just tell Corey your Contact info. He's going to mail you this book. I'm going to sign it right now and you can give it away to someone for the birthday. All right? Okay. Why is there less chance of an audit? David says because there are fewer auditors in the partnership tax return department than there are in the 1040, 1040s and Schedule E's and Schedule C's get audited more than any other tax return. And you know, it was two weeks ago or three weeks ago when the IRS released the tax book. What did I call it? It's the tax book that tells you the statistics for two years before on all the audits, how many tax returns were audit. And every time per capita you'll say, well, Mark, there's fewer partnership returns, so there's fewer audits. Still per capita, your chance of an audit goes down by 1500%. Okay. KK Adorable. Says, I love everything you say. Mark, best tax and legal advice for business owners. Would you mind explaining. See, I got to take your question. When she says she loves everything I say, I appreciate that, KK you rock. She says, would you mind explaining the situation when we can't write off the losses in rental real estate? Super high income earners. Well, K.K. let's go back. This is good. Good little thing here. So you've got your 1040 and let's say KK is single, all right? And she's got her trust, revocable living trust. And she's single. I'm going to make sure she has her boa Sign a prenup. I'm not going to let her marry some guy that's going to take all her money. So two words. KK Prenup. Okay? And KK Is going out there and she is buying. What am I doing here? Oh, I got to tighten this up. Okay, she's going out there and buying rentals. Now let's say KK she says she's a high income earner. So let's say she has a big day job or she has a restaurant or she's a consultant or she's a life coach or whatever. So she's got the big income over here and she makes more than 150 grand a year. So should she buy rentals? Does she get the write offs? Oh, she gets the write offs. Just when does she get to take them? So we're going to build all these write offs and we're going to put them in a bucket. And KK everybody out there, the government's just said, if you're a high Income earner, you get all the write offs, but it's delayed gratification when you sell any rental. Kk, you can dump these out with any rental you sell, but you got to wait. That's just the rule. I'm in the same bucket. I've got it. It's called a pal, passive loss carry forward. I don't know, it's called pound, but passive loss carry forward. And we're going to dump this out on any sale. So they just carry forward. Now, kk, here's your number one strategy. I want you to go out there and you are on dating restrictions. That's right. Your account is giving you dating advice. You, you can only date real estate professionals. Contractors, realtors, brokers. Make sure you really interview them about their tax return. I don't care what you know. Are they Sagittarius or Scorpio or whatever cancer you want to say. How are you doing on your income? How you know, talk to me. Real estate professional. Now if KK is married, next strategy. Well, how much do you love this guy? You know, I'm just saying, you know, if he's not a real estate professional, you might need to upgrade, you know. Now I'm going to get some hate mail from KK's husband. All right, next question. What do we got?

I like this one. Got one from Alex bent on.

Yeah, I want to go back to night owl too. After you. Okay.

Okay.

Yeah.

So Alex just asks, how many rentals would you have per llc?

Oh, good. Okay, now I'm gonna be the.

We're gonna play Pictionary.

Okay. Okay.

You know my four options, right?

I don't know if I've heard the four.

Oh my gosh, you're killing me, Darren.

Four.

Okay, so over on this side, this. I'm gonna put Darren on the spot. You got your trust. I've got four options.

You've seen this.

Option one.

Oh, yeah.

Okay, option two. Now it's coming back to you, right?

A little bit.

Option three, Option four.

I'll get it right. Oh, Corey's got it.

Yeah, Corey's.

He's.

He's throwing down today. Feel a little feisty, ladies. Kk, kk, Corey, single. Oh, but you're not a real estate professional, kk, you can't date. Sorry. Course you missed out right there.

Okay, now for my brand new real

estate investors, Darren, option one.

So if you're just starting out, typically what I'll do is set up an LLC in the state that you're in. Well, where the property is. Sorry, in the state where the property is, and then you go ahead and you put the property in there.

One llc.

One llc.

And I might put two or three rentals in it. Now, let's say my first rentals in Illinois, my second rentals in Tennessee, and my other rental is in Arizona. Do I set up 3 LLC?

No. I'm gonna find the cheapest state to

set up my primary.

So let's get Tennessee. And then I'm gonna register foreign. It's called foreign registration for Arizona and illinois. Simple, easy. One LLC, three rentals. And you may have like 50 grand of equity, 30 grand of equity, 100 grand of equity. But if these rentals start to really grow in equity, I'm going to go to option two. Now, before we go to option two, I want to ask anybody out there if you're loving this, please. It helps you. Really helps you more than it helps me. Subscribe. Get over to YouTube. Subscribe and hit the bell icon. Every time I go live, ping, you get a ping. And, baby, every time I go live, you're saving money. So get over there and subscribe to YouTube. You're going to freaking love it. If you're on Facebook, give me a like. And every time I do a post and new tips, new videos, they're on your feed. All right, so option two, three rentals, one llc. What's the con, Darren? Why do I not want to do option one?

Well, part of the con is that so if. If you're going where I think you're going, those rentals are going to be sharing liabilities.

Yeah. If the Illinois meth lab.

I love my meth lab rental in Illinois. And I love Illinois.

There's not that many meth labs there,

but there's a few.

I own one of them. If something goes wrong and it blows up, if they can get at my Tennessee or my Arizona rental, that sucks. That's one reason why. Rental, you know, but so all my rentals are subject to the same liability. So that sucks. Okay, option two.

Well, Mark, I don't want that.

So what am I going to do? Each state, I'm going to set up three LLCs. Geez. So now I have a Tennessee LLC, an Arizona LLC, and an Illinois LLC. Now I got a rental in each LLC. Well, what's the good part?

Yeah, Great. Asset protection.

Freaking awesome.

Asset protection. If anything goes wrong in Illinois, they can't touch Arizona.

If anything goes wrong in Arizona, they can't touch Tennessee. But what's the con?

Three bank accounts, three renewals.

Yeah. Three big LLCs. Three bank accounts, three possible tax returns, you know, disregarded or whatever. So option two is pretty awesome, but it costs more. So here's the point. When people say, how many LLCs do I need? It's not an issue of quantity. I might put three rentals in one llc. It's the issue of quality. If this is a ski in, ski out rental worth a half a million, this is a golf course rental, Airbnb, worth 750 grand. And this is my little trashy Met Lab rental.

I don't want them all in the llc. Llc. But if they're all the same single

family home worth 200 grand, boom, they're all going in the same LLC. It's not an issue of quality.

I'm sorry, quantity.

It's an issue of quality.

I want to look at the liability

and the asset value, then decide how many LLCs I might need.

Three LLCs. Commercial rental, Airbnb, trashy. Fine.

And I could, you know, I'm not picking on Illinois.

I'm just using that as an example.

But I really do have a crappy rental building.

Okay, now, so option two.

Three LLCs, one rental. Now, night Owl Richard from Wisconsin says, can you convert a sub series LLC to a regular llc? It depends on the state.

Sometimes I can take an LLC and make it a sub series with one form called Articles of Conversion. In other states. I can go back the other direction with Articles of Conversion. If you ever want to know what your options are per state, call my Director of Business Entities, Susan Compey. She's wonderful. She's been with me for over 10 years. She's great. Call the office, 435-586-9366. She can quote you the price for any LLC in any state. For the filing fee, we charge $800 and you get an hour with an attorney or 450 for any LLC in any state. Paralegal. So this is the paralegal setup and this is with attorney setup. Now, my attorneys are out two or three weeks. Don't stress. Get the entity going and schedule the hour with the attorney later. That way the attorney can walk you through all the pieces and parts, answer your questions. But at least you know it's set up right. It's okay. You don't have to have the attorney call next, you know, next week to get your entity going. Get started with Susan. Okay, so, but Night owl brings up this word called sub series llc. Okay, Darren, tell me how these work.

All plate Pictionary doing the series option three.

Okay. Yeah. So for A series. If you set that up, you'll have essentially a holding company or a main parent company, and then the subs underneath it will be owned by the parent company. We call it holdings. For passive parent is usually what we use for ordinary. Okay, yeah.

So parent or. And. And then you have subs.

Yeah, so you have the series LLC and then you have the sub LLCs underneath that, and then the properties go in the subs.

Now, here's the problem. Well, no, here's the good part. I only pay for one freaking series

llc and I can have as many subs as I want. Now, Night Owl in Wisconsin says, well, I want to go back to a regular llc. Why? If you already have a parent and subs, just keep it. It's the same annual filing fee you've already paid for a series llc. Night Owl, I'd say keep it. If it was me, I'd just keep it. But here's what's crazy. Some states don't allow for a series llc. Arizona doesn't. So in this example, if I have Arizona, Tennessee and Illinois. Now, I already know Tennessee and Illinois allows for series llc. Arizona doesn't. So in this example, I'd have to have an Arizona llc. Then I can have a parent that's in Illinois and have my foreign registered, foreign registration in Tennessee, and I could have baby subs in Tennessee or Illinois. Doesn't matter. So you're like, what states are parents and subs and regulars and blah, blah, blah. Well, there we go to the tax and legal playbook. So we know the answers. It's hot in here, isn't it? We can't turn on the AC because it's too loud for our audio. So this is not hot yoga. This is Hot Facebook, YouTube Live.

My guess is it's probably fine. I think it's just Cory.

Yeah, I'm just wearing Lululemon Leggins. You just don't see them. But I'm ready to do some stretches, you know, I'm just. This is hot live. Whoo. Man, I'm not sweating because stress freaking 100 degrees in here. All right, so you go to my tax and legal playbook, and you go to Appendice A or number. No, this is appendice. Which one is this? Number C. Number C. I'm so stupid. Letter C. Appendices C. Sorry, I got to move over. Huh? I wanted people to see the board. Okay, Appendices C as in Charlie, look it. I can list off all the states that are series llc. All right? Now, if you want to buy the book. I literally have this on my desk because I have to look at it, too. I didn't memorize my book for crying around. I wrote it, all right? It's like Indiana Jones when Harrison Ford asked Sean Connery his dad, he goes, well, why do we need to go to Berlin to get your diary? What did it say? And he goes, I didn't memorize it. That's why I wrote it in my diary. So I didn't memorize my book. That's why I wrote a book, so I can just look at it and know the answer. Okay? Series LLCs. Alabama, Delaware, Washington, D.C. illinois, Iowa, Kansas, Minnesota, Missouri, Montana, Nevada, North Dakota, Oklahoma, Tennessee, Texas, Utah, and Wisconsin. So Nidal Richard in Wisconsin, he's already got a Wisconsin series llc. He's like, I want to convert it back. Why? You already got it. You're done. If you want to pay me to do it, I'll switch it, but I probably keep it. All right, so when you have rentals properties, you say, I'm going to probably use a series LLC if I can in the state where I have rentals so I can get protection from all the other rentals, but I don't have to pay for extra llc. See, if you came to me, combine these two, save you money. That's. Believe it or not, lawyers try to save you money sometime, so you come back and use their services. We'd love you to come back. We don't want to rip you off. Those are other bad lawyers. All right, now. Oh, my gosh. We got option four. Guys. This is high level. Do you know I teach this to, like, other lawyers, and they're like, holy hell, I wish I learned this in law school. You guys are doing awesome if you get this. This is master's level law. I'm so proud of everybody. I'm so glad you're here.

All right, look at this.

Jerry and Madison, they're going deep on, what if I don't want to do a 1031 exchange cost of living. He says, just refi, pull the money out and go buy another rental. Why sell and do a 1031? I'm with you. You can do 1031s. You can refi and pull out equity. Sometimes it's nice to cash in. You're like, I'm going to get the most I'm ever going to get. And sometimes refis don't work. So, Jerry, Madison Heights, cost of living. I love what you're talking about. This is good stuff. Audi Clark says, can I create a series llc? In Texas. To purchase properties in Texas, and then in other states, use the series llc. Now, remember, let's go back to our diagram here. Does Texas allow for series? Yes. And then you're going to buy a rental property in Georgia. No, can't do it, Adi. You can't use a series LLC in Texas and hope to get serious protection in Georgia. Georgia's going to be like, we don't have that. Go back to Texas. So you can only use series LLCs in states that have series LLC law. Sorry. Okay. Oh, California. They said, bring them here. We'll charge you $800 for every series. Freaking California. All right, now, number four. You want to throw down four, or you want me to? You can if you want. Or do you want me to throw down? Okay. You sure? Okay. I'm intimidating Darren today. Darren said, I want to be on camera and answer questions. Now he's feeling the heat. That's tough. It's tough, isn't it? Okay. All right. Option four, master's level. You ready? Some clients go, mark, I got 10 rentals. I'm worth 2 million bucks. I need better asset protection. This is great, but look what's happening here, everybody. What happens if Cory is driving down the road texting and driving, which he does, and he gets in a lawsuit? He plows through a crosswalk and kills a family of five? I would never want that to happen to Cory. But let's say he's texting and driving and they sue him. Can they get into his LLC and take away his rentals? Can they go in and foreclose on those rentals? Now, some of you may go, well, Mark, I set up an LLC to protect the rental property. No, you didn't. You set up an LLC to protect you from the rental. This is deep, right? Because you got to trust. And you've got your home over here paid for because you've been following Dave Ramsey. Dave Ramsey said, pay off your home. That's cool. But you got a $500,000 home paid for over here. You screw up in one of these rentals and you don't have an llc, they're going to get your house. So why'd you set up an LLC to protect you from your rentals. That's the number one reason. Well, you said, well, Mark, I thought I protected the rentals from me being an idiot. I was. Texting and driving, by the way, is being prosecuted as manslaughter in more and more counties across the country. Like a dui. Be careful. No texting and driving. I say that to myself, too. I'm bad. So no texting and driving. But you do and you get into an accident and they sue you individually and they get a judgment against you. Can they get into your LLC and take away your rentals? Well, let's go to the tax and legal playbook, appendices C, as in Charlie also says, which states give you charging order protection, which means which LLC stop a judgment creditor from coming after you. They say then you can get a charging order for any money that comes out, but you can't get in the LLC and foreclose. All right, Arizona. Ooh, I love it. Arizona. Cope charging order protection. That's great. Okay, let's go over to Tennessee. Tennessee. Ooh, charging order protection. Tennessee. Nice. Illinois. Oh, sorry. Illinois, foreclosure state. I can get into your Illinois LLC and foreclose on your rental property to get money for you driving through a crosswalk and killing my family. Illinois says we do not want to have LLCs to protect people's assets. If you owe someone, it's their policy. And by the way, charging order states, there's only about 15. So most states say you have an LLC. We're not going to protect you if you're a jerk and you owe someone. So what clients do is they set up a holding company, a cope. And I'm going to put that in red just to kind of highlight that. So let's put that in red. This cope. Cope. So we've got COPE in Arizona. That's cool. And we have COPE in Tennessee. That's cool. But I don't have COPE in Illinois. And so I have clients in California. Gosh. Okay, you want to know the COPE states? I know people are asking Cope states. These are where you get protection. All right, Alabama, Arizona, Delaware, Indiana, Maine, Michigan, Mississippi, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Texas, Utah. Now, Utah is not on my chart, but I know they have coat protection. Virginia, West Virginia and Wyoming. Now, the state that is the most affordable, the most private and the cheapest to set up and easy to maintain and even a single member disregarded LLC is gives you COPE protection. It's the only state. It's Wyoming. So I'm going to set up a COPE in Wyoming owned by, guess what? Your trust and your cope, Wyoming LLC owns your other llc. So it acts like a sub series llc, but it gives you better protection. Now, some of you may say, well, Mark, I called your firm and you didn't do that for me. Because people, we don't sell Number four, unless you've got a million dollars of equity or more, maybe five to ten rentals and you can grow into it. See, this is what pisses me off out there. A lot of law firms, oh, you come to Holiday Inn, we'll set this up right now. By the way, for five grand, ten grand. We'll set up unlimited LLCs, blah, blah, blah, blah, blah. People watch out for that crap. Set up the LLC you need now and grow into it. All my clients are at least here. Some graduate to two. Those that are in series entity states, where you go to number three. And for clients that have a lot of crap going on and they're building wealth and they get to that level, boom, we go to number four, the Cadillac. So that's option four. That's a good option when you've got a lot of equity and a lot of rentals in multiple states. How did that go? We good?

So there's a follow up.

Oh, we have a follow up. Okay. All right. This is from Darren.

Yeah, Darren's gonna give some advice for everybody.

Well, let's say. Let's say that all of these rentals are all in the same state. There's no. We'll say. Pick a state, no series. You're going to put a rental.

So a non cope, non series state.

Non cope, non series state. Just a generic one. You're going to start out.

Should we choose? Let's see.

Where do people have a lot of

entities, you know, are a lot of rentals Georgia? Let's go with Georgia. Okay. Okay, so we got Georgia Reynolds with no coat protection and no series. And I love Reynolds in Atlanta. I got a lot of clients with Reynolds in Georgia.

Yeah.

Okay, so what's the.

What you're saying?

What's the option?

So, yes. Do they need an LLC for every single one in that case, or should they start putting together or what? What should they think about?

Let's go to Coke. I mean, let's go to our trifecta, people. We're going to finish up on this.

So here's my revocable living trust. I've got a 1040. Married or single? Married. Okay, so we've got spouse one, spouse two. One of the spouses have a day job. Okay, so we got spouse number one with a day job. You guys, hang on. This is going to be the climax of the show here. All right, W2, spouse number one, benefits, maybe a 401k at work, and they're getting a little matching. All right, cool. Spouse number two, number one and number Two. Spouse number two. Entrepreneur. Side hustle.

Realtor.

Realtor. Okay, so we're going to go with a realtor. Darren's just throwing this out. So we have an S Corp realtor, spouse number two. What about spouse number three? Oh, I'm sorry, that's kind of a South Arizona thing. Okay. All right. Sorry. Spouse number two is a realtor and they have some rentals. Okay. And they're all in Georgia. That's what you said. How many rentals? 5 rentals worth over a million dollars or equity of a million dollars. Okay, okay. 200 grand of equity in each one. Okay. All right. This is cool. Boy, trying to throw me for a curveball, aren't you? Okay, that's okay. I got. I got it. I got it. What we're gonna do, we're not even done yet. We're gonna. Any kids? No kids. Alright, so we have an S Corp. And what I'm gonna normally do is for this realtor, set up a solo 401k and I may even pay spouse number one. See what's gonna happen. A spouse number one is gonna play in the 401k and I call it matching out. They're going to get their match, Maybe it's a 3 to 4% match and then get out matching out. Then they're going to come over here and we're going to have two W2s. One for spouse one, one for the other spouse. And we're going to fund this solo 401k. And we're also going to do backdoor Roths. Roth one, Roth two. So we've got backdoor Roths, solo 401k. First spouse is going to just be on enough to get the rest of their match. So let's say their match. Okay. This year you can do 19,500. Well, at work they only match 10 up to 10 grand. So they do their 10, get the match and get out. So that means they can put in another $9,500. Well, we don't do it here. We do it in the solo. So I put the spouse on payroll for around 12,000. No, it's going to be around 11,500, but I'll just do 12,000 because I got to cover FICA. Then we put the other 9,500 in here. The second spouse, that's the realtor, we're going to do at least 25,000 in salary and do our 19,5. So look at this. At work we got 10,000 plus the match. That's 20 plus the 9,000 here. That's 29,5 plus the 19,5 here. That's 38, 48, 49,000 plus the matches. Oh my gosh. Let's throw in another six. So I'm up to 54 backdoor roths of 6K each. 64, 66 grand. I've dropped 66 grand in retirement accounts and I'm just getting started with rentals. Boom. All right, now over here we're in Georgia, no coat protection, five rentals with 200 grand of equity. We're going to use mortgages, right? Madison and Carrie, we want to, we want to use our mortgages. We're doing leverage. You know what I do? I'd probably do two LLC in Georgia. I'd put about. Really what I'm shooting for is about 400 grand of equity in each LLC. I might do a third LLC do, but I'm going to really do about 500 grand of equity in each LLC and by splitting these up generally. So I'm going to go 600 of equity here, 400 of equity here, and I'm going to have two LLCs in Georgia. Disregarded LLC. 100% owned by my Wyoming LLC. That's a two member LLC. Husband and wife. And why do I do that? Because I want awesome freaking audit protection. I do my 1065. Oh, by the way, there's no tax in Wyoming, so no tax in Wyoming. I'm only paying tax in Georgia and I only have to do one tax return even though I have three llc. You just get chills. I'm getting double asset protection from the rentals. So they got to get through two barriers to get to me and my house. And if there's a charging order, if there's a lawsuit for texting and driving, they can't get at my rentals in Georgia because they have to go through Wyoming. And Wyoming says no. That my friends, whole chapter in here on asset protection advanced. That is when you have a lot of real estate with a lot of equity. I'm going to double down with the cope and I'm going to throw it in here now. If this is awesome for you and you're loving it, subscribe over to my YouTube channel. I shoot videos all the freaking time. All my podcasts are turned to YouTube videos, Facebook, I post all the videos and all my tips on there too. So please check it out. Give me a five star. Give me a rating. I'd love it. This, my friends, is asset protection. This is tax free planning. This is payroll tax planning. And I'm going to be writing off all my freaking kick ass. Sorry for those kids in the room. These are all my kick ass strategies here for the small business owner, real estate professional with the spouse wiping out the income of the W2, getting the match on the 401k. All coming together in my trust. That was freaking awesome. There we go. Good example, Darren. Oh, that's our studio audience. Corey. Clap. Everybody. Thanks so much for being here. I love small business. I love real estate, I love crypto. I love investing. I love the American dream. I love what I do. I love being here with you. Thanks so much for participating, your questions and all that. And Corey, I'm just going to do it for fun. I'm feeling it. I want to give away two or three books. Must be present right now. Corey, give me a winner. I want a female winner for the self directed IRA handbook. Female. Corey@markjkohler.com if you're a winner, just email him your contact info. Who's my winner? Sandy Chambers. You just won. Sandy Chambers just won the self directed IRA handbook written by my partner Matt Sorenson on how to do all of this tax planning here with your IRAs and 401ks. Next winner. Male winner. Business owner's guide to financial freedom. A business owner's way to build wealth. Sell my business, do the tax strategies. Bring my family in. How do I do it? Who's the winner? Come on, come on.

Eric Paulson.

Eric Paulson. Paulson. Eric Paulson is the winner. Make sure you go to Corey. Email coreyarkjkohler.com and he will give you mail you the financial freedom book. He'll give it to the marketing team. Next winner is. What? Your CPA isn't telling you a story that gets you geeked out on tax planning. It's not. It doesn't have a chapter for every strategy like this one, but it's a great gateway drug to understand how it affects a family. Female winner on this one. Andrina Arara. What if a realtor has a different industry? Day job law in a single no Cope in Florida. Does a revocable living trust. Owns a Wyoming LLC that owns a Florida LLC funded by rental property. Would she be better off married? Adriana, you're beautiful and I love your structure. You would be a catch for anybody out there. And you know, whether you're married or not is. I wish I could say getting married is worth tax planning, but married's a big decision. I will say this, okay, I'm gonna go out on a limb. This is important for everybody. When you're married. I have more options for tax planning, period. Because I'm going to be building wealth times two. I'm going to be using side hustle and day job. I might be using real estate professional. I've also got two credit scores for loans to buy more rentals. So if some of you can swallow being married and it's some of you been through a divorce and you're like, I'm never going to get married again, just get a prenup. That's cool. Get a prenup. We can still do some great tax planning. Last winner is a male. So we got two males and two females. Tax and legal playbook. Who's my winner? A cost of living man. He was active here on the chat, wasn't he? And he didn't beat me up. A cost of living. Thank you for making great comments and not being a jerk and I appreciate it. So a cost of living. Email Corey C o R E yarkjcohler.com Give him your info and we'll send you out a book. Thanks everybody. You have a great week. And next Thursday. I might be doing this on Friday rather than Thursday. I got family in town for a little reunion this next week, so we'll see how it goes. That's why you got to subscribe so I can tell you when the Live is next week. Thanks everybody. Keep living the dream. I'm going to go out for Mexican food. That's what I'm feeling.