How to use pre Tax money invest real estate?

[steven5477]

I'm 26, a new real estate agent, just doing this a little more than 2 years. before i never think about the tax problem.
First year, I only make 20k commission, barely survive,
second year, I make 60k commissions, end of 2012 i start to do commercial
third year, if all these deals go well, at the end i will make more than 200k commission, and 2013 not even start, i don't even know how much tax i would get at the end of 2013.
so here is my question:
1, as a real estate agent, can i open my own LLC or Corp, everytime i make a sales, my broker instead paying me commission, she pays to my company?
2, If my company has 300k income a year, how to use this pre-tax money to buy real estate so i dont have to face big tax at the end.

please help and give a little advise

thanks

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[oddball]

JScott, with the SDIRA, is there a max amount per year you can contribute?

 

[steven5477]

Funneling income through a company won't relieve you of your tax burden each year. If you have an S-corp or an LLC taxed as a partnership or S-corp, the money will flow through to your 1040 and you'll be on the hook for taxes (and SET, most likely, as well). If you have a C-corp or an LLC taxed as a C-corp, the corporation will have a tax burden at the end of the year.

If you want to buy real estate with pre-tax dollars, take as much income as you can and put in it a self-directed IRA. Then, use the SDIRA to invest in real estate. That money can grow tax-free in your retirement account until you're old enough to pull it out...

if i use LLC income to invest real estate, is that expense? so that part of income can be gone and not be taxed?

How to use LLC income to invest then i dont have to tax on that part of income?

can my broker pay commission to my LLC instead paying to me?

If I use LLC to pay someone salary, or just service fees, should I need report that person's SSN when i report tax?

Is that some limit on how much money i can put in the IRA? if i make 100k this year, so i put 50k in, next year i make 300k, then i put 250k in, is that ok?

also, is there any limit i can withdraw from IRA to do real estate investment?

 

[steven5477]

I'm not a tax professional, so take these responses for what they're worth...

First, i really appreciate about your help
it just seems like the more research i have done in last couple days, the more questions i have now

please help, here it is

1. regarding about mortgage interest deduction, for example:
my income is 100,000 a year, and i need to pay 35% of income like 3,5000 tax this year, and i bought a house and need pay mortgage interest this year is 20000.
so which of the following is right?
A. I only pay tax 35000-20000= 15000 this year.
B. I pay tax (100,000-20000)* 35%=28,000

2. another question is about 1031 exchange.
for example, Years ago i bought a commercial property A 500,000 , and this year i sold it for 800,000
so without 1031, i need pay capital gain on the $300,000 profit.

in order to qualify the 1031 requirement, Do i need to looking for another 500,000 property or something around 800,000 property.
If in 45 days i need to looking for anything more than 800,000 property B,

at the B closing, If i already pay off all the mortgage for A, Can I use the 300,000 net profit i get from sold property A as down payment in order to get a 500,000 new mortgage from the bank, so I can put the old 500,000 back to my Pocket?

Or I need put all 800,000 in to the B, and I can't apply mortgage for B?

If there is still 200,000 mortgage left on A when i at A closing, and settle for 800,000. IS that mean i can get 600,000, but in order to close B, Can I put 500,000 a way back to my pocket, and put the rest 100,000 as down payment and get 700,000 mortgage in order to get B.
or, i have to put all my 600,000 cash money in to property B, and only get 200,000 mortgage for it?

sorry about my english,

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[steven5477]

If I use LLC to pay someone salary, or just service fees, should I need report that person's SSN when i report tax?
Is the person an employee or contractor? If contractor, you need to get a W-9 (with the contractor's SSN or EIN) and issue a 1099 if you pay the contractor more than $600 in a given year, and also provide that information to the IRS. If employee, you'll get a W-4 (with the employee's SSN and withholding information), and you'll be responsible for withholding income and payroll taxes before paying that employee; you'll also be responsible for submitting payroll information and withheld taxes to federal and state agencies.

one more question about this:
as a real estate agent, next year, i plan to hire a assistant to help my desk work.
and i want to pay him by 1099 (less paper work)
but for me, im planing to start a LLC and let my broker send commission to my LLC instead me, can i use the LLC pre-tax money to pay my assistant salary as my LLC expense ? or i have to use after tax money to pay my assistant? in that case, there is no difference to open LLC or not

thanks

 

[steven5477]

can my broker pay commission to my LLC instead paying to me?
Absolutely.

about this i have one more question:
If i open a LLC, since LLC only tax once, is that legal to transfer money from LLC account to my personal account any time i want? or i cant mess them up
thanks