SaveGainsTax

Is The Capital Gains Tax Rate Going UP?

2009-07-09T17:31:00.000-07:00

For years now, CPAs, financial advisors, realtors, etc. have been telling their clients to sell their assets now because capital gains tax is at the lowest it has been in years.

This is true, and in some cases a wise move. However, these advisors usually have some personal interest in having you sell your assets such as a sales commission, another place to put the funds to make them money or simply because they don’t know there may be another way that would save you money.

Typically, if the asset is valued under 100K I tend to agree. Especially if you live in a state with no capital gains tax or are in a very low income bracket.

Will capital gains tax rates be going up? Probably, and probably in the not too distant future. We Americans will have to pay for all this money our government is doling out to the big companies and banks, etc. Not that they are sharing it or helping the average Joe as they promised, but don’t get me started down that road….

However, there is an argument to be made for deferring tax or spreading out the payment of tax even if the tax rates rise. Here are the main reasons why.

1. If you can earn interest on money you would have had to pay all at once up front you usually still make out even if tax rates rise.

2. If tax rates go up, interest rates usually go up as well

3. Tax rates go up and tax rates come down over long periods of time. You pay them as you receive them, so you will pay higher rates in some years and lower rates in others, but you are only paying on a portion of each installment.

4. When you pay in a lump sum and invest the remainder, it takes a very long time just to get back to where you started and in most cases you still have to deal with taxes on interest or dividends which is taxed at an even higher rate.

5. People in general tend to manage money better when it comes as an income stream and not as a lump sum. Just look at lottery winners and sports stars.

Don’t just look at one factor, such as the current capital gains tax rate to make your decision when selling an asset. You need to look at your entire financial picture, your present and future needs, and plan for the overall best outcome.

Also, don’t rely only on the person who stands to gain from your selling and paying upfront. If the rates go up, their advice will be the same, though probably with a different rationale. That is how they make their living.

Paula Straub
www.savegainstax.com
760-917-0858
savegainstax@gmail.com

Who Can You Trust With Your Money?

2009-07-03T12:27:00.000-07:00

Even during good times it is hard to trust another person or company with your hard earned money. What if you get taken?

This past year has only added to the fear with crooks like Madoff, Stanford and numerous other con men and women literally stealing the life savings of innocent people, charities and pension funds.

Yes, you can stuff your cash in a mattress or personal safe to physically guard it, but let’s face it, there’s got to be a better way. It’s a bit like identity theft. There are standard and common sense precautions to take that work 99% of the time and there is always that 1% that is unavoidable and unpredictable but necessary for us to prosper.

I’ve put together some basic rules that it makes sense to follow.

*Know what it is you own. Whether it is a CD, a stock, an annuity, real property, a mutual fund, etc. you should have a document of purchase and it should be traceable.

* Beware of writing a check to an individual who is investing your money. This is how many crooks take advantage. They cash the check because it is made out to them personally and never invest it where they said they would.

* Don’t invest in something you don’t understand.

* Most investments should be in vehicles that are regulated by the state and or federal government. Stocks, mutual funds, annuities, real estate are all examples.Be cautious of giving money to a person or company that tells you they will give you unusually high returns on an investment you can’t track the value of or that is unsecured by some sort of collateral.

* Be aware if your investment is in anything except some insurance products, annuities and CDs with guarantees you can and often will lose value as well as receive gains.

The moral of this story is not to be afraid, but to be cautiously optimistic and educated on where you put your hard earned gains and savings. If we learn nothing else from this rotten economy, it should be that prudence should outweigh greed.

Paula Straub
760-917-0858
savegainstax@gmail.com
http://www.savegainstax.com/

Attention Seniors With Diabetes, Arthritis and/or Mobility Issues

2009-06-09T16:18:00.001-07:00

If you are over age 65, and have Medicare Parts A and B, and are not currently part of an HMO, you may be eligible for free medical supplies.

Examples are a diabetic testing meter that does not require pricking your finger, elastic support braces, electric scooters and a hot/cold compression wrap to reduce swelling.

Go to the following link to see the options available, and if you feel you can benefit send me an email to savegainstax@gmail.com with your name and phone number. If you qualify, the devices are delivered to you at no charge.

http://www.savegainstax.com/ProductsAvailable.pdf

Be patient for the file to appear, as it takes a bit of time to load on your screen.

Please feel free to pass this email to someone you know if you feel they can use any of these products.

My Mom loves her new testing meter.

In this economy, every little bit of savings count!

Paula Straub
(760)917-0858

Another Potential Hidden Source of Income

2009-06-03T16:44:00.000-07:00

There may be some “green shoots” of hope forming in parts of the economy but we are still subject to a long period of uncertainty. I am always looking for ways to pass on little known options for the right situation where someone might benefit.

I’ve talked about life settlements and veteran’s pension benefits and today want to mention annuity purchases. Here are a couple of examples.

1. You bought an annuity years ago and are now receiving payments from this annuity over a number of years, let’s say 20. You set this up for a guaranteed income stream to get you through retirement. Now it is year 5 and you are faced with a serious life crisis. For whatever reason, you need a lump sum of money but don’t have other resources. It is possible that a company who purchases annuity payments can look over your policy and make a cash offer in exchange for your future payments. This may be also possible on a partial amount. If this makes sense for you, it opens a new window to solve a pressing problem.

2. You had an accident or perhaps a medical claim that was settled in the past and you chose payments over a specific number of years versus a lump sum payout. At the time this seemed the prudent thing to do, but again, life interferes and you need access to a larger sum of funds. There may be a company who will make an offer as in example one that will allow you access to funds that you did not have before.

I have access to these companies, so if you are in a similar situation, or know someone else who is, please give me a call at (760)917-0858 or (888)338-3036.

It helps to know as many options as possible, because we are all having to be creative financially in this volatile times and knowing where to turn for help is the first important step.

In the next email, I’m going to explain how certain people can get access to free medical supplies such as new diabetic testers, braces for arthritis, and electric scooters.

Paula Straub
savegainstax@gmail.com
www.savegainstax.com

The Document Everyone Should Have on File

2009-05-15T14:23:00.000-07:00

While waiting for the credit markets to loosen up so my clients can actually sell their real estate and businesses, I have been spending a lot of time with veterans, widows and their families.

As I have mentioned before, many who are now in need of daily medical and personal assistance can qualify for the Veterans Improved Pension benefit with Aid and Attendance Add-on. It is a life saver for those whose savings are being eaten up by care bills and also those adult children caregivers who perhaps have quit a job to care for Mom or Dad and now find themselves in a financial bind.

Perhaps one of the major road blocks I have consistently seen is an elderly person with dementia or Alzheimer disease, or perhaps now disabled from a stroke who did not sign over durable power of attorney to someone prior to becoming physically or medically disabled. Now it is too late and a family member must go to court to get custodianship and ask permission from the court before making financial or medical decisions on their behalf.

This can be very time consuming and expensive and is easily avoidable.

It does not matter if you are 30 or 80, you need to put a plan in action to give a chosen person power of attorney in the event of your physical or mental incapacity. Name contingent designees in case a spouse might precede you in death. The power of attorney should be for both financial and medical decisions.

Just having this document notarized and on file where someone can access it in time of need can mean the difference of being taken care of the way you want and having everyone hands tied so they can not help get your affairs in order when necessary.

An attorney is not necessary to implement this document. Templates can be downloaded online and you can write in your exact wishes and when the document becomes in effect.

Please take a moment and do this now. Tell your family and friends to do the same. Take it from those who wish this had been done and whose hands are now tied because they can’t access the funds of the incapacitated individual or make the medical decisions necessary for their care and well being without a court ruling.

Paula Straub
760-917-0858 M-F 8am to 5pm Pacific
www.savegainstax.com
www.gbausa.org/pstraub (More info on VA benefits)

Answers to Most Common Questions from VA Benefit Post

2009-04-13T18:09:00.001-07:00

I’ve been receiving many questions from my last post, so I am going to attempt to answer the most common questions. If you have others, please contact me directly.

Q: What exactly is this pension and who qualifies?

A: Here are the mandatory qualifications for what is known as the Veterans Improved Pension Benefit. This is a non-service connected pension benefit with additional add-ons of “housebound” and “aid and attendance” benefits available to a veteran or their widow(er) who requires the assistance of another person in order to avoid the hazards of his or her daily environment. This is not to be confused with a service related disability pension which falls under a different program. The veteran must also have:
a. 90 days of consecutive active duty service, one of which was during wartime.
b. Any discharge other then a dishonorable discharge
c. Be 100% disabled or at least age 65
d. There are income and asset limitations which can be discussed individually

Q: How do I know if I qualify?

A: Go to http://www.gbausa.org/pstraub and fill out the qualification form. It comes directly to me and no one else and I can contact you to discuss your qualification.

Q: I already applied and was turned down. What can I do now?

A: Once you have submitted the application, and if it was done incorrectly or lacking the proper documentation, it is pretty difficult to overturn the decision. This is why it is crucial to do everything right before the initial submittal.

Q: I have a Veteran’s Service Officer helping me. Do they perform the same service you are providing?

A: The Veteran’s Service Officer at the local VFW or American Legion is trained to fill out the paperwork for submittal. They are not trained or able to offer suggestions of what options you have to be in a position to qualify at a later date, and may tell you that you do not currently qualify and to come back once your income or assets have been depleted. It makes their job easier if everything is in order so they can review the application prior to submittal and make sure everything is in order for processing. Since you only get one first shot at success, it pays to have all your ducks in a row so you are approved on the first go around. Since neither myself nor the VA Service officer charge for this service, why not cover all your bases for optimum success? We both want you to qualify to receive the benefit you have earned.

Q: How long does it take to qualify and begin receiving the benefit?

A: The VA can take 4-6 months to approve the benefit, just due to backlog and understaffing. However, the benefit is retroactive to the 1st of the month following application receipt, so the sooner the better as far as applying. If assets need to be transferred, this may take additional time depending on the individual situation.

Q: Do you have to be “poor” to qualify?

A: No. To get only the basic pension without any need of medical assistance, such as driving, taking medication, walking, bathing, etc, you do have to have a very low income and this may not be the right time to apply. Once you start needing ongoing care, the medical bills can be substantial, and this is when the program can really help defray the costs of home care, assisted living, or nursing care. This is the true value of this benefit.

Q: Is this applicable to the spouse of a veteran?

A: Although the aid and attendance benefit is for the veteran or the widow(er) of the veteran, it still may assist the couple when either needs care. This is because both the husband and wife’s income counts towards qualification, so do the medical costs of both the husband and wife count towards qualification.

Q: If a widow(er) of a veteran remarries, do they still qualify for the benefit?

A: No. The VA only counts the most recent marriage for the widow(er).

Q: Does care provided in the home count for qualification?

A: Yes, see me for details.

Q: What if a child is caring for the veteran at home?

A: The care does not have to be provided by a licensed care giver as in long term care policies. See me for details.

Q: Can a veteran get both a service related pension benefit and a non-service related benefit?

A: Not both at the same time. Whichever pays the higher amount would be the one to go with.

Q: Does this amount stay the same year after year?

A: The amounts are increased annually. You must also re-qualify each year, which is pretty straight forward unless you receive additional income or no longer need assistance.

The bottom line is if you know of someone who may qualify, it is worth it to check it out. With the rising cost of health care, the increase in life expectancy and the risk of outliving income and savings, every penny counts and this benefit is free of dreaded TAXES!

Paula Straub
www.savegainstax.com
http://gbausa.org/pstraub
888-338-3036 toll free
savegainstax@gmail.com

Important Info for Veterans Over 65 Using Assisted Living Services

2009-04-07T16:51:00.001-07:00

In doing research for my own family member, I came across extremely valuable information for US Veterans that might make a huge financial difference in their lives and the lives of their spouses and children.

If you are, or know of, a Veteran or Widow(er) of a Veteran over age 65 in need of medical assistance for daily living, whether at home, in an Assisted Living Facility or in a Nursing Facility, you need to know if you (or they) qualify for the Veterans NSC Improved Pension Benefit.

http://www.gbausa.org/pstraub

This assistance is a little known benefit of tax free pension income from our Government to Veterans who served during any period of war, even if they did not go into battle and it can truly be a life saver.

I recently went through a training program to educate people on this benefit and have set up a web page with additional information and resources. I also have a toll free phone line for questions and contact.

http://www.gbausa.org/pstraub

It doesn’t matter which state you reside in. I will let you know if I can help, or I will try and direct you to a person in your area.

There is no charge for this service and I urge you to use it. Even if you think you or your family member or friend will not qualify, this may not be the case. The maximum benefit for 2009 is $23,396.00 per year and is TAX Free!

Go to this web link and find out more.

http://www.gbausa.org/pstraub

Paula Straub
http://www.savegainstax.com/
760-917-0858

Good Intentions, Bad Tax Consequences

2009-03-31T14:32:00.000-07:00

As we step in to take care of aging friends, parents and grandparents, we can make choices which seem like a good idea at the time, but turn out to be not so desirable when it comes time to sell.

I’ve gotten several questions lately about the tax consequences after selling a home that was either gifted or sold for a very low price prior to death, typically to a child of a sick or ailing relative.

The idea was that the owner was either too sick or unable to take care of their residence and a child stepped into getting control of the assets so they could make the financial decisions to care for the seller.

Since they didn’t want to pay the seller out of pocket, the property was gifted with a quit claim or grant deed or sold on paper for $1. or other low amount. No taxes were due, and now the responsible party was in control. Note: this doesn’t work for planning for state or federal aid unless done at least 5 years prior to need or request.

Then, once the parent or seller is taken care of or has passed on the property is sold for market value. It is at this time that the real consequences surface.

To make a long story short, the new seller now has a large tax bill with capital gains tax levied on the amount over cost basis for the sale. The cost basis is either the $1 paid or the previous owner’s cost basis if gifted. This can be a huge amount depending on value.

If the original owner had retained title, the house could have been sold and the personal exclusion for primary residence applied if they still satisfied the ownership and residence tests, or would have passed to the beneficiary at market value as of date of death.

The child could have gotten legal power of attorney and handled this for the original owner if incapacitated.

Before making any major decisions, be sure to meet with a good attorney who will explain all the pros and cons.

Paula Straub
www.savegainstax.com
savegainstax@gmail.com
760-917-0858
Fill out a Confidential Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
http://www.savegainstax.com/qq.html

Simply Wealth On Hiatus

2009-03-24T12:57:00.000-07:00

I’ve really enjoyed being the host of Simply Wealth on WebTalkRadio over the past 15 months, and wanted to let you know I’m taking a break to concentrate on exciting new ventures.

Anyone who has hosted a weekly radio show will appreciate the amount of time and effort that goes into preparing, taping, editing, uploading, etc. I developed a regular following of about 30K listeners on a weekly basis and appreciate all who faithfully tuned in.

I will keep my radio email open for any general questions on financial matters and try to keep up with replying as time allows. This address is SimplyWealthShow@gmail.com . You can also listen to my archived shows at www.savegains.com by clicking on the link to “Listen to My Radio Show Simply Wealth”.

You can also follow me on Twitter. My name there is @savegainstax . This is a whole new concept for me which allows short updates of new developments and interesting tidbits.

While waiting for the credit markets to unfreeze, stay tuned for info on some local seminars I will be offering which will really benefit certain deserving individuals. More info to follow.

Paula Straub
www.savegainstax.com
savegainstax@gmail.com
760-917-0858
Fill out a Confidential Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
http://www.savegainstax.com/qq.html

Safety Has Once Again Risen To the Forefront- Thank Goodness!

2009-03-18T16:08:00.001-07:00

It was less than a year ago that clients were willing to forsake safety and a steady return for the chance to “make it big” with gas and oil, REITs, real estate and other volatile investments.

They decided to pay all their capital gains tax and depreciation recapture up front so they could invest their hard earned proceeds – often with the help of money managers- to not only get back where they started from before taxes, but to soar ahead of a measly 6% return and tax deferral.

Why put money into principle protected products that don’t lose in bad markets and gain only a portion of the growth that stock indexes make in good times? How boring!

Do you know anyone who has lost a LOT of money in the market this year, in gas and oil, in real estate, in a business? I do. I have taken a beating in my own retirement plans.

The people I know who are the happiest are the ones that opted for the boring equity indexed annuity and who have experienced zero loss and an income stream that pays the monthly expenses. When the market does come back, and it will eventually, they will start where they left off and not have to dig out of any holes going forward.

It takes a crisis like the one we are in to appreciate slow and steady versus quick and uncertain. Now when I get calls, the first thing I’m asked is how will they be assured their principle is protected?

If I look back to my parent’s generation, who worked and saved rather than borrowed and spent, we have come full circle. I think it’s a much better way to go.

How about you?

Paula Straub
http://www.savegainstax.com/
savegainstax@gmail.com
760-917-0858
Fill out a Confidential Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
http://www.savegainstax.com/qq.html

A Sad, But All Too Common Story

2009-03-12T10:33:00.000-07:00

In past years, the most common situation was people nearing retirement often came to a decision to sell real estate or businesses which had appreciated in value, had a low cost basis and little debt. This left a big gain and a huge tax bill.

There are still many great choices for deferring or spreading out taxes over long periods of time and setting up a solid income stream for retirement if this is the case.

With this crazy economy, more and more upside down situations are becoming all too common place. Here is one scenario which has many variations, but the same dire consequences.

Phil bought a commercial property 16 years ago for 500K. As it appreciated in value, he took out equity to make other investments, pay bills and buy a few luxuries. His debt increased to 800 as the property value reached 1 million.

Then the market came tumbling down and the property is now worth 750K and he wants to sell. He will only clear about 700K after normal costs of sale. He called to ask how he can minimize his taxes.

Phil is in a world of hurt with no good way out. Not only would he have to come up with 100K out of pocket to pay off the loan to the lender, he is on the hook to the IRS for 400K in capital gains and depreciation recapture, which will work out to about 120K in taxes due.

So, to sell now, he will owe approximately 220K out of pocket to the bank and the IRS and he will have zero proceeds from the sale. Phil was hoping I would have a solution for him to defer paying his taxes. Bankruptcy came to mind.

The thing Phil was oblivious to was that he had had use of 300K equity for many years, but had not reinvested it into his property, and spent it elsewhere. He had assumed the property value would continue to increase and never go down. Now he’s pretty much up a creek without a paddle.

Since Phil does not have the money he needs, he may not be able to sell at current market value. The lender would have to ok a short sale, and then he would have to declare the 100K as income because it is forgiveness of debt and there is no break for investment property. He would still owe the 120K to the IRS. There is no way he can pay all his tax and mortgage obligations, as he has no savings.

The bottom line is, Phil is in trouble and if he can’t hold onto the property he will have to look into bankruptcy or insolvency. There are currently many in the same boat and there is no good way out. I hope Phil can hang on until the market rebounds at least enough to cover his taxes because I hate to see anyone lose everything they’ve worked for.

Paula Straub
www.savegainstax.com
savegainstax@gmail.com
760-917-0858
Fill out a Confidential Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
http://www.savegainstax.com/qq.html

Listen to my weekly radio show “Simply Wealth” at www.webtalkradio.net

How Bill Saved $240,981 Using a Self Directed Installment Sale

2009-03-03T17:32:00.000-08:00

Bill owned an investment property that had appreciated a lot in value. He had depreciated it completely over the years.

Bill’s adjusted cost basis was $0. His straight line depreciation was 200K. The selling price after closing costs was 1.2 million. His gain is 1.2 million and of that 200K is taxed at depreciation recapture rates, and 1 million is taxed as capital gain.

Bill is 62 years old and lives in Utah where capital gains are taxed at 5%.

Bill did not want to do a 1031 exchange and wanted the maximum amount of proceeds to be kept in his family. A Self Directed Installment Sale was his vehicle of choice.

If Bill had sold and paid all taxes upfront, he would have owed about 264K in taxes.

By structuring the sale correctly, Bill chose a 25 year payout so it would most likely last him the rest of his life. He is single and has one son who is financially sound.

By spreading out the repayment of capital gains and depreciation recapture over 25 years, Bill was able to recognize a savings of approximately 241K .

Assuming Bill paid his taxes, invested the proceeds at 6% interest and took withdrawals to live on over a 25 year period, his annual income would be approximately $73,056.00 per year.

By deferring and spreading out the tax repayment over 25 years and assuming that the proceeds are also invested at 6% during the payout phase, his annual income is $93,661.00 per year.

In these crazy times, can you use the extra income, or do you prefer to give it to the IRS?
Paula Straub

www.savegainstax.com
savegainstax@gmail.com
760-917-0858
Fill out a Confidential Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
http://www.savegainstax.com/qq.html

Listen to my weekly radio show “Simply Wealth” at www.webtalkradio.net

How Painful Has This Year Been For You?

2009-02-24T17:14:00.000-08:00

I don’t know about you, but this past year has been a real “bear” in more ways than one!

Not long ago, the calls and emails I received were primarily from relatively happy individuals who had found a buyer for their appreciated real estate, businesses, etc. and were looking to minimize their capital gains taxes.

Fast forward to today. More and more calls and emails are from people who
have been trying to sell their assets for a very long time, and few are having any success. Here are the most common dilemmas:

They are getting low-balled on the offers that do come in and are determined to wait for the values to go back up

They are getting close to losing the properties because tenants have pulled out, they are behind on mortgage payments, or buyers offers are dependent on the sale of another property

The most common is that buyers, even though they are supposedly prequalified for loans, are unable to get the loans, and this is happening right up to the day of close.

The saddest calls of all are from investors who have had to go through short sales on investment properties they bought at the top of the market and now are finding out that they owe income tax on the amount of debt forgiven by the lender. In some cases, this amounts to tens or hundreds of thousands of dollars which the person does not have, and they face possible bankruptcy or insolvency.

As much as I’d like to help with these things, when you aren’t able to sell at a profit, I have no tax strategy to help save on your tax bill. I sure wish I did, because I’d be the most popular person around. Until credit frees up, real estate prices stabilize and confidence is restored we are all pretty much at a standstill and it stinks.

Just realize, if any of the situations above are similar to yours, you are in very good company. Let’s hope all these stimulus packages using our tax dollars have the desired effect. Personally, I can’t wait for the day to get happy calls again!

If you do have a cash buyer that makes even close to a reasonable offer, think real hard before turning them away. They are far and few between and it will be a good while before it is once again a sellers market.

Paula Straub
www.savegainstax.com
savegainstax@gmail.com
760-917-0858
Fill out a Confidential Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
http://www.savegainstax.com/qq.html

Listen to my weekly radio show “Simply Wealth” at www.webtalkradio.net

Tips For Getting Through Tough Times #2

2009-02-10T12:25:00.000-08:00

The last email talked about the possibility of getting a cash offer for a life insurance contract that was no longer needed, expiring, and/or affordable.

Here is another potential source of lump sum value for an annuity contract in the payout phase. Potential individuals who may benefit are those
Whose payments are not providing enough to live on
Who are receiving payments tied to an extremely low interest rate
Whose health has changed and the need for additional money is great
Who have inherited an annuity and are forced to take the balance as a payment stream when a lump sum is more valuable to them.

If you or anyone you know is in this situation please email me or give me a call. I can let you know if a company is willing to make an offer for consideration.

Not all policies will qualify, but if yours does it may mean that you have the ability to access money you did not think you had and cover whatever expenses are at hand. There is no obligation to accept any offer made.

If you have any questions don’t hesitate to call or pass this email to someone who might benefit.

Paula Straub
www.savegainstax.com
savegainstax@gmail.com
M-F 8am-5pm PST
760-917-0858

Fill out a Confidential Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
http://www.savegainstax.com/qq.html

Listen to my weekly radio show “Simply Wealth” at www.webtalkradio.net

Tips to Getting Through Tough Times #1

2009-02-04T16:45:00.000-08:00

I don’t have to tell you that our current economic turmoil is affecting our lives in ways it didn’t seem possible even one year ago.

Many of the emails and questionnaires I receive on a regular basis are relating to people selling assets at fire sale prices, being foreclosed on, and being stuck in perpetual hold mode due to the lack of credit available to potential buyers.

Worse yet, property values continue to decline, as do assets in stocks, IRAs, variable annuities, life contracts, etc.

The next series of emails will be focused on finding potential sources of income from assets you may own but may be unaware they have additional value.

Even if these options do not apply to you, you may know of someone who can benefit and share this information with them. We are all in this situation together.

First is potential value in a life insurance policy that could provide a substantial lump sum payment in times of need.

If you or someone you know over age 65 is considering dropping or surrendering a life insurance policy because it is no longer needed or if the payments have become too much of a burden to maintain, please have them contact me.

Even if the policy is a term policy with no cash value, there may be value to an investment company who may make a substantial cash offer on a policy that would have been dropped anyway. These companies buy policies and package them in large groups which are resold to investors. There is no single owner with a vested interest in the seller passing on early so this makes it more palpable to the seller.

This is especially valuable to seniors who are afraid they don’t have enough savings to last through their retirement, those who have an unexpected medical or financial setback or those who have no heirs that need the death benefit. It is also a way for their children to have enough resources to take care of them should they need long term care and have no insurance for that. In some cases, additional life insurance can still be purchased with the proceeds.

The policy owner has complete control on whether or not to accept the offer. Not all policies qualify, but I can let you know if yours does when I get some basic information. It never hurts to cover all the bases.

Paula Straub
http://www.savegainstax.com/
savegainstax@gmail.com
760-917-0858 M-F 8am to 5pm PST
Fill out a Confidential Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
http://www.savegainstax.com/qq.html

Listen to my weekly radio show “Simply Wealth” at http://www.webtalkradio.net/

TIC Properties in Today's Real Estate Market

2009-01-12T15:06:00.000-08:00

We all know that real estate goes up and down in value. Just like stocks, more years are up than down but occasionally we get a market such as the one we are in where it seems all investments are taking a big hit.

So, what is the state of the tenant in common market today? It depends.

It depends on what type of property you own, where it is located, and when you purchased it. Here are some of the factors involved.

Some of the most common types of tenant in common properties consist of shopping centers, office buildings, medical buildings, senior and assisted living and apartments. Most are at least 95% rented when originally purchased.

For years, when real estate values were climbing and the economy going strong, most properties met their expectations and paid out the proceeds as planned.

Now look at what is happening nationwide. Retail businesses are closing and leases are being broken. Large and small service businesses are also shutting down due to the economy. Some parts of the country are worse than others but we see job losses occurring every day. This is not the buildings or managements fault. It is part of being an owner of real estate. It wouldn’t matter if you owned the whole building or a part of it. This will disrupt your profits and income.

Many apartments are doing very well. People losing homes have to live somewhere and often fill up rentals. On the other hand, if your apartment complex is mostly filled with workers from a particular company and if that company is laying off in droves this could affect vacancy rates.

Most senior living and medical buildings are faring well. There is no shortage of aging seniors or people needing medical care. Of course more and more people are losing medical insurance so we may see this have an effect as time goes on unless we get some sort of universal health care open to all.

Commercial property is starting to slide in value and there are more and better deals to be had. The hardest part now for TIC Sponsors is getting the financing to make the purchase and allow exchangers financing in place. It is also difficult to refinance the initial loans that are resetting if the property was purchased 5-10 years ago. Again, this is true for anyone owning real estate and simply part of the risk involved.

The bottom line is that some TICs are underperforming, and some are doing well. There are great opportunities coming along when credit begins to free up. Things will get better, but some values may fall due to unforeseen events beyond our control. Owning real estate means owning the ups and downs of fluctuating markets. Just like any investment, never put all your eggs in one basket and be prepared to weather the storm. This too shall pass.

Paula Straub
www.savegainstax.com
savegainstax@gmail.com
760-917-0858
Fill out a Confidential Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
http://www.savegainstax.com/qq.html

Listen to my weekly radio show “Simply Wealth” at www.webtalkradio.net

Happy New Year 2009

2008-12-31T13:06:00.000-08:00

Well, another year down and what a year it was! Unfortunately, for many not such a good year financially.

Retirement accounts, savings, home values are pretty much down across the board. Layoffs are compounding and unless we can get people back to work, more will lose their homes, savings and most likely benefits such as health insurance coverage. None of this is good news and will start 2009 on a down note.

On the upside, we have a new president coming into office, and he has hopefully engaged the right brain power to begin to turn things around over the coming months.

On the upside, if you have a steady job and good credit, opportunities abound with the ability to refinance at a low rate and buy stocks and property at sale prices. If only the majority of people fit into this bracket!

So, my wishes for the coming year are job creations, a consumer confidence rebound, health care reform and not an excessive amount of tax increases. Also, less war worldwide would be a very welcome change.

So all the best for a happy, healthy, and prosperous year ahead.

Paula Straub

What Will Obama Do With Capital Gains Taxes?

2008-12-17T15:43:00.000-08:00

Dow Jones Newswire reports that President-elect Obama's plans include:

Exempting seniors earning less than $50,000 from income tax.

Increase the top two marginal tax rates from their current levels of 33 percent and 35 percent to 36 percent and 39.6 percent, respectively. Based on 2009 income thresholds, that would result in a tax increase on singles making $171,550 or more and married couples making $208,850 or more.

Taxpayers in those brackets also face increased taxes because President-elect Obama plans to restore phase-outs of personal exemptions and itemized deductions. This means that high-earners would not only face higher tax rates, but they would also lose some or all of their personal exemptions and itemized deductions.

Obama has also proposed raising the tax rate on capital gains income from 15 percent to 20 percent for single taxpayers making more than $200,000 and for married couples earning more than $250,000 annually.

Of course, nothing is set in stone yet and some of these issues may not be addressed until well into his term, depending on the economy.

We can be sure, however, that at some point the government will have to be paid back for all the billions or trillions of dollars it is spending to stabilize our financial infrastructure.

This will most likely be done through tax increases, so minimizing taxes becomes more important than ever. I’m glad my practice will benefit throughout the foreseeable future!

Paula Straub
http://www.savegainstax.com/
savegainstax@gmail.com
760-917-0858

Fill out a Confidential Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
http://www.savegainstax.com/qq.html

Listen to my weekly radio show “Simply Wealth” at http://www.webtalkradio.net/

If It Sound Too Good To Be True...

2008-12-12T18:28:00.000-08:00

If it sounds too good to be true… yep, it usually is.

You’ve heard this saying time and time again, but it is not always easy to know when you are simply following existing guidelines to save money and grow your profits, or when you are tempted to “go for the bleachers” and fall prey to a party who promises you the moon but delivers nothing but heartache. I always go by the motto that it is better to under promise and over deliver than vice versa.

Even wealthy investors are easily misled when dealing with the mask of seemingly successful individuals whose motives often come down to personal greed and arrogance but initially appear to offer a brass ring.

I’m not sure any of us saw the downfall coming of major banks, investment firms and large corporations. It seems even their leadership was mislead into believing some of these complicated investment vehicles were safe and prudent.

However, there are many red flags to look out for that have held true for years. Here are just a few at the top of my list.

* Don’t get fooled by someone wearing a 4K suit and driving a Rolls Royce. Give me a guy like Warren Buffet any day. Even though he’s one of the wealthiest men in the world, he lives in the same house he bought 27 years ago and drives a modest car. I find many people who flaunt wealth come into it at the expense of others they have taken advantage of. They are the only ones that get richer until they get caught doing something illegal or immoral.

* If history shows the average investment return in a vehicle such as stocks or mutual funds is 7 or 8 percent on average over time and someone tells you they consistently get 12 or 15 or 20 percent annually even through bad times, make sure they are able to explain exactly how this is being done. It may be possible, but chances are they are luring you in with empty promises and you only find out once you have lost money that these claims were untrue or exaggerated.

*If someone tells you they are letting you in on an investment typically only available to a very select group – beware. I have seen even an educated man fall victim to this sort of desire to “play with the big boys”. There is often a cloak of secrecy surrounding the details that can’t be disclosed due to “protecting the sources” who deal only with the well healed. It’s usually a scam.

* Legitimate companies value transparency and disclosure. They have nothing to hide and are willing to “show you where the money is” at all times. I don’t like companies that tell you their investments or structures are all proprietary and unique only to them so they aren’t able to disclose the details unless you give them money first.

* Know that any unregulated investments are just that. They can set their own rules and are buyer-beware. This is why hedge funds and the like take huge risks and can either sky rocket or go belly up in a very short time.

In this world where governors try to sell Senate seats, former NASDAQ chairmen run Ponzi schemes, company execs pay themselves huge salaries while their companies and stock holders go broke, and politicians fall to scandal, it makes sense to stick to the basics.

This doesn’t mean burying your money in the backyard or not doing everything you can to maximize what you do have, but don’t jump at a chance to gamble on hitting a home run when taking one base hit at a time will usually win the game and allow you to sleep at night.

Paula Straub
www.savegainstax.com
savegainstax@gmail.com
760-917-0858

Fill out a Confidential Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
http://www.savegainstax.com/qq.html

Listen to my weekly radio show “Simply Wealth” at www.webtalkradio.net

Year End Tax Planning

2008-12-02T16:54:00.000-08:00

December always brings its share of stresses along with the enjoyment of the holiday season. This year has not been a banner year for many families so the holidays may not be as much fun as in previous years.

Year end also deserves a close look for tax planning. Even though taxes are due in April, whatever balancing doesn’t get done in December sets the tax consequences for the previous year.

Here are just a few things to consider:

If you had gains should you look to sell assets at a loss to minimize the taxes? If it is stocks, you can always buy the loser shares back after 30 days if you feel they will go up in value again soon.
If you had losses, should you look to sell something you’ve been putting off at a gain? This year watch for exceptions to withdrawal from retirement accounts that may pass Congress at the last minute.
If you had gains, can you add extra to existing retirement accounts or open new ones to reduce your income?
If you are planning to gift children or grandchildren make sure you take advantage of the 12K yearly exemption per person to the gift tax limits.
Be aware if you own mutual funds outside of a retirement account that you may get a distribution which is taxable even if you still own the funds. Be sure you have the extra money to pay the tax bill.
If you are a business owner with extra income consider purchasing equipment which can be depreciated at an accelerated rate.
If you are self employed, consider deferring income into the next tax year if possible.
High income earners, watch out for the AMT tax trap. Have a tax professional do a quick computation to see if this will catch you before it’s too late to do something about it.

I know this may not be at the top of your list for fun things to do, but it’s better to spend some time now than be surprised in April when it’s too late.

Paula Straub
www.savegainstax.com
savegainstax@gmail.com
760-917-0858
Fill out a Confidential Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
http://www.savegainstax.com/qq.html

Listen to my weekly radio show “Simply Wealth” at www.webtalkradio.net

Thanksgiving Wishes

2008-11-26T14:32:00.000-08:00

Happy Thanksgiving! Just wanted to send a quick note to let you know how thankful I am for all my subscribers. In turbulent times such as these, I know I have to stop and count my blessings for the things I do have.

I have been a little remiss on sending updates on capital gains tax issues and on what may be changing in the next year or soon after. A lot is still up in the air as the feds try and stabilize the economy and the credit markets but I’ll keep you informed.

The best spot to keep abreast is to listen to my weekly radio program Simply Wealth on www.webtalkradio.net. I spend a lot of time putting together each program to reflect what is happening week by week and provide information and education that you can use. All you need is 30 minutes and a computer with speakers to listen any time of the day or night.

I’m also always looking for topics which are important to you, so send me an email if you have something you’d like me to discuss or even a guest you’d like to hear interviewed.

Have a terrific holiday and I’ll be in touch again soon.

Paula Straub
savegainstax@gmail.com
760-917-0858
Fill out a Confidential Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
http://www.savegainstax.com/qq.html

Making the Tax Bill More Bearable When Selling A Business - Option 2

2008-07-07T16:38:00.000-07:00

So, you’re selling your business and have received the shock from your CPA of how much of the proceeds will be passing directly to Uncle Sam if you don’t implement a tax saving strategy prior to sale.

Depending on the type of business you are selling and where it is located, this amount could be between 15-50% and is usually on the higher end of that range.

In the last article, the Self Directed Installment Sale was outlined and now another option will be presented. There are so many variables involved with each sale, there is never any one size fits all “best” option. It is important to work with someone familiar with all options available, so each can be compared and considered for your unique circumstance.

If you have the need for an immediate tax deduction, perhaps to offset other gains or simply in exchange for contributing to a non-profit close to your heart, consider a Charitable Installment Bargain Sale (CIBS). Don’t confuse this with a Charitable Remainder Trust (CRT) because you are not pledging the asset to charity on your death.

In essence, you notify a participating non-profit 501(c)3 corporation that you will do a CIBS and find a buyer for your business. You negotiate the sales price using a fair market value. You donate a percentage of the FMV to the charity and they buy the asset from you at a discount and sell to your buyer in a simultaneous close for the agreed upon price.

You receive a tax deduction for the amount donated and partial tax forgiveness on the allocated tax percentage for that donation. The remainder of the proceeds is returned to you over time with interest via an installment contract between you and the non-profit.

You have the advantage of paying the taxes as you receive the payments and have the compounded tax benefit of the money that would have gone directly to pay taxes earning interest for you over many years. You determine when the payments start and how long they will last.

There is a non-profit corporation set up to handle this for you, and the program is flexible enough to be offered through any established 501(c)3 that would like to become involved and receive the donation. There is a bonded and insured independent 3rd party administrator tasked to make the payments, invest the funds and send out the necessary tax documents so the non-profit does not have to have a department set up in house.

As with the Self Directed Installment Sale, if you pass away before receiving all the agreed payments, the remainder passes to your designated beneficiaries. The costs to set up the CIBS are very reasonable, as the non-profit absorbs the legal fees for the bargain sale.

To summarize, the benefits are tax deduction, partial tax forgiveness, tax deferral and the ability to transfer some of those tax dollars to a very worth cause.

For more information and to see if this is the right option for you, contact Paula Straub of Save Gains Tax LLC at 760-917-0858 (8am to 5pm PST) or email Paula at savegainstax@gmail.com to set up a complimentary consultation.

Making the Tax Bill More Bearable When Selling a Business - Option 1

2008-07-02T12:06:00.000-07:00

Hopefully, before selling a business, you meet with a CPA or tax accountant and get an estimate on how much of your proceeds will be going directly to Uncle Sam if you pay them in a lump sum at time of sale. You don’t want to save this surprise for after all is said and done, because not only will it most likely be a shock, but you will have given up your chance to do anything about it.

Planning is everything. For this article I will assume you are not doing a 1031 business exchange, that is selling your business and buying another similar business taking into consideration all the IRS guidelines and timelines. It’s pretty rare to see this, but it can defer all of your capital gains tax if done correctly.

Depending on how the business is sold, the gains may be taxed as long term capital gain, short term capital gain, ordinary income, etc. and if you are selling an asset in a C-Corp you may face double taxation. So, the idea is to minimize your tax bill and maximize your proceeds no matter what situation you are in.

One option is with a Self Directed Installment Sale. The structure must be in place before the buy/sell agreement is signed. The gist is to receive the sale proceeds in installments and only pay capital gains tax as you receive the income. This has the effect of allowing the majority of money you would have paid immediately in taxes to continue earning compounded interest for you for many years, thus increasing your bottom line by a significant amount.

The details are a bit too complex to fully outline in a short article, but both an LLC and a Trust are created for you and set up meet IRS criteria for favorable taxation of installment sales. Your asset gets transferred to the LLC prior to sale, and your buyer purchases from your LLC. The trust buys the shares of your LLC from you via an installment agreement and you pay taxes on your gain only as you receive the payments.

You, the seller, are able to control when the payments begin and how long they will be spread out. This allows for maximum flexibility to control your income, and plan for future tax savings as well. Since your buyer paid cash in exchange for your property, you are not dependent on them to make the installment payments and you have transferred the risk of refinance or default. This is done by using an independent third party administrator and your money is safely invested in a principle protected insurance product to be used solely for the purpose of paying the installments.

If you pass on before receiving all of the payments due, the remainder of the installment payments pass to the beneficiaries of your choice.

Seeing an example of a taxed sale vs. a Self Directed Installment Sale side by side will show you how much of a difference in overall return this strategy will provide. This can make the process of the sale more palatable and provide a dependable income stream for retirement.

For more information and to see if this is the right option for you, contact Paula Straub of Save Gains Tax LLC at 760-917-0858 (8am to 5pm PST) or email Paula at savegainstax@gmail.com to set up a complimentary consultation.

How To Get the Greatest Return on the Sale of Your Business

2008-06-26T15:05:00.000-07:00

If you are thinking about selling, or already have your business up for sale, you don’t want to make any crucial mistakes that will cost you big time.

Most business owners only sell one business in their lifetime. The results of this sale have a major impact on the financial future of the family. You may be an expert in business development, but totally in the dark about most aspects of the best way to sell.

A colleague of mine, Dave Kauppi makes his living helping business owners get the maximum return from their business sales. He has extensive knowledge of the mistakes made by owners attempting to handle the sales process without professional help and can make sure your business is not a victim of unintended financial disaster.

Dave publishes the Exit Strategist Newsletter. It contains a wealth of useful advice to help guide you through your business sale. The subscription is complimentary and I urge you to sign up on his website.

Go to www.midmarkcap.com/exit and start learning how to reduce taxes, put together creative deal structures, perform valuations, employ buyer negotiation tactics and much more.

You owe it to yourself to learn how to structure your business sale to your own advantage and have a place to turn when you need some help. Wouldn’t you rather learn from the mistakes of other business sellers instead of being the one to suffer the consequences?

You can also reach Dave directly by calling 630-325-0123 or emailing him at davekauppi@midmarkcap.com .

Paula Straub
www.savegainstax.com
savegainstax@gmail.com
760-917-0858
Fill out a Confidential Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
http://www.savegainstax.com/qq.html

Listen to my weekly radio show “Simply Wealth” at www.webtalkradio.net

Selling Your Second or Vacation Home

2008-06-04T09:28:00.000-07:00

Almost everyone is affected by something happening within the economy today.

Housing prices have taken a dive. Staples such as food and gas are significantly more expensive and still rising. Jobs are being cut throughout many sectors such as construction, education, retail, restaurant, manufacturing, etc. So, the first thing we find ourselves doing is looking to see what we can do without.

I’ve been receiving a lot of calls and emails regarding the sale of second or vacation homes. Once a nice luxury and place to retreat, they are more and more becoming a financial strain, or at least an unnecessary part of life for many.

When selling a vacation or second home, you can’t enjoy the personal exclusion given to primary residences, nor can you qualify for a 1031 exchange available for investment property. Thus, saving on taxes becomes an even more important issue.

If you need to maximize your income, a Self Directed Installment Sale could be an excellent choice. It will basically allow you to receive a steady income stream over the number of years you choose. It also allows for the capital gains tax to be paid back over many years, and compounds the amount of return using the tax amount that would have been paid upfront to earn interest for you going forward.

So, by selling your vacation home and deferring taxes, you have immediate relief from the ongoing expenses of a second property, and additional monthly income to cover the rising costs of life.

Paula Straub
www.savegainstax.com
savegainstax@gmail.com
760-917-0858
Fill out a Confidential Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
http://www.savegainstax.com/qq.html

Listen to my weekly radio show “Simply Wealth” at www.webtalkradio.net