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Thursday, April 7, 2011

Today's Tax Tip: Another Gift-Leaseback Technique

Here is the beginning of something new: I will have a regular feature of "Tax Tips". This is a regular feature that will appear on www.robertwilliamsjr.com. Mr. Kevin Walls will be the contributor to these blog entries.

Use Gift-Leaseback on your parent's home. Say your parents are living in their home mortgage free! They are not getting many deductions and probably don't have enough deductions to itemize with just their property taxes. Moreover, they can't deduct their insurance on their home, repairs etc. Here is a genius solution for all my friends reading this post that will work for everyone.


Use the Gift-Leaseback technique. First, get a fair appraisal of the parent's home. Second, buy the home at that appraised price. Third, lease the home back to them at fair rental value, although courts do allow a 20% discount from fair rent because your parents will make a good trustworthy tenant.


You might be asking, "Where can I get the cash to buy my parent's home?" The answer is that your parent's can be your bank. They can fund 80-90% of the purchase price with a note. There is a minimum interest that must be charged too as noted by the applicable long-term federal rate that you can get on the IRS's web site. As of this posting it is 4.25%.


Thus, each month, you will get a rent check. You will in turn pay your parent's note. Thus, the cash flow will be fairly even give or take about $100-$200 a month. However, there are major benefits to everyone. Your parents can still live in the house relatively cost free since they are getting mortgage payments. The house is out of the estate upon their death.


You and whoever else owns the house now becomes a landlord. This means that you can depreciate the house, deduct repairs, insurance, upkeep costs etc. Moreover, and this is the very cool benefit, you ( and your siblings who own the home) can potentially visit your parents once a year and deduct the trip as a care-taking trip even if it is done at year end. This can be a big deal folks.


Mr. Kevin Walls is the President/CEO of Intelligent Expansion Group, LLC. This marketing organization is marketing arm for the number one fastest growing company in the US; according to Inc 500.


Billion Dollar Asset


Revelation-

rev·e·la·tion

noun \ˌre-və-ˈlā-shən\

Definition of REVELATION

1
a : an act of revealing or communicating divine truthb : something that is revealed by God to humans
2
a : an act of revealing to view or making knownb : something that is revealed; especially : an enlightening or astonishing disclosure revelations>

While riding with my youngest son, I was listening to a inspirational message. In the speech, the speaker mentioned that your brain is worth BILLIONS! My son's eyes were widened with amazement. A Revelation that HE was worth something! I really enjoy seeing kids when they "get it". Their body language changes, and they walk with a different step. They gain a small amount of confidence.

The speaker went on to describe the power of the human brain. It would take the Empire State Building full of computers at max capacity to come near the mental capacity of ONE HUMAN BRAIN! Since that type of operation is very massive, it would require a cooling system. What is needed to cool this operation? Answer: The water that flows through the entire Mississippi River daily would be needed just to cool of this massive computer system. One Human Brain! Amazing!!
The famous Economist, the late Julian Simon, believed the Human Mind is the "Ultimate Resource". To prove the power of the brain, he took a bet on the possibility of 5 natural resources "running out"(in lay terms not economic terms:expressed in increasing/decreasing in price)When people bet Mr. Simon that we would " run out"natural resources, he took that bet, and won it! In other words, the resources increased in available quantity!
There are many reasons why he won the bet, but ultimately it is this fact: The Human Mind IS the Ultimate Resource. We will continue to expand and maximize our earthly resources to achieve great heights, thanks to our Billion Dollar Asset. If there is a "shortage" the human brain will seek out more efficient ways to make that resource last longer, or integrate other resources to "solve the problem". Our brains are powerful!

My final thought: What are you doing to maximize your Multi-Billion dollar asset?

Music for thought: The Yellow Jackets performing, "Revelation".