In this episode of REAL ESTATE RADIO LIVE WITH JOE CUCCHIARA, we discuss different types of real estate investments, their respective tax treatment, and the importance of using the optimal tax entity to achieve the greatest tax savings for each. Tax entities for real estate investors are LLCs, partnership-LLCs, S-corps, and self-directed retirement accounts. Depending on the nature of your investment, you’ll want to use the appropriate business entity – or combination of entities – that will give you the best results.
We also discuss the tax treatment of Bitcoin and cryptocurrency transactions. Investors in digital currencies are surprised to learn that trading virtual currencies results in taxable income even before they cash out their holdings to dollars. For example, if you trade Etherum for Ripple, even though you receive no “fiat” (industry jargon for paper money) you still must pay taxes to the IRS on any gains, as outlined in IRS Notice 2014-21. Self-directed retirement accounts, such as Checkbook IRAs and Checkbook 401Ks, can eliminate the tax compliance burden and tax liabilities of crypto investing.