An extra $144,500 added on to your profits is no small feat. That’s exactly why you should be using this tax loophole to your advantage.
Have you ever heard that C Corporations are the best way to hold your investment properties?
That myth is exactly how you’d miss out on this $144,500. This tax loophole ensures you receive that profit, and not a dime less…
When people ask me what the most important step to take in real estate is, I consistently stress that they must structure their assets in the most profitable way.
People lose out on millions of dollars in profits simply because they’ve been misguided by industry “professionals.”
I don’t want to see you take this route, that’s why this tax loophole is the perfect place for you to start.
You may not have invested in any property at all yet, but trust me when I tell you that going into real estate investing with this tax loophole will be the best thing you’ve ever done.
In fact, it could mean an extra $144,500 in your pocket each time you use it.
Before I explain exactly how to use it, I want to debunk the widespread myth that’s chopping down many investors’ profits.
A lot of real estate “professionals” will advise you to hold your property as a C corporation.
A C corporation is a corporation that’s taxed separately from its owners.
The issue with holding your property under a C corporation is that it actually gets taxed twice—you pay a 34% corporate tax and then a 15% distribution tax.
And that’s exactly why most uneducated investors are losing out on this $144,500 profit.
Obviously, the government will want you to pay as much taxation as possible, but when there’s a legal loophole that could yield you this kind of profit, why would you pay twice?
That’s where a Limited Liability Company (LLC) comes in. An LLC can be used in place of a C Corporation in order to exploit this tax loophole.
You see, an LLC only pays tax once—a 15% capital gain tax.
Let me break it down into numbers for you…
Let’s say you realize your first profit from a property and it comes out to a $500,000 gain. Here’s how that’d be broken down in a C Corporation:
$500,000 gain
-170,000 in 34% corporate tax
————
$330,000
-49,500 in 15% distribution tax
———–
$280,500 profit after tax
Now, with an LLC, it’d break down like this:
$500,000 gain
-75,000 in 15% capital gain tax
————
$425,000 profit after tax
You can either take a $280,500 profit from a C Corporation, or you could rake in $144,500 more for a $425 profit from an LLC.
This tax loophole is often overlooked by even the most experienced real estate investors; that’s why it’s so important to do your research using tools like ours in order to take in the biggest profits possible.
By using this tax loophole correctly, you could be seeing an extra $144,500 in your pocket.
