Saturday, May 16, 2009

How To Make Money on Vacation

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How to turn your fun trips into tax cuts

How would you like to deduct every dime you spend on vacation this year? Tim did. Legally. Want to know how?

Tim wanted to take a two-week trip around the US. He learned that every thing is much cheaper when you can legitimately deduct it.

1. Make all your business appointments before you leave for your trip.
Most people believe that they can go on vacation and simply hand out their business cards in order to make the trip deductible. Wrong.

You must have at least one business appointment before you leave in order to establish the "prior set business purpose" required by the IRS.

The first thing that Tim needs to do is set up appointments in various cities such as Chicago, Sacramento, and Phoenix before he leaves. The best way to establish this is to put advertisements in the newspaper, looking for distributors. He could then interview those who respond when he gets to the business destination.

Example: Tim wants to vacation in Hawaii. If he places some advertisements for distributors, or contacts some of his downline to perform a presentation, the IRS would accept his trip for business.

Tip: It would be vital for Tim to document this business purpose by keeping a copy of the advertisement and all correspondence along with noting what appointments he will have in his diary.

2. Make It All "Business Travel."
In order to deduct all on-the-road business expenses, you must be traveling on business. By definition, you are on business travel whenever you are sleeping overnight in a strange bed - conducting business, that is!

Example: Tim wanted to go to a regional meeting in Boston, which is only a one-hour drive from his home. If he were to sleep in the hotel where the meeting will be held (in order to avoid possible automobile and traffic problems), he will be deemed to be on business travel.

Tip: Remember: You don't need to live far away to be on business travel. If you have a good reason for sleeping at your destination, you could live a couple of miles away and still be on travel status.

3. Make sure that you deduct all of your on-the-road -expenses for each day you're away.
For every day you are on business travel, you can deduct 100% of lodging, tips, shoe-shines, laundry and dry cleaning, car rentals, and 50% of your food. Tim spends three days meeting with potential distributors. If he spends $50 a day for food, he can deduct 50% of this amount, or $25.

According to the IRS, no receipts are required for any travel expense under $75 per expense. The only exception would be for lodging.

Example: If Tim pays $6 for drinks an the plane, $6.95 for breakfast, $12.00 for lunch, $50 for dinner, he does not need receipts for anything since each item was under $75.

Tip: You would, however, need to document these items in your diary. A good tax diary is essential in order to audit-proof your records. Adequate documentation shall consist of amount, date, place and essential character of the expense.

Example: If, however, Tim stays in the Bate Motel and spends $22 on lodging, will he need a receipt? The answer is yes. You need receipts for all paid lodging.

Tip: Not only are your on-the-road expenses deductible from your trip, but also all laundry and dry-cleaning costs for clothes worn on the trip. Thus, your first dry cleaning bill that you incur when you get home will be fully deductible. Make sure that you keep the dry cleaning receipt and have your clothing dry cleaned within a day or two of getting home.

4. Sandwich weekends between business days.
Interestingly, the IRS notes that if you have a business day on Friday and another one on Monday, you can deduct all on-the-road expenses during the weekend.

Example: Tim makes business appointments in Florida on Friday and one on the following Monday. Even though he as no business on Saturday and Sunday (other than monkey business), he may deduct on-the-road business expenses incurred during the weekend.

5. Make the majority of your trip days business days.
The IRS says that you can deduct transportation expenses if business was the primary purpose of the trip. The majority of the days in the trip must be for business activities. Otherwise, you cannot make any transportation deductions. This is an all-or-nothing proposition.

Example: Tim spends six days in San Diego. He leaves early on Thursday morning. He had a seminar on Friday and meets with distributors on Monday and flies home on Tuesday, taking the last flight of the day home after playing a complete round of golf. How many days are considered business days?

All of them. (Nice work, Timmy!) Thursday is a business day, since it includes traveling - even if the rest of the day is spent at the beach. Friday is a business day because he had a seminar. Monday is a business day because he met with prospects and distributors in pre-arranged appointments. Saturday and Sunday are sandwiched between business days, so they count. Tuesday is a travel day. So every day was deductible.

Since Tim accrued six business days, he could spend another five days having fun and still deduct all his transportation to San Diego. The reason is that the majority of the days were business days (six out of eleven). However, he can only deduct six days worth of lodging, dry cleaning, shoe shines, and tips. The important point is that Tim would be spending money on lodging, airfare, and food, but now most of his expenses will become deductible.

With proper planning, you can deduct most of your vacations if you combine them with business. That can make your life a lot less taxing!

Monday, April 27, 2009

Most People not taking tax deductions

This tax season, I became very aware of the number of people in the mlm industry who did not realize that they owned a homebased business with all the applicable tax deductions. The majority of them had only been educated on income potential side of the mlm product not the running of a homebased business.

As a result, when the income did not appear as promised, they became discouraged and soon dropped out of the business. It is sad that no one had educated them on the tax side of the business. The fact that they could save thousands in taxes and obtain an immediate raise on their jobs.

The mlm homebased business is the best way for the average American to get out of debt.

I am doing a survey on this topic to help in the development of an ebook I am writing. Your imput and advice is desired.
Thank You.

Sunday, April 26, 2009

Home Foreclosure - Can A Foreclosure Be Stopped Or Even Delayed Altogether?

Home Foreclosure - Can A Foreclosure Be Stopped Or Even Delayed Altogether?

Home foreclosure is on the increase in both the United States and in many other countries across the world as the credit crunch hits with full force. Homeowners are struggling to make their mortgage repayments and are falling into arrears like never before.

Some estimates state that home foreclosures have reached over 30%. In other words, nearly a third of all homeowners are facing problems and the possible reposession of their home. That is an almost unbelievable figure and one that would have been unheard of just a couple of years ago. CNN told viewers: "Foreclosures spiked 112% in early 2008 - with no real end in sight."

As the credit crunch bites deeper worldwide, many homeowners will be wondering what, if anything can be done to prevent a home foreclosure.

A lot of people will feel that there is little they can do, or they will feel so upset by their situation that they will sit back and just let it happen.

If you or someone you know find yourself in this situation there are in fact things that you can do. Actions that you can take to delay the reposession of your home or perhaps prevent it altogether.

The key though is to act swiftly. It's no good sitting and worrying and just letting valuable time pass when you could have been setting things in place that would at the very least buy you some time. If you have already received a notice of default you have just ninety days to respond. That may seem like a reasonable period of time, but you should consider that in 3 months from receiving that default notice if you have not taken certain actions saving your home may be much more difficult, if not altogether impossible.

If you want to save your home from going into foreclosure you cannot afford to waste any time at all. In fact, not ignoring the situation and taking action right now, no matter how painful it is, is actually in your best interest.

There are solutions that can be arranged well before you reach the last chance saloon of having your home taken away from you. Talking to your lender at an early stage is vitally important, but do be sure that you know exactly what you should be saying to them (and what you should not)!

You must know exactly who to contact first, and in what order, to find the very best (and least expensive) alternative way to solve your current foreclosure situation.

So take action, do your research and you may find that a foreclosure is not the only option.

If you don't have time to do all the research and you need to act now to prevent your home from being reposessed, 'Home Foreclosure Survival Tactics'will help you to better understand the actions you should be taking right away.
Click on this link or paste it in your browser:

Saturday, April 25, 2009

Stopped future retirement losses and recaptured $55,000.

I met with client who had experience over $111,000 in their retirement account. I was able to put client in a more secure vehicle which guarantees no losses in the future, plus I was able to get the client back $55,000 of the the loss.

This was a great day for both of us.

Sunday, December 21, 2008

Cash Flow Is King In Real Estate Investing

Following is an article by Justin Ford that is quite informative.
Take It Easy: Why Making Good Money in Real Estate Shouldn't Be That Hard

"Business is easy," according to Sam Zell. "If you've got a low downside and a big upside, you do it. If you've got a big downside and a small upside, you run away." That philosophy has stood Zell in good stead. He started out buying and renting out small properties to college students while he was an undergrad himself at the University of Michigan in the early '60s. More recently, he sold one of his flagship Real Estate Investment Trusts to a leading hedge fund for $36 billion.
In real estate, the best way to keep your investment decisions "easy" - with low risk and a high potential for profits - is to act on values others can't see. Often, that means going against the herd, especially against dominant ideas in the mainstream media.
Zell grew his portfolio rapidly from the '60s through the '80s. But he only leapfrogged into the league of billionaires in the early '90s. He bought aggressively during the real estate recession of those years, while the headlines and public sentiment about real estate were at their worst.
I've tried to help my readers see beyond the mainstream hysteria. I've been warning about bubble markets for about four years now. I advised not to get caught up in the hype. Instead, I recommended to be sure to buy below market value; buy cash-flow properties only; fix your interest rates; have a margin of safety in the form of ample cash reserves, cash flow, or both. And always have a Plan B. (If, for instance, you were planning to flip, to be prepared to rent, sell on terms, or do a lease option that would keep you in the black if the flip didn't work out.)
That advice ran contrary to the headlines. It also cut against the advice of real estate gurus who figured the easiest way for them to make money was to sell you on the idea that real estate is a can't-miss proposition. The height of the "can't-miss" mania was marked by the publication of Are You Missing the Real Estate Boom? It was written by David Lereah, former shill... er, "chief economist" of the National Association of Realtors. It came out in February 2005, just months before some of the hottest markets in the country peaked. For timing, it ranks right up there with James Glassman's Dow 36,000, published in 1999, shortly before the second-worst stock market crash of the last century.
Different Headlines, Same Story

Today, the real estate headlines are all about doom and gloom. But, once again, there are tremendous opportunities out there. You just have to tune out the herd, focus on the facts, try to understand the true, larger trends, and look for values others can't see. For instance, I live in South Florida, one of the worst markets in the country. Prices are down. Volume is down. (The number of transactions is off 50-60 percent in many areas.) Insurance and real estate taxes have soared, and foreclosures are setting new records. Yet, I've continued to make good money in real estate. That's basically because I've followed my own advice. Over the last two years, I've been writing about exceptional values outside the bubble markets. And I've gone into these markets in search of undervalued properties.
In one western state, the first property I bought was a four-plex in an area where college students live. We bought it for $180,000 on a street where comparable properties were selling for $220,000. It produced just over $25,000 a year in gross revenue. So we bought it under value and it cash-flowed comfortably. We also fixed the interest rate.
Even though this was a market that offered great values and strong growth... and where sales volume remained (and remains) high... we followed the deep-value, low-risk/high-potential-reward formula I've always recommended. And it's continued to work well.

Within six months, we got an unsolicited offer for $60,000 more than we paid. Since then, we've received two more offers for as much as $80,000 more than our purchase price. Not long after we bought this property, we bought another four-unit property not too far away. We ended up selling it for $129,000 more than we paid in just under 14 months.
In another market in another state, I closed on a 14-unit apartment building five months ago. The seller was asking $565,000 for this mostly vacant building. We ended up buying it for $397,500. Today, after about $68,000 in rehab, the property is fully leased (with a waiting list) and generates just over $7,000 a month in gross revenue. It also generates about $4,100 in net operating income (NOI - revenue minus expenses).
A conservative eight percent cap rate puts the current value of the building at about $615,000. That's about $145,000 more than the roughly $470,000 we have into it, including purchase price, closing costs and repairs. (A cap rate is basically the yield you would get on an income-producing property if you bought it for all cash. It is arrived at by dividing the NOI by the purchase price.)
Even an ultra-conservative 8.5 percent cap rate would put the value of this property at about $579,000. That means we've been able to create - at a minimum - an additional $109,000 in equity on a cash-flow property in five months. And yet, the prospects going forward are even better.
It Pays to Invest in Value & Growth Cities

Right now, I'm looking at properties in one of the most affordable cities in America. It's a major city that not only offers value, but strong growth as well. It's the fastest growing city in its state. In fact, its population growth has been 75 percent greater than the national average over the last 15 years. Jobs have grown at nearly twice the national rate over the last two years.
The fact is, value cities like these are actually benefiting from the mayhem going on in the bubble cities. There is a huge flow of money moving from the bubble areas to the value areas - from homeowners, individual investors, institutional investors, and operating companies.
This will continue for years to come - even while the national headlines shout "sub-prime crisis" and "real estate meltdown."
Here is a quick overview of how to look beyond the headlines that everyone sees... so you can find the true opportunities that few can see.
Tune out the noise: Get facts and figures from media outlets, professional associations, and government outlets. But draw your own conclusions. Look for the emergence of "value gaps" and the flow of money from overvalued to undervalued areas.
Always buy cash flow: If you do this, you dramatically reduce your chances of seriously being hurt in any market. Even if you don't want to be a landlord and you prefer to "flip" houses, why not flip them at prices where you could rent them out on a cash-flow-positive basis if you had to? If you like million-dollar deals, why should you deal with luxury homes when you can do million-dollar cash-flow apartment houses or offices or warehouses instead? If cash is king... cash-flow is the Holy Roman Emperor.
Buy at or below market value: Know your target-market values cold, on a dollar-per-square-foot basis and on a price/rent basis. If you're in a good value market that also has strong growth and where real estate sales are brisk, it may make sense to buy cash-flow properties close to, or even at, market value. But the more overvalued your market, the more undervalued a purchase should be. The greater the discount at which you buy, the more of a cash and equity cushion you'll have if and when the market corrects.
Fix your interest rates: This alone would have prevented half the foreclosures going on in the country right now. If you have to do some negative-amortization, adjustable, time-bomb mortgage to make a deal work... chances are it's not a deal after all.
Focus on value and growth cities: Remember, real estate is local, yet all markets are connected. Extreme overvalue in certain markets can create extremely attractive undervalued investment opportunities in other markets.
When you combine these criteria and buy undervalued properties in undervalued, growing markets... consistently making money in real estate almost becomes "easy," as Sam Zell says.
According to the U.S. Census, Arizona is now the fastest growing state in the U.S. It is projected to continue to be the fastest growing state through 2030. There is only so much real estate to satisfy this huge demand. Therefore, Arizona real estate values are expected to continue to rise. Professionally managed, leveraged real estate will continue to be a top tax-advantaged wealth builder.

Thursday, December 4, 2008

Tax Hit On Mutual Fund Investors

Many of you will be hit with capital gain taxes in April, even though your mutual fund has lost money this year. This is due to long term holdings that were profitable that the mutual fund advisors have sold off this year to stem the losts on your mutual fund. We think paying these taxes when your fund is down is outrageous, so here's what you need to do right away to avoid paying the taxes:

1. Call your mutual fund company and ask if they will be paying out capital gains on YOUR specific fund.

2. If you're told they are paying out gains, ask what the payout date is.

3. To avoid being taxed (assuming the fund's shares have depreciated this year), consider selling the fund BEFORE the distribution date, which could come any day now.

Another Reason to Act Now

In addition to avoiding the capital gains tax, taking action now might also give you a loss to offset income, which is another benefit.

If you still want to own a particular fund over the long haul, you can always sell it now and buy the fund back again AFTER 30 days. This is to avoid the so-called "wash sale" rule, which would disallow your tax loss if you bought back that fund or a similar fund too quickly.

Chances are, the fund's shares will not have appreciated much in those 30 days, and you may set yourself up to avoid paying capital gains taxes next year! That fund will more than likely be sharing a huge chunk of tax-loss carry-forwards to help mitigate any capital gains that you'd have to pay in 2009 should you choose to reinvest in the fund.

I hope this blog will help you.

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Wednesday, December 3, 2008

Tax Season Is Upon Us

Well it is almost the end of the year. We only have a few weeks left to fine tune our tax liability. If you have any concerns about your taxes, please let me know.

I will need you to look at how much income and expenses you have incurred year to date. This will allow me to project your end of the year debt.

Don't wait until after December 31, 2008, it will be too late to adjust after that date.