Call Today!
863-456-4768
Tax Advantaged Investment Strategies
Tax Planning and Tax Reduction Solutions
"We offer solutions for reducing current and future tax liabilities."
~ Jimmy Nelson, CFP®
Defer, Reduce, or Eliminate Taxes -
Increase Wealth
Our focus is on tax saving solutions that are available to accredited investors and high net worth individuals.
Utilizing current sections of the U.S Tax Code as the backbone of the planning process, our knowledgeable team guides you through a host of tax-advantaged wealth management solutions.
At On Point Wealth Management, it's not just about growing wealth - it's about tax savings, preservation, and legacy as well.
IRA to ROTH IRA Conversion
Converting a Traditional IRA to a Roth IRA can be a very beneficial decision for investors to make; for themselves and for their heirs. The potential for tax-free asset growth is indeed significant, however there are important considerations and details that one should be careful not to overlook when it comes to IRA Conversion.
Given the uncertainty of one’s lifespan, future tax brackets, or financial standing in the future, deciding whether to convert or not can be a challenging task. For some investors, the uncertainty associated with calculating and realizing the tax liability associated with IRA conversion outweighs the pursuit of meaningful benefits that can follow conversion.
For Accredited Investors in particular, one of the keys to realizing the potential benefits associated with Roth Conversion is a tax-favorable approach to the conversion process. A very important consideration related to such an approach is timing:
• When is the optimal time to pay the taxes?
• When will the Roth IRA funds be needed?
On Point Wealth Management is here to help you answer these questions and determine if pursuing a tax-favorable Roth IRA conversion is suitable to your circumstances and overall financial, retirement, and estate plans.
Schedule A Consultation
Section 1031 Exchange
1031 Exchange, named after Section 1031 of the U.S. Internal Revenue Service Tax Code, is a tax-advantaged investment solution that allows accredited investors to reinvest the proceeds from the sale of a property (generally excluding one's personal residence) directly into a "like-kind" property and defer the applicable capital gain taxes. This means, within the stipulated IRS guidelines, investors can sell and replace assets while postponing the immediate tax obligation.
One of the potential benefits of 1031 Exchange is there is no limit on how many times or how frequently an investor can conduct a 1031 Exchange. Therein lies the potential for additional asset growth. By continually rolling over capital gains from one 1031 Exchange solution to another another, investors have the opportunity to grow wealth on a tax-deferred basis.
Additionally, a 1031 Exchange strategy can provide increased cash flow, as investment capital isn't reduced by tax liabilities. Delaware Statutory Trusts (DSTs), which have been deemed by the IRS to be "in-kind" investments, provide accredited investors an institutional 1031 Exchange solution that is professionally managed for income and growth.
For accredited investors looking to leverage real estate investments while mitigating tax liability, a 1031 exchange may be a suitable solution.
Section 1400z Qualified Opportunity Zones
The Tax Cuts and Jobs Act, passed by Congress in 2017, created a new section in the U.S Tax Code known as Section 1400z Qualified Opportunity Zones. This legislation was designed to encourage long-term investments in communities across the United States that have historically experienced economic distress. Investment in these opportunity zones offer potentially significant tax benefits, making them an attractive option for high net worth investors seeking tax-advantaged investment solutions.
By investing into an institutional, professionally managed Opportunity Zone Fund, accredited investors can defer and reduce capital gains tax liability from the sale of a host of prior investments (businesses, real estate, stocks, bonds, art, collectibles, etc.) while also eliminating future capital gains tax on returns earned from the Opportunity Fund. (This aspect of investment in an Opportunity Zone Fund is similar to the tax saving benefit of a Roth IRA.)
For accredited investors and high net worth individuals, investment in Opportunity Zones can provide a lower effective tax rate on capital gains, encourage a longer investment horizon, and offer the chance to help uplift economically distressed communities.
Section 721 and Real Estate Investment Trusts (REITs)
Section 721 Exchanges offer tax saving benefits to accredited real estate investors, making it a potentially beneficial wealth management tool. The central advantage of a Section 721 Exchange is the deferment of capital gains taxes, which would otherwise be realized upon the sale of a property. By transferring the property to an UPREIT, accredited investors postpone their tax liabilities until the Operating Partnership units are sold or until the REIT sells the property.
Further, Section 721 exchanges permit accredited investors increased diversity in their real estate portfolio. By converting their investment property into shares of an UPREIT, investors gain exposure to a larger pool of properties, thus mitigating some of the risks associated with owning a single or just a couple of properties. Investors who desire more regional or national exposure in their holdings, may see the move to an UPREIT as an opportunity to spread risk through diversification.
REITs are professionally managed companies that own, finance, and operate income-generating real estate, and are obliged to distribute at least 90% of their income to shareholders annually in the form of dividends. As a result, investors typically receive a consistent stream of income. Since REITs are professionally managed, they offer the benefits of real estate investment without the need for investors to participate in direct, hands-on management of properties.
Section 1202 QSBS (Qualified Small Business Stock) and Section 1045 Deferral
Investing in Section 1202 Qualified Small Business Stock (QSBS) can be an effective solution to reduce tax liability. This legislation, which was enacted by Congress in 1993, allows accredited investors to exclude capital gain tax on the sale of QSBS that they hold for more than five years. (This aspect of investment in a QSBS is similar to the tax saving benefit of a Roth IRA.)
Accredited investors can eliminate their capital gains tax liability on the sale of QSBS up to a cumulative limit of $10million and an annual limit of 10 times the adjusted basis of the QSBS. This potential tax savings makes investing in QSBS an attractive strategy for those who desire to invest in small businesses. For sales of QSBS that exceed the exclusion amount, Section 1045 Deferral provides for tax-deferral by using the proceeds from the sale of a QSBS to purchase another QSBS.
If the proceeds from the sale of a QSBS are reinvested into another QSBS within the requisite 60-day period, Section 1045 of the U.S. Tax Code allows the investor to defer recognition of the taxable gain. This deferral provision further enhances the attractiveness of this investment strategy. It is important to note however, in order to qualify for these benefits, the small business in which investments are made needs to meet a set of stringent criteria.
Contact Info
29 SR 60 West
Lake Wales, FL 33853
863-456-4768
James M. “Jimmy” Nelson is a Registered Representative of Realta Equities, Inc. and an Investment Advisory Representative of Realta Investment Advisors, Inc. Neither Realta Equities, Inc. nor Realta Investment Advisors, Inc. is affiliated with On Point Wealth Management. Investment Advisory Services are offered through Realta Investment Advisors, Inc., a US SEC Registered Investment Advisor, and securities are offered through Realta Equities, Inc., Member FINRA/SIPC, 1201 N. Orange St., Suite 729, Wilmington, DE 19801.
Realta Wealth is the trade name for the Realta Wealth Companies. The Realta Wealth Companies are Realta Equities, Inc., Realta Investment Advisors, Inc., and Realta Insurance Services, which consist of several affiliated insurance agencies.