Are you using your IRA to invest in a multifamily syndication? Then brace yourself for an unexpected tax bill when the asset sells. If, on the other hand, you’d prefer not to owe the IRS for Unrelated Business Income Tax (or UBIT), it’s time to consider a Qualified Retirement Plan (or QRP) that gives you more control over your money and makes it much easier to invest in real estate!
Damion Lupo is a real estate investor, serial entrepreneur, and high-profile financial consultant. He founded Total Control Financial in 2010 to help people achieve financial freedom. He is committed disrupting Wall Street and empowering Main Street with the tools and teachings of financial transformation. In the last 25 years, Damion has launched and owned 40-plus companies, including a venture capital firm, an insurance agency, and more than a dozen real estate investment and development operations. He is also the author of QRP Book: How to Get Checkbook Control of Your 401(k) & IRA Money Now.
Today, Damion joins me to explain why the current retirement system is broken and discuss the problem with using your IRA to invest in multifamily real estate. He walks us through the fundamentals of UBIT, describing how you can be blindsided by a BIG tax bill when an asset sells. Damion also offers insight around the alternative to the IRA that is exempt from UBIT, the QRP. Listen in to understand the multiple benefits of the QRP as a retirement vehicle—and learn how to regain control of your retirement savings AND maximize your profits as a multifamily investor.
Key Takeaways
Why the retirement system is broken
- Hand $ to someone else + hope for best
- Better to create own wealth
The shortcomings of the 401(k)
- No control over money, high fees
- Limits around what invest in
The problems with the IRA
- Hit with taxes if invest in syndications
- Pay unlimited fees to custodians
The fundamentals of UBIT
- 35% tax on profit from debt
- Hit with UBIT when asset sells
How to avoid UBIT
- Move asset into QRP (in-kind rollover)
The benefits of the QRP
- Ability to control own money
- Higher contribution limits (up to $50K)
- Borrow up to $50K to invest in self
- No custodian = much lower fees
- No third party for paperwork
Short- vs. long-term real estate investments
- Short-term investments need tax shelter like QRP
- Don’t put long-term investments in retirement account
When it’s worth it to get a QRP
- Cost between $1500—$6K (depends on # of employees, companies)
- Makes sense even for $50K investment
Connect with Damion
QRP Book: How to Get Checkbook Control of Your 401(k) & IRA Money Now by Damion S. Lupo
- Text ‘doors’ to 72000
- Visit https://themichaelblank.com/qrp
Resources
Podcast Show Notes
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