This show we explore the very large obstacle that debt is and how it consumes opportunities. Many of us are listening to the cheer of wall street which is “spend” and follow the example of our government which is irresponsibly spend. There is new generation rising that is shrugging off both and has new strategies to get out and stay of debt. If you find yourself in cycles of debt this show is for you.
Archive for July, 2007
29
Jul
Debt 7-29-07
27
Jul
Peru 7-22-07
No, this show is not about the real estate market in Peru! In this show Ken shares stories from his trip to Peru. Find out about his journey and what in the world he was doing in Peru. You can also visit our Global Missions page for more information.
20
Jul
Investor Loan FAQ
Attention investors! This show is for you. Listen in and get answers of frequently asked questions from real estate investors throughout the region. This will help you navigate through the minefield out there in the mortgage industry. Note…Make sure you call us tto confirm that the answer is still correct due to the credit crisis and the significant changes that have occurred.
Below are the Show Highlights, click the more button to continue reading. You may also download the PDF of the highlights at the bottom of the page.
Host: Patrick Allman, President, Strategic Equity
Guest: Sandy Botkin , Founder, Tax Reduction Institute
The Alternative Minimum Tax
The Alternative Minimum Tax or AMT is a tax that Congress passed to ensure wealthy individuals pay some kind of tax. Essentially, wealthy
individuals pay the greater of whatever they would normally pay with income tax or what they would pay with AMT, which has certain deductions.
However, AMT has unintended consequences. For example:
• Congress gave an exemption from AMT of a certain amount but never raised the exemption. As people made more money, they had more deductions. As a result, AMT then applied to more people.
• The AMT eliminates business-related expenses. Many mortgage brokers who are treated as employees are wondering why they are
subject to AMT.
Who is affected by AMT?
• Generally, if you are self employed and take all the deductions you can then these are also deductible in computing income tax and, for
the most part, AMT.
• AMT is often referred to as the “stealth tax” because most taxpayers don’t know they are subject to it until they have submitted all their
tax info to their accountant.
Some of the deductions that are disallowed include:
• Employee-business expenses – for example, marketing, advertising, hiring minors.
• Those with big stock options (large capital gains). You don’t pay tax until you sell the stock. That’s true for income tax but not for AMT.
How is AMT calculated?
• You take your regular net taxable income and subtract credits you have already paid the government.
• With AMT, you add some things back. For example, normally taxexempt interest is tax exempt. But interest on private activity bonds is
added back in.
• All taxes—state, local, property that you are paying on your home or second home is added back. You don’t get a deduction. Property tax
on investment property is not affected.
• On any exercise of incentive stock options, you have to pay tax on the difference between the fair market value of that stock and the exercised
price of that stock. This has caused a lot of problems for people. If you have a lot of stock options, meet with your accountant to find
out if you are going to be subject to AMT.
• Since unreimbursed job-related expenses are disallowed, you can get around this by making it a reimbursed expense and taking less commission
since reimbursements are tax free.
• For legal fees – if you have a lawsuit going against someone – all the income from the lawsuit is taxable (unless it is personal injury) but
the fees are a miscellaneous deduction.
• If you are single and earn over $247,500 or married and earn more than $330,000, you don’t get any exemption from AMT.
How is AMT affected by mortgage interest?
Mortgage interest is deductible on your principal residence and second residence (to purchase or improve your principle residence). This is
the same as income tax but the limit for income tax is $1 million. The same limit applies to AMT. There are two exceptions:
• Normally you can deduct interest on the purchase of any principal residence which can be a condo, house or houseboat. But interest on
a houseboat is not deductible for AMT.
• No deduction is allowed for home equity interest/line of credit for AMT.
• Normally if you take a deduction for state income tax and get a refund, you have to pick up that refund as income. With AMT, any refund you get is tax free because you cannot deduct state and property income tax.
AMT Tactics
There are some things you can do if you are subject to AMT, but you need to plan ahead:
• Because you cannot deduct business-employee expenses, try to accelerate your income for that year. You cannot deduct state income taxes
or property taxes on your home.
• Reduce your deductions for that year. Avoid paying state and local property and income taxes for that year. By postponing it for one
year, you may be subject to the regular income tax the next year and therefore be able to deduct the state and property tax the next year.
• With AMT, you have to reduce the amount of depreciation you would normally have had to take. You get almost all the other investment
property deductions.
Will the AMT ever be repealed?
There have been some proposals to eliminate it but Botkin says Congress has no desire to eliminate taxes, especially with the huge deficit
there is. There may be the possibility that the exemption rate could be raised so fewer people are subject to it.
This show we had very special guest join us. A special friend and excellent financial advisor Kerry Erickson. Kerry answers some important questions from a financial advisor’s point of view and also discusses the real estate and mortgage market.
08
Jul
Equity 7-8-07
America is obsessed with home equity…the Holy Grail…the ultimate investment…right?? Well you will have to find out. We will take you through and educate on home equity and answers questions such as…does equity have a rate of return?, is it safe to have a lot of it?, is it liquid? This is also a fan favorite so tune in and find out what equity is all about!!
01
Jul
Dan & Carol Kirksey
A husband and wife team, Dan and Carol have been in real estate for l5 years. Prior to entering the real estate business, Dan was in Aerospace and Carol was VP of Finance for an electronics import/wholesale firm. Their market is in the Ontario/Riverside area of Southern California and average sales price is around $500,000.
TEAM
Dan’s strength is business generation (dialogues, systems, presentations etc.), and Carol’s strength is contract negotiations and handling escrows.
The staff is licensed and they all prospect for new business. The Listing Coordinator makes welcome calls, orders virtual tours, termite inspections, disclosures, flyers and she makes twice-weekly calls to follow up with clients. The Escrow Manager takes the file
from point of contract to closing. There are two full-time and one part-time listing/buyer agents who prospect, list and show property.
SYSTEMS
Dan and Carol’s database consists of approximately 500 contacts, categorized A, B, C. Group A contacts are their staunch supporters, Group B are occasional contacts and Group C are their “Adopted Buyers”- out-of-area buyers that they still want to stay in contact with. They use Online Agent as their CRM solution.
Dan describes his listing presentation as “extremely canned”. It incorporates a standard greeting and an enthusiastic request to get the “cook’s tour.” After seeing the house he runs through his scripted questions and invites the potential client to question him.
Then, Dan spends about 5 minutes going over the CMA, at which time he attempts a trial close with an affirmative assumption.
MARKETING
A The Kirkseys bought a 31-foot motor home, branded it “The Windermere Mobile Real Estate Office”, and they take it to sporting events, company openings, etc. They offer a community service from the motor home which is a child photo ID program and of course CMAs.
Each month a letter is sent to everyone on their list inviting them to enter a monthly drawing. Winners receive gift certificates for dinner or Home Depot. These letters are usually associated with a theme such as Valentine’s Day, Spring Cleaning, etc.
Dan and Carol advertise property in their local paper, three or four different magazines and 20 different websites.
In a buyers market, they make sure to pre-qualify upfront over the phone. If the seller’s motivation isn’t strong, they will tell them that this is probably not the time for them to sell.
KEY ELEMENTS OF SUCCESS
Scripting, confidence and certainty define the Kirksey’s success, as well as their focus on five “pillars” of business:
FSBOs
EXPIREDs (though they haven’t seen any since 1995)
Geographic Farm
Past Client database
Referrals from other agents
Also, to stay on track, they regularly use a time-blocking tool they refer to as “The Mirror” to check their productivity on a regular basis. .
01
Jul
Investor Loan FAQ 7-1-07
Attention investors! This show is for you. Listen in and get answers of frequently asked questions from real estate investors throughout the region. This will help you navigate through the minefield out there in the mortgage industry. Note…Make sure you call us tto confirm that the answer is still correct due to the credit crisis and the significant changes that have occurred.
