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What Is The Landlord Exit Strategy?

We use a combination of two important tax advantaged programs, Opportunity Zones and Delaware Statutory Trusts, designed to allow landlords to exit the headaches of direct property management, eliminate or mitigate taxes and still enjoy the benefits of real estate investing. These tax advantaged programs can be used separately or together depending on your individual goals.

What Are The Benefits?

The Tax Cuts and Jobs Act of 2017 included a section entitled the Investing in Opportunity Act. This new law created what many are saying could be the biggest tax break in U.S. history, the creation of what are known as “Opportunity Zones”. The Act allowed the governors of each state and heads of all U.S. territories to designate certain areas in their states and territories as “Opportunity Zones”. Each Opportunity Zone has to be in an area that is economically distressed based on certain census criteria. All fifty states and U.S. territories participated and created over 8,700 Opportunity Zones.

Tax Breaks

  • OZ investments receive Tax Deferral, Tax Reduction, Tax Elimination and Potential Tax Free Income. Tax on the capital gains invested is deferred until 2027. If the OZ investment is held for 5 years, the original tax is reduced by 10%. If the OZ investment is held for 10 years or longer, all of the appreciation on the OZ investment is tax free including no recapture tax. And income derived from the OZ investment along the way can potentially be tax free.

Separation of Basis and Capital Gains.

  • You can use the basis portion of the sale proceeds of your property for anything you would like and invest the capital gains portion (including recapture) into an OZ investment with no tax (including recapture tax) being due at the time of the property sale. You can’t do this with a 1031 exchange.

Diversification

  • Diversify your portfolio with real estate. You can choose where to invest geographically from properties around the country, as well as the types of properties you want to invest in.
What Are The Benefits?

Passive Investing

  • Relinquish the burden of managing properties and exchange them for freedom without giving up the benefits of real estate investing.

Tax Benefits

  • As a 1031 exchange, landlords can sell their investment properties, defer all income tax on the sale of the properties and avoid leaving a tax burden to their heirs with a step-up in basis upon their demise.

Income Generation

  • Collect monthly income on-time with no worries about maintenance, repairs or vacancies with a portion of this income being received potentially tax free. Also participate in increasing income based on any applicable rent increases.

Value Appreciation

  • Capture your share of any appreciation of the DST investment properties.

Diversification

  • You choose investments offering various geographic locations, property types and debt leverage.

An Example of a Landlord Exit Strategy Plan

Sue (64) has built an impressive portfolio of 6 rental properties during her working years each valued at approximately $500,000 and all being free and clear of debt. She is ready to retire and travel extensively over the next 10 years. Sue has enjoyed the benefits of being a real estate investor, but she is tired of the headaches of being a landlord. Sue needs $500,000 of liquid assets to fund her retirement lifestyle needs.

Sue’s Landlord Exit Strategy Plan calls for her to sell 2 of her rentals that have a combined non-taxable basis of $500,000 and capital gains of $500,000. Sue uses the $500,000 of non-taxable basis to fund her retirement liquidity needs. She invests the $500,000 of capital gains in an OZ investment that allows her to defer payment of the capital gains tax until 2027, reduce the tax by 10% if she holds the OZ investment for 5 years, eliminate all taxes on the appreciation of her investment if she holds the OZ investment for 10 years or more and potentially receive tax free income from the investment.

Sue’s Landlord Exit Strategy Plan calls for her to sell 2 of her rentals that have a combined non-taxable basis of $500,000 and capital gains of $500,000. Sue uses the $500,000 of non-taxable basis to fund her retirement liquidity needs. She invests the $500,000 of capital gains in an OZ investment that allows her to defer payment of the capital gains tax until 2027, reduce the tax by 10% if she holds the OZ investment for 5 years, eliminate all taxes on the appreciation of her investment if she holds the OZ investment for 10 years or more and potentially receive tax free income from the investment.

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About APO Financial

If your money worked smarter it wouldn’t have to work as hard to grow. It’s a principle based around controlling the things you can control to maximize efficiency. At APO Financial we built a strategy around this principle and created our Landlord Exit Strategy.

The Landlord Exit Strategy deploys multiple tax reduction and elimination strategies with the singular goal of helping you keep more of what you have. Whether it’s ordinary income, capital gains, or specialized investments like real estate, APO Financial has a strategy that can potentially help reduce or eliminate your tax burden.

The entire team of people at APO Financial works hard every day to bring our clients financial opportunities and retirement planning concepts and methodology which we believe in. Our goal is to help each retiree feel secure and happy knowing that their retirement plan has been designed to protect them.

financial advisorBRIAN GRAY

Brian is a nationally recognized Financial Educator, Author, Speaker, and Financial Planner, whom you may have seen on NBC, ABC, CBS, and FOX network affiliates and in Fortune, Money, Bloomberg Business, Kiplinger, Wall Street Select, Market Watch, Denver Business Journal, Denver Post, Yahoo Finance and others. You also may have heard him as the premier financial guest on KHOW 630AM’s daily show The Troubleshooter with Tom Martino. Gray is the Co-Author of Smiling Through Retirement and Giving Transforms You. He has been interviewed by Kevin Harrington, original Shark on the multi EMMY® Award winning TV series, Shark Tank, and by James Malinchak, featured on ABC TV’s Hit Series, Secret Millionaire. He also interviewed such notables as country music star Martina McBride and renowned economist Roger Ibbotson

Brian enjoys spending quality time with his wife Ashley. They like to travel, learn about different cultures, play golf, and scuba dive together. He strongly believes that everyone should complete their dreams within their bucket list window. Brian co-created The Smiling Through Retirement Process™. He is passionate about planning and sharing his financial wisdom and insights.

financial advisorJOHN GOODHUE

John is a nationally recognized Financial Educator, Speaker, and Author, who you may have seen as a guest many times on financial shows such as CNBC’s Squawk Box and Power Lunch or heard as the premier financial guest on KHOW 630AM’s daily show, The Troubleshooter with Tom Martino. Goodhue has recently coauthored his second book on advanced strategies to reduce income taxes and eliminate estate taxes. He is the creator of the Smiling Through Retirement Process and has been interviewed by Kevin Harrington, original Shark on the multi EMMY® Award winning TV series, Shark Tank, and by James Malinchak, featured on ABC TV’s Hit Series, Secret Millionaire. They also interviewed such notables as country music star Martina McBride and renowned economist Roger Ibbotson

He has conducted over 400 presentations across the country on topics including Zero Tax Planning, Baby Boomer Retirement, The New World of Defined Benefit Plans, and Tax Smart Retirement Planning for thousands of CPAs, attorneys, financial professionals, and others. His published articles include How Strong Are Your Financial Pillars and 5 Ways to Lower Stress & Anxiety in Retirement. They have appeared in Fortune, Forbes, and CNNMoney, among others.

John advises wealthy individuals and families from coast to coast. A Summa Cum Laude graduate of Eastern Kentucky University and the University of Kentucky College of Law, John and his wife, Mary, live in Denver with their eight children and grandchildren.

John has a passion for helping people think about their wealth from a new perspective… showing them how they may leave a legacy of not just their money, but also of their values and significant influence in their community.

financial advisorRAY STEIN

If you’ve ever heard Ray’s APO Process  at any of the dozens of classes he teaches annually, you likely have heard a portion of the childhood events that shaped his life. His parents divorced when he was 4 years old and Ray was raised by a single parent who was plagued by drug and alcohol addiction. A broken family and financial hardship early in life created a drive in Ray to truly value what matters in life – family and helping others.

Today, Ray is a nationally recognized Advisor, Author and SAPOer who you may have seen on NBC, ABC, CBS and FOX network affiliates and in Bloomberg Business, Yahoo Finance, Investing Daily, Wall Street Select, and Market Watch, among others. However, if you ask Ray, his most proud accomplishments are his marriage to his high school sweetheart and becoming a father.

Ray is the co-author of Smiling Through Retirement: The Importance of Living Your Life in Five Year Increments and co-creator of the Smiling Through Retirement Process ™. As an advisor, Ray and the team at APO Financial Inc., show business owners, professionals, and executives how to preserve, protect, and pass on their wealth.

Ray co-created The Smiling Through Retirement Process ™ out of his passion to help people more fully enjoy their hard-earned wealth. He knows through personal experience, guiding both clients and family through retirement, that there are many pitfalls that can cause tremendous pain and regret in retirement, but also many opportunities that can lead to a fulfilling life.

A native of Colorado, Ray is an avid musician, skier, and proud father. He attended the Leeds School of Business at the University of Colorado Boulder and graduated with a degree in finance. Ray and his wife, Arisa, and their son enjoy spending time in the beautiful Colorado outdoors.

IMPORTANT DISCLAIMERS:

This information is provided for educational purposes only and is not an offer to sell nor a solicitation to buy securities. While we endeavor to keep  the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the information contained on the website for any purpose. Nothing on this site should be considered personalized investment, legal or tax advice. Information provided may not be relied upon for any investment decision. Any reliance you place on such information is therefore strictly at your own risk. The investments described are subject to the various requirements and restrictions of the United States Internal Revenue Code. All investing is risky, and no investor should make investment decisions without first consulting with a competent professional adviser as there may be significant taxable implications, portfolio risks or other risks not known at this time. Some or all invested funds can be lost. The past performance of any investment,investment strategy or investment style is not indicative of future performance. Future results may vary, and are not guaranteed. The value of investments and their income may increase or decrease, and a loss of principal – including all principal – may occur. Direct participation i n alternative investment products involve a high degree of risk and illiquidity and are typically highly speculative.Therefore, you should always consult your tax and legal professional for details regarding your situation.

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