NuView IRA Inc. is a retirement plan administration company, specializing in recordkeeping services for those who wish to self-direct their retirement plans and hold alternative investments.  The principals of NuView are all Certified IRA Services Professions and have a combined twenty five years of experience in self direction.  Our mission is to help you achieve your dream of retirement, and we have been doing so from Lake Mary for almost ten years.

Through our offices in Central Florida, Ft. Lauderdale, and our affiliate in Chicago, over $500 Million in IRA funds are administered, serving thousands of clients from every state of the union and beyond.  Our facilities provide a great venue to provide our clients hands-on, practical training on how self-directed IRAs can change your view of investing, and unlock the power of your own choices.

All of our clients undirected funds are FDIC insured to the legal limit, and transactions are executed with speed unprecedented in the industry.  Our client services team are cross-trained on the latest processes, and in a society driven by call centers,  you will find their accessibility refreshing.

While we may never meet many of our clients face-to-face, through our website, our distributed learning resources, and our newsletters, we will get to know you and serve your needs accordingly.  And if you are ever in the Orlando area for business or pleasure, please stop by so that we can make your acquaintance.

Here are some of the things they are working on for this year. Some of these will happen and some won’t. To volunteer or give them your input contact any Board Member or Officer.

National speakers for main meetings: Albert Aiello (Tax certificates), Larry Goins (Ultimate Buying Machine and Filthy Riches), Lou Brown (Street Smart Buying, Selling and Asset Protection), Robert Sheemin (Secrets of Real Estate Investing), Ron LeGrand (Buying, Selling, Leasing, Lease Options, Pure Options, all without banks).

Main Meeting format: Allowing more time for members to participate. Examples:

1.  Deals members have done with a question period, a great way for members to see how others are doing deals right here in Jacksonville, right now.

2.  Helping members with deal structuring, got a deal you need some help with, this is the time to get that help.

3.  Have and Want time, use this time to pitch something you are selling/giving away and to ask for something you need/want.

4.  Information minute,  use this time share information you have that could benefit your fellow investors.

5.  Due Diligence, A time to learn and share with others on what to look for before, during and after, doing a deal or rental.

Quick Start classes: Some may be changed and others may be added to reflect the current market. A visitor can attend two at no charge to get a feel for what they are about, but as these classes are for members only, they will have to join the group to attend more.

Member only benefits: Master classes and Yahoo group. A special area on the JaxREIA web site. Free membership for spouse with all the free and discounted meeting and classes a member would get. Phone or email help with experienced member investors.

Networking: Provide more opportunities for networking with other investors and vendors.

Mentoring: Coming up with a mentoring program. By phone, Email and in person. Individual and in a small group setting.

Web site: Continuing to enhance it. We have 4 or 5 people working hard on this. They want this to be a real source of knowledge, information, and inspiration.

News letter: Same as the web site, knowledge, information and inspiration from local and national sources. A great resource for vendors who have real estate related products to get exposure to local investors.

Master Series classes: A members only benefit. Non-members can’t even pay to get into these classes! The Board of Directors are working hard to bring you the best people and most timely information possible for these classes.

Better forum for asking and sharing information: This will most likely be a special area of the web site but may also be a members only networking area on the internet.  A place to sell, buy, and ask questions and get responses from some of the most experienced real estate investors in the local area.

Better follow up:  With new and experienced members to make sure we are providing for all.

Due diligence: Training at the main meeting, quick start and master classes. Maybe an all day Saturday class. It is impossible for a group like ours to check out and protect its members from everyone they may come in contact with. That is the reason this year’s Board of Directors are putting so much emphasis on teaching due diligence. They want you to have the knowledge to be able to evaluate on your own every opportunity presented to you!

Spring Bus tour: Saturday April 21 and Sunday 22 (possibly Friday evening the 20th). This is shaping up to be one of the best ever. If you want to actually walk thru homes with an experienced investor and have him/her tell you what they would do to get it ready to sell/rent and the cost to do it, then this is a week end you can’t miss. A condensed version of a $3,000 to $5,000 national seminar. But, put on by our local experts for a few hundred dollars. Fast pace, high octane, jump start to real estate investing.

Vendor program: Revamping to make it better for JaxREIA members and vendors. Vendors keep us up to date on products, programs and current information. With this information we are better prepare to make decisions that affect our real estate investing. But at the same time we have a lot of information to present at the main meeting along with the vendors, so it becomes a balancing act. That is being worked on.

Annual Trade show: Coming up in October. This is a well attended meeting every year. Gives everyone a chance to talk at length to the vendors and get free goodies from most. JaxREIA conducts three, 45 minute mini seminars during this meeting too. We anticipate this to be a very good meeting this year.

Volunteer program: JaxREIA can always use some more volunteers to teach and assist the Board of Directors in the operation of the group. Volunteer and rub elbows with the movers and shakers of the group. See Clara Watkins, or any board member.

We have a great year ahead of us. Be successful and do your due diligence!

Mike Duprel Sr.
President JaxREIA

Before telling you why, first the “Potential” Power of LLC’s for real estate…Limited liability companies (LLC’s) are powerful entities because they have all of the legal benefits of a corporation; yet all of the excellent tax advantages of a general partnership; yet avoid the legal disadvantages of a general partnership and avoid the tax disadvantages of

C-corps, S-corps and limited partnerships. They also avoid much of the legal complexity of corporations and limited partnerships.  In short the best of all worlds…unlike any other entity.

LLC’s can be used for all types of real estate transactions…Residential rental, commercial, wholesaling, short sales, rehabbing, new construction, sub-divisions, condo conversations, etc.  So powerful are LLC’s, they have diminished the importance of limited partnerships, family limited partnerships, C-corporations, S-corporations and land trusts (although they can be combined with land trusts).

Plus, a properly structured LLC should…

• Protect your personal assets
• Save you substantial amounts of taxes
• Defend you against IRS attacks
• Prevent legal disputes and save you legal fees and hassles
• Enable you to successfully operate your real estate business

But Most do NOT!

Notice the above words “Potential Power”.  Below are the reasons why most LLC’s never reap the power of their great benefits.

Just about all attorneys, CPA’s and others, who form LLC’s, use barebones, boilerplate LLC documents. Consequently, your LLC is set up and operated WRONG, because these poorly documented LLC’s…

Do not shield you, causing your personal assets to be totally exposed. You therefore are not protected from legal actions (when you should). It is not the size of the entity, but rather the existence of complete and proper documents which provides the protection from personal liability for the LLC members.

Do not save you in taxes (when they should). Having certain Tax Elections and Tax Matters in the operating agreement and other LLC documents can generate for you, yearly tax savings you didn’t even know about.

Do not defend you against IRS (when they should).  IRS auditors typically examine LLC legal documents to see if they support tax deductions and strategies.  If they don’t, you are out the deductions and A LOT OF MONEY!

Do not prevent legal disputes with partners or others (when they should).  Having the proper language would do this and save you from costly lawsuits.

Do not give you important operating guidelines for successfully running your business (when then should).  LLC documents (esp. the operating agreement) should also be your roadmap to help you implement a profitable real estate business.

In short, most LLC’s simply do not give you the significant dollar-saving benefits that a well designed & documented LLC should give you!

The SOLUTION…Our upcoming meeting

PLUS: Includes how you can resurrect your existing LLC’s with the right system and more.

Don’t miss this golden opportunity to protect you and your family!

The OA is also a private document, not exposed to the public such as the articles of organization. The OA used, should be a “Real Estate OA”, specifically designed for real estate investment operations.

A properly worded OA will contain legal provisions that document the LLC is a separate entity where the LLC affairs are separate from the affairs of the members. These legal provisions (along with entity formalities) will give its members limited liability protection, therefore making it difficult for a court to pierce the LLC entity veil (which would expose member personal assets to attachment). This is because the LLC would be separate and distinct from its members.

ALERT: Standard boiler-plate OA’s (which most are) do not do this, as well as not doing below.

Tax Deduction Support: A properly worded Real Estate OA also supports the multitude of tax saving expense/deductions (and strategies) that are available for the absolute best tax shelter –  real estate.

How Is This So? Because having the correct legal provisions in the OA (per the above) separates the LLC entity from its members, as a separate legal person.  So given this, the statutory LLC entity (separate from its members) via this legal document (the OA), formally authorizes LLC members to incur expenses necessary to attain the specific business purpose of the LLC as provided in the OA (which purpose is: High-return, low-risk real estate investing).  This is summarized below

This is powerful!  You will feel much more assured and comfortable that your tax deductions are legally supported by this legal entity (LLC) via this legal document (OA).

Conclusion-Summary: Such proper documentation can therefore be an effective defense against any IRS attacks; or CPA’s trying to deny you of valuable deductions. Reason: This statutory LLC entity (separate from its members) via this legal document (the OA), formally authorizes these deductible expenses necessary to attain the LLC business purpose. You end up with legal tax-saving deductions and a more successful real estate operation…The best of both worlds. To hear more about the hidden powers of LLC’s and save $1,000’s come to our meeting  Thursday, March 1st 6:00 – 9:00JaxREIA will also host Saturday Seminar March 3rd featuring Al’s “Total Wealth Protection for Real Estate Investors” from 8:00 AM – 3:00 PM.  For further details visit our website at www.jaxreia.org. 
]]> http://jaxreia.wordpress.com/2012/02/21/can-an-llc-create-and-support-tax-deductions-by-albert-aiello-cpa-ms-taxation-re-investor/feed/ 0 jaxreia http://jaxreia.wordpress.com/2012/02/21/why-is-the-llc-operating-agreement-so-important-by-al-aiello-and-bill-noll-cpaattorney/ http://jaxreia.wordpress.com/2012/02/21/why-is-the-llc-operating-agreement-so-important-by-al-aiello-and-bill-noll-cpaattorney/#comments Tue, 21 Feb 2012 21:01:16 +0000 jaxreia http://jaxreia.wordpress.com/?p=653 Continue reading →]]> A Nuclear Private Document. The most important LLC document is the Operating Agreement (OA). It is the nuclear, governing instrument…mandating LLC business operations.  Simply put, it is the heart of the LLC.

The OA Versus The Articles. The articles of organization, which is necessary for the filing of the LLC formation, is not a substitute for an OA by which the members govern the LLC business and their financial interest in the LLC. Moreover, the articles of organization is a public document, while an OA is private document. Therefore using the articles of organization as a substitute for an OA would surrender a great deal of privacy which is an essential part of total asset protection. Because the LLC’s articles of organization are available to the public, any provisions that are not required to be in the articles should not be, but can be in the OA, because it is not a public document, it’s private.  However, any provision that the OA contains should not be in conflict with the formation state’s articles of organization. A properly designed OA would do this. Also, if there is a choice by state statute between amending the OA or the articles of organization, when such amendment is required, amend the OA not the articles, again for reason of privacy.

What Should An Effective OA Should Contain…Specifically For Real Estate Investments.

__Be very comprehensive for its intended business purpose (real estate investing) containing all of the essential provisions relating to legal, tax, accounting, including the administration and regulation of the LLC’s affairs and the members’ rights and powers.

__Document that your LLC is a separate entity where the LLC affairs are separate from the affairs of the members. Following its provisions will give its members limited liability protection, therefore making it difficult for any court to pierce its entity veil.

__Related  to the above, give the best defense against an attack on the use of a state statutory business entity by always treating the LLC as a separate entity.  As long as it can be clearly shown that the members respected the entity separateness, the LLC existence should not be disregarded by the courts.  It is not the size of the entity, but rather the existence of complete LLC documents (especially this OA) which provides the protection from liability for the members of the LLC. It is crucial to recognize this vital element in operating an LLC.

__Some of the more specific provisions that can help accomplish the above limited liability protection are those that cover: LLC declaration of being separate and apart from its members; specific business purpose of LLC; member capitalization of the LLC in accordance with membership percentage ownership; prohibited unilateral acts of members; indemnification of members; transfers of member interests (right of first refusal with buy-sell provision); arbitration of member disputes; specific duties of members accomplishing the LLC business purpose (including what duties certain members should not be doing).

NOTE – FORMALITIES: Also to attain limited liability protection  and avoid the piercing of the LLC veil, adhere to entity formalities, such as: Keeping minutes, filing of all tax returns, no co-mingling of funds with a separate business checking account which should not be used for personal expenditures, etc.

The OA should also…

__Support and helps to document numerous tax saving strategies and elections to be an effective defense in the event of an IRS audit, as this statutory LLC entity (separate from its members) via this legal document (the OA), formally authorizes these tax saving strategies and elections. This is powerful! You will feel much more assured and comfortable that your tax strategies are legally supported by this legal entity (LLC) via this legal document (OA). (See prior article – Real Estate Investors…Can An LLC Create And Support Tax Deductions?)

To sum up, use an effective comprehensive OA to protect you; support tax-saving strategies; defend you against the IRS; and more… protecting your family wealth.

Legal Benefits – There is the following:

• The LLC statutes of all 50 states and the District of Columbia all recognize LLC’s as legal entities separate and distinct from its member-owners, granting the corporate shield of limited liability for its members, based primarily on corporation law which has many decades of long standing precedent in the US.

• LP type protection. Legally, LLC’s also have similarities to the long standing limited partnership (LP)  with another form of protection called “charging order” protection (which is a way to thwart claimants from attaching your ownership shares).

*                  Limited liability protection for ALL of the members. LLC’s have the corporate characteristic of limited liability for all of the members. An LLC does not need an individual or entity (such as a general partner) who is personally liable for debts. NO LLC member is personally liable. This is unlike a limited partnership, where there must be at least one general partner personally liable for all debts. This causes the necessity of additional cost and paperwork to incorporate the general partner. This is not necessary with an LLC.

*                  Control with limited liability. Unlike a limited partner, any LLC member can exercise control over daily management decisions without the fear or actuality of losing their protected, limited liability status.

*                  Charging order protection like an LP. Yet without LP pitfalls.

*                  LLC’s are free from the qualification constraints imposed on S-corps. The members can be corporations, partnerships, estates, pension plans, IRA’s, and non-resident aliens. Unlike S-corps, an LLC can have more than one class of “membership interest” (similar to stock).

*             LLC’s can be used for all types of real estate transactions. Residential rental, commercial, wholesaling, short sales, rehabbing, new construction, sub-divisions, condo conversations, etc.

Tax Benefits – There is the following:

• Easy entity selection. Under simple IRS check-the-box rules, as a separate legal entity an LLC can be taxed as a sole proprietor, as a partnership or as a corporation.  But for real estate ownership, an LLC should elect to be taxed as a partnership and thereby be governed by the favorable tax benefits of partnership tax law

• The LLC-partnership is the only pure flow-through entity where the tax benefits still pass down to your 1040 even though the LLC-partnership is a separate legal and tax entity from you. One example is property tax losses which can be “paper” losses because of componentizing depreciation (a non-cash paper deduction). Such paper losses pass down to offset your other 1040 income saving you a bundle of taxes every year

v   Lower IRS audit risk than other forms of ownership such as corporations, Schedule C’s and E’s

v   No IRS controversy on corporate tax-prone issues of “reasonable compensation” or ”constructive dividends”;  there are no issues of loans to partners as taxable dividends or salaries (as with corporations).

*                  No W-2 salaries. Unlike corporations, LLC-partnerships do not have to pay salaries to partners and thus avoid payroll recordkeeping, tax withholdings and filings. Optionally and without the bookkeeping of W-2 salaries, simple straight guaranteed payments could be paid to create earned income for valuable retirement plan contributions.

*                  No corporation limits for deducting property tax losses. Even S-corps have limits on deducting losses with leveraged real estate.

*                  Avoid IRS passive loss limits. Unlike limited partners, because LLC members can participate in management, they can side step passive loss limits and fully currently deduct property tax losses against other ordinary income by actively participating in property management under Code Section 469. This is huge!

*                  Tax-free distributions. Unlike corporations, distribution of funds (including borrowed money) from an LLC will not result in current tax (single or double); there is no gain recognized to a member upon the distribution of property to the member even if it is appreciated property (with built-in gains) where the value is higher than its adjusted basis.

*                  1031 tax-free exchanges. Unlike corporations, LLC’s, with members splitting up, can much better accomplish a 1031 exchange to defer capital gains taxes on property sales.

*                  Special member P&L allocations. Can allocate profit or losses to the members in a manner that best suits the members’ tax needs.  For example, a member in a high tax bracket, may want allocated to them less of any net income or more of any net losses; or vice versa for a low bracketed member. These special allocations can be done in compliance with special partnership provisions under code section 704(b). They do not at all apply to corporations and are more restricted with limited partnerships.

In a nutshell, the intended benefits of LLC’s offer the best of several worlds:

• The corporate shield of limited liability for all of the members

• Control over management decisions for all of the members

• Charging order protection

• All of the optimum real estate tax advantages of a partnership.

• Ability to use for all types of real estate investing

A properly structured LLC should…

• Protect your personal assets
• Save you substantial amounts of taxes

Defend you against IRS attacks

• Prevent legal disputes and save you legal fees and hassles
• Enable you to successfully operate your real estate business.

But Most LLC’s Are Worthless! They simply do not give you the significant dollar-saving benefits that a well-designed& documented LLC should give you!!

To find out why… and save $1,000’s come to our meeting  Thursday March 1st

House members went along with Gov. Rick Scott’s proposal to increase the corporate-income tax exemption from $25,000 to $50,000, passing it as part of a broader economic-development bill. Scott, in a statement, said it was “a huge victory” for Floridians, and would help businesses create more jobs.

An additional exemption could benefit some Realtors and brokers in Florida, depending on their current tax situation. However, the Florida Senate has not yet voted on the bill.

The issue broke along partisan lines on Tuesday. Some Democrats wanted to add conditions onto the additional exemption, while some Republicans wanted to limit the tax break to businesses that don’t employ union workers. Even after the vote, some lawmakers contend it will primarily help large corporations and do little for small businesses.

“This bill does nothing to sweeten the pot for the middle class or the working families in this state,” said Rep. Mark Pafford, D-West Palm Beach.

But Finance and Tax Chairman Steve Precourt, R-Orlando, said lawmakers need to put aside procedural disputes and “partisan rhetoric.” He said the higher exemption would allow nearly 4,000 businesses to avoid paying corporate-income taxes altogether.

“This is not about the big guys, the big corporations, the fat cats,” said Majority Leader Carlos Lopez-Cantera, R-Miami. “This is about jobs.”

The House voted 92-22 to approve the economic-development package, which also includes new or expanded tax breaks related to agricultural packing houses, aircraft repairs and industrial machinery and equipment.

A House analysis said the package eventually would eliminate about $121 million a year in tax revenues for state and local governments.

“By allowing more than 3,500 businesses to stop paying income taxes and instead put that money into jobs, and maximizing incentives to make Florida more attractive to quality manufacturing jobs, the Florida House has demonstrated it knows what it takes to help grow private-sector jobs,” Scott said in a statement after the vote.

Also Wednesday, the House voted unanimously to hold a “sales tax holiday” from Aug. 3 through Aug. 5 that would be geared to back-to-school shoppers. The plan (HB 737) would allow shoppers to avoid paying sales taxes on items such as clothing, shoes and bags that cost $75 or less. Also, they would receive a sales-tax exemption for school supplies valued at $15 or less.

House members also approved a bill (HB 87) on Wednesday that would provide tax incentives for companies that want to produce oil from abandoned wells in parts of Northwest and Southwest Florida.

Pafford questioned whether that bill would open wells in Big Cypress National Preserve and Everglades National Park. But sponsor Matt Hudson, R-Naples, said the bill, which passed 80-36, would help put people back to work and put Florida on a “path to energy independence.”

The Senate has not approved the economic-development package, the sales-tax holiday or the oil-production tax incentives.

But Rep. Gary Aubuchon, R-Cape Coral, said the House is requesting that the Senate pass the measures or include them in budget negotiations.

Source: News Service of Florida, Jim Saunders

Al Aiello will be our guest speaker at our March Main Meeting, Thursday March 1st discussing the Importance of LLC’s.

On Saturday, March 3rd JaxREIA will sponsor a Saturday Seminar featuring Al Aiello’s “Total Wealth Protection for Real Estate Investors”  This is a presentation not to be missed!

When:  Saturday March 3, 2012   Time:  8:30 – 3:00 (Doors open at 8:00 AM)

Where:  JaxREIA 103 Century 21 Drive Jacksonville, FL  32216

Cost:  $29.00 per Member;  $39.00 per Non-Member  (Includes Lunch)

A landlord on a routine inspection of a rental property made a startling discovery one Sunday afternoon.

When he went to his rental home in West Lakeview and tried to get in, he found the locks had been changed.  The police were called to gain entry to the home, and that’s when they discovered that the new tenant was in the process of converting the basement into a marijuana grow op.  Inside, there were about 200 plants that have a street value in excess of $250,000.

The existence of the plants wasn’t all that was wrong with the rental.  According to police, the electrical system was altered, the carpet removed, and lights and vents added for the cultivation of the plants. Codes Enforcement is expected to inspect the home to determine if the structural integrity has been compromised.

This all sounds like justice done and perhaps for the city it was but the landlord is about to get hit with thousands in expenses he was not expecting to put the house back in its original condition.  Worse, now city Code Enforcement will stick close by while he tries to return the home to its pre-gro status.  Lovely!

Actually, this owner is very fortunate since the tenants were just growing pot.  If they’d setup a Meth lab his losses could be in the tens of thousands of dollars.

This landlord caught the problem pretty early in the process.  However, most landlords rarely if ever perform any type of inspection.  Too often the result is damage far beyond what it would have been had it been caught early.  See:  A Strong Case for Periodic Inspections.

It’s hard to understand why so many real estate investors skip the two easiest ways to save thousands of dollars:  1) Adequate tenant screening,  2) Periodic inspections.

There is abundant information about tenant screening at our website.  Periodic inspections doesn’t seem to get enough attention and it may be more important than tenant screening.  Read the book: “Tales of a White Trash Landlord’.

The purpose of periodic inspections is to catch poor housekeeping (or worse) very early in order to reduce the damage.  But wait, can a landlord legally inspect the property anytime he wants?

Florida Statutes 83.53 – Landlord’s access to dewlling unit

(1) The tenant shall not unreasonably withhold consent to the landlord to enter the dwelling unit from time to time in order to inspect the premises; make necessary or agreed repairs, decorations, alterations, or improvements; supply agreed services; or exhibit the dwelling unit to prospective or actual purchasers, mortgagees, tenants, workers, or contractors.

(2) The landlord may enter the dwelling unit at any time for the protection or preservation of the premises. The landlord may enter the dwelling unit upon reasonable notice to the tenant and at a reasonable time for the purpose of repair of the premises. “Reasonable notice” for the purpose of repair is notice given at least 12 hours prior to the entry, and reasonable time for the purpose of repair shall be between the hours of 7:30 a.m. and 8:00 p.m. The landlord may enter the dwelling unit when necessary for the further purposes set forth in subsection (1) under any of the following circumstances:

(a) With the consent of the tenant;

(b) In case of emergency;

(c) When the tenant unreasonably withholds consent; or

(d) If the tenant is absent from the premises for a period of time equal to one-half the time for periodic rental payments. If the rent is current and the tenant notifies the landlord of an intended absence, then the landlord may enter only with the consent of the tenant or for the protection or preservation of the premises.

(3) The landlord shall not abuse the right of access nor use it to harass the tenant.

Thus, the statue makes it clear the tenant may not unreasonably withhold consent to the landlord to enter the dwelling unit and the landlord is entitled to perform inspections.  That’s the legal part.  Wise landlords understand the importance of excellent customer service and will make sure this is explained to the tenant as a CUSTOMER BENEFIT instead of an INSPECTION.

Here’s an idea that many landlords employ:  include a memorandum with the lease which notifies the tenants that you or a representative will replace the the air condition filters on a particular day each month.  There are at least two good reasons:  1)  Most tenants do not change the filters, so you’re doing your A/C a favor.  2)  It takes just a few seconds walking through the house to the A/C unit to get a sense of the tenant’s housekeeping style.

If, during this walk through, you notice serious issues don’t panic.  The law provides a remedy for that too.  Send the Warning Notice titled “Seven Day Notice of Non-Compliance, with Right to Cure”.

In a nutshell, this letter notifies the tenant they are in non-compliance for the following reason: (here you insert the single, specific non-compliance).  The letter says the tenant has seven days to cure the problem or the lease is immediately terminated.  It goes on to say if the same non-compliance reoccurs within the next twelve months the lease is immediately terminated.

This puts you in a very strong position to insist on the tenant correcting the problem and if they don’t they must move and/or you can evict.

The easiest way to dramatically reduce property damage caused by poor housekeeping, vandalism or worse is to periodically inspect the property.  This inspection could be more important than the inspection you perform when you buy.  Especially if you discover your tenant in the early stages of constructing a Meth lab, for example.

###

Paul Howard is President of The Florida Landlord Network
He may be reached by phone at: 800-809-1530
or by Email: Paul@FlaLandLord.Com