During this segment of HyperFast Wealth, Dan Lesniak and Sunil Saxena speak with Jack Kiley, Principal at Mid-Atlantic IRA, about what you need to know about real estate investing and the new tax changes. This episode will answer some of the important questions you may have about qualified business income (QBI).  Episode Highlights:  Jack receives many questions about qualified business income (QBI). QBI is attached to rental property even though technically that's not a business under what the tax code defines as a business. QBI puts people who work in pass-through entities, or are self-employed, at parity with corporations. The idea of the QBI deduction was to give self-employed people or small business owners the same effective taxable income rate as a corporation. For different types of businesses, there are different calculations. With rental property, you work down to what your net rental income is. In the tax code, rental real estate is considered an investment activity. Rental real estate is deductible, but you have to qualify. You have to spend more than 250 hours in the activity to qualify. These hours may include negotiating a lease, finding tenants, working on repairs, and overseeing someone else. If you are refinancing that property, the time you spend to refinance is not included. Travel to and from the property is not included. Reviewing your financial statement is not included. If you have a number of rental properties, you are allowed to aggregate those hours across all properties. If you have all residential property, you can aggregate all the residential properties and the 250 hours could be across your multiple residential rentals. The same thing applies for commercial properties. If you own residential rentals as well as commercial, you can't group them together. You have to treat the residential as one group and qualify, and you have to qualify separately on the commercial. Keep contemporaneous records. Mixed-use is a third category. If you have the same number of properties in 2020 that you had in 2018, you are paying less tax assuming everything stays the same. The 250 hours is a relatively low threshold to qualify. If your income is over a certain amount, there is a phase-out. If your properties are triple-net, those properties are not available for QBI. If you buy the building and your business is the main tenant, then QBI is not available. In capital intensive businesses, there's no income phase-out. For service businesses, there's a phase-out. If you're married, that phase-out starts at about $320k adjusted gross income and you'd be totally phased out once you hit $400k. Flipping is a business activity. If the activity is subject to self-employment tax, then it's a business activity. Flipping has no income threshold. You pay Social Security and Medicare on your net earnings. In 2019 you pay Social Security on the first $132k of wages. Medicare is on everything. Income tax and self-employment tax are independent of each other and there are separate calculations. Income tax is based on total income less deductions. If you have income from a business that you participate in, that's subject to self-employment tax which is 15.3%. Passive real estate investors are unlikely to qualify for QBI. The new tax law benefits people who use capital, such as rehabbers, development projects, and new construction. Remember, to meet the requirement you must spend 250 hours per year in the business or if you've been in the business for over four years, you have to have spent that time in three of the last five years. 3 Key Points:   Real estate investment activity may qualify for the QBI deduction.    Keep contemporaneous records of the time you spend on your real estate investment projects annually. This will help with qualifying.    Passive real estate investors are unlikely to qualify for QBI.  Resources Mentioned: Learn more about Hyperfast Academy; HyperFast Wealth Dan Lesniak bio, Facebook, Twitter Sunil Saxena LinkedIn John “Jack” Kiley website, phone: (240) 575-3880 ext: 201 or email him at [email protected]

During this episode of the HyperFast Agent Podcast, host Keri Shull speaks with Mikki and John Ramey about how they built a business around helping doctors buy and sell homes. Mikki shares what inspired her to pursue this niche, how she builds relationships with medical schools and hospitals to find leads, and how you can use her strategies to break into this niche in your own area.  Episode Highlights:  The Rameys have helped over 500 doctors buy and sell homes in the last few years. John Ramey is a doctor, so they know what that lifestyle is like, and help other families who are going through what they went through.  Mikki used her inside knowledge to create a niche in her market. They realized five years ago they could help physicians relocate nationally and started a company called Dr. Moves to help doctors find great real estate agents across the country. A big part of their business is connecting doctors with loans that can help them buy houses. The first step in creating their business was to start a website that functions like Zillow for doctors. In 2008 they had a business plan and a vision. Mikki's first four clients were from one mailing she sent to incoming medical residents. Mikki had a connection at the medical school. She went to each department individually at their medical school and handed out her flyer. That was how her business began. With medical students and residents, they focus on finding resellable properties for them to buy. They know exactly the day medical school graduation will be and exactly when they'll finish up residency. So they contact these leads six months to a year ahead of that time. Dr. Moves has a page for each medical school in the country. They are looking to partner with one real estate agent in each of those cities and teach them what they've done. Their system is easily duplicable and you can do the same thing every year, over and over. They now have a lecture series where they go into the medical school and talk to them about whether it would make more sense to rent or buy. Sometimes you have to go to a school a couple of times and be really sincere. Have some good statistics to share how you can benefit students. They provide dinners or bring food into the hospital with their education. Always make sure you know what the school allows. There are still 100% financing loans out there and doctors can get them. On their website they have a list of banks in each state that provide doctor loans. They partnered with a loan officer that works with doctor loans and created videos for social media. They also have 10-15 webinars that answer common questions. Timing is important when working with medical students and residents. Nurture them in the fall so that they'll be ready to work with you in the spring. 3 Key Points: You can use your insider knowledge to serve a highly specific niche and build a successful business this way.  If you want to work with medical students and residents, you can establish a relationship with nearby medical schools and hospitals. When working with doctors or medical school students, be aware of doctor loans and their benefits. Resources Mentioned: Learn more about Hyperfast Academy; HyperFast Inner Circle  Keri Shull: Linkedin, Facebook, Instagram Mikki Ramey Instagram | Facebook John Ramey Instagram | Facebook Contact Mikki and John at [email protected] Healthy Realty Dr Moves Dr Moves videos  Dr Moves webinars