Getting Started
I have been researching the REI field for a while now, reading books, taking notes, etc. I feel I have a good handle on most of the subjects that directly affect me. My question is for recommendations on books to help the beginner get a good handle on the whole issue of tax issues (i.e. paying as little as possible, knowing what I have to pay, etc.) In particular, I was looking at John Reed's "Agressive Tax Avoidance for Real Estate Investors, 18th edition". Would any of you recomend that book or another? Most subjects in REI, I think I am more willing to take a chance but with the taxes, I am afraid of hefty penalties if I do something wrong.
Thanks in advance for any responses.:-D
Joe [ Edited by joecrane on Date 04/02/2004 ]
You are getting the cart before the horse. Acquire some properties before you worry about taxes. Go to the library and check out some books on real estate investing. Or go buy them at a bookstore. And even better go into products&services on the toolbar on this site and purchase some books or courses.
I apologize if I was unclear. I am trying to develop a tax strategy before I look for the property. I was looking for receommended books from experienced investors (like yourself) in paticular, John Reed's "Agressive Tax Avoidance for RE Investors." I am looking for a book that will give me an overview of the taxes and, once I know about the general process, I can then focus my studies to particular aspects of taxes.
Thanks for your response.
I also want to note that I have checked out the products here on the site. It had three books and one was from Robert Kiyosaki so I kind of don't trust that book. The other two are specific strategies (1031 and using an IRA). I was wondering if anyone had a book to cover the entire landscape of the tax situation and I could then decide which strageties and options were best for me. Since a newbie, I am unsure as to where to start.
Joe,
Start by identifying your niche. Do you have a tolerance for landlording? If so, how will you acquire your property -- foreclosures, pre-foreclosures, Subject To, MLS listings, FSBOs, short sales, etc.
Would you rather flip properties for quick cash? If so, how will you acquire your property -- foreclosures, pre-foreclosures, Subject To, MLS listings, FSBOs, etc., AND, what is your exit strategy -- retail sale, wholesale flip, contract assignment, Contract For Deed, Lease Option, etc.Once you have identified your niche, then learn all you need to learn about the tax ramifications for your strategy. I think it is short-sighted to make tax considerations the primary focus of your investment strategy.
Your attitude should be: I can't wait for the day when my federal income tax bill is $1,000,000. Because on that day, your total income will likely be closer to $5MM. Remember, noone ever went broke taking a profit, even after taxes.[ Edited by DaveT on Date 04/02/2004 ]
why dont you trust kiyosaki??
have you poisoned by john t reed bitter and biased approach to everything in life???
i have read most of kiyosaki's book and the worst thing
i can say is they lack actual information. other than that
the ideas are sound.
he got me started in option trading and real estate.
Joe,
If you are seriously going to be going REIs, in conjunction with your search for reading materials on taxes, I would start to search for a good Tax Advisor with knowledge in Real Estate taxation. Find a CPA with tax audit experience. He will advise you regarding what tax consequences you will be facing. If possible, talk to him before and after each Real Estate Investment.
When I first started that is what I did. I told him what I was buying and what I was selling (before I did it). He advised me what my potential tax obligations were for each one. If I didn’t like what he told me, we discussed ways to resolve the issues I had (paying taxes).
My Tax Advisor has never charged me for the discussions.
You will be kept busy trying to find Real Estate Investments and building your Network without worrying about your tax consequences.
Quit your day job so you won't have to pay taxes on that income.
When I joined the Army Special Operations Community, we trained hard so our operations were surgical (in other words, we didn't kill the people we weren't supposed to). When I joined the business world, we did our homework so when the action happened, we could outperform the competition. I was not trying to get rid of taxes-I was trying to plan for them and minimize them (as smart business people do). So to all who gave practical advice, <b>thank you</b>.
As for Kiyosaki, when I read "Rich Dad, Poor Dad", I just couldn't buy his story; plus, some of the information about some of his dealings were pratically impossible or wrong. Reed merely cemented what I thought about Kiyosaki; and, once an author loses his credibility with me, I tend not to read anything else they write.
Tax: money paid by people for the support of the government and the cost of public works and services; Money or sometimes goods collected from citizens by their rulers; Assessment
oh joy! taxes, taxes, taxes if their is one thing we can not get out of is taxes
most jump into things and then face the results, good move, checking all the angles first.
so do you disagree with kiyosaki's belief that everyone should gain financial intelligence, start they're own business to save on taxes and realize that theie job will never make them rich.
or are you still caught on the "there never was a rich dad" part????
I would say yes to both of those questions. Not everyone is built to run their own business. I would recommend you read "The E-myth" by Michael Gerber. In it he describes how the idea of gaining financial success through business is not for everyone. If you are not dedicated to what you are doing, plan to work your tail off and know that it may not work (or possibly break you), then owning your own business is not for you. For that person, having a job with limited income potential is for some (if not most) people. If they are happy, so be it. Besides, if everyone was built to be an entrepreneur, no one would have anyone to work for them.
And, it is not a matter of a "rich dad" or a "poor dad" actually existing. If he conveys good information, I don't care if that is a true or false story. The problem is, the business advice he gives (in my opinion) is not good. You don't own a business for tax breaks. It’s like someone I knew who took a mortgage out on his home because the interest was tax deductible. It impressed people he told; but, there is no way that paying a mortgage on a house he could own would save him taxes. That's what I found quite a bit of in the book—information that sounds impressive but does not or will not work in the real world. Now, if someone reads the book and learns a financial principle in a manner that understandable and enjoyable, great. There is too much financial ignorance in America as shown by the high credit card debt of the average American.
My point in this thread was to get recommendations for books that experienced investors could recommend (which I have received). As a side note though, if I cannot trust what an author says in a basic book on finances, why should I trust tax advice that may also be wrong.