Gift Leasebacks On the Freedom Formula For Physicians Podcast

physician tax advice

Now you know I just want to take a step back because there was something that I didn’t want to point out as far as a strategy that may be helpful to some of your listeners. Are you familiar with the gift leaseback strategy?

The gift lease back. So are you, you’re gifting something to kids and then essentially you’re renting it back from them?

The strategy is typically used when, let’s just say you have somebody that’s supporting a parent and maybe they’re giving him a couple of thousand dollars a month.  So with the gift leaseback strategy, we give them a piece of property from maybe the entity that’s typically fully depreciated. And then you lease it back from them. So ultimately the money that you weren’t giving them that was not taxed and what you give them becomes tax deductible.

Interesting. So is the, is the idea, I guess this is a business owner to a parent or a child?

I guess it could be either. Typically use those two, let the parents know because typically the child just kind of is constantly taking the money in little pieces. You when you wind up supporting a parent, it’s usually billion dollars, you know, once. And that’s a strategy we’ve used in as a totally, totally legal strategy.

And the reason you do a depreciated asset, essentially it’s because now there’s no cost basis. So if you sold it, for example, you would have normally realized a capital gain of some sort. Correct. Whereas you gift it, there’s limits on what you can do, but I believe its a million dollar exemption per person or something like that that you can get by 5,000,000.

Oh, that’s right. The state taxes 5,000,000, so up to $5,000,000 can give as a lifetime gift.

Correct. So you have to fill out some special forms and what not to do that, that’s in, supporting his parents for $3,000 a month. Now at the end of the year he winds up with a $36,000 deduction he did not have. And somebody in the 40% bracket, that’s a lot of money.

Absolutely. That’s huge. It’s huge. So it’s kind of like a, I think of a charitable remainder trust. It’s kind of a similar idea, but in this case your parents are the charity rather than a …

Right and you’re turning something that is non-deductible and wanting to do something that is deductible and obviously I have to do it the right way.

I love it. That’s great. Well, I mentioned in the intro that you have a book I’d love to hear about the book, my friend and, and all about it.

Well, my first book was “Secrets of a Tax Free Life”. I co-authored it and it was an Amazon bestseller that came out about three years ago. Most recently, I also co- authored “10 Most Expensive Tax Mistakes that Cost Business Owners Thousands” and you will have a link in your show notes to anybody that would like a free copy of that. The link will take them to our page and our website and they can request a copy and we’ll mail it out.

Wonderful. Thank you so much for making that available. I’d love to hear besides your resources which we’ll link in the show notes. I’d love to know what are some other good resources? Whether they’re books or blogs that are courses that aren’t your own, that you think you would recommend to physicians to grab a hold of?

I mean there’s so much information out there and I think you can go online and you can find plenty of different things to read. The problem with that and you know, knowledge is power, but sometimes you don’t have all the pieces and if you try and do something and maybe you’re missing a little piece, it could be not working out the way you want. So I think go out there, read, and then work with a professional that is willing to listen to what you have to say and is willing to work outside the box and being proactive.

Perfect. That’s great. Well, there’ so much that he could cover on this subject. There’s, there’s huge volumes of books written on this stuff. Any closing thoughts, Craig that you want to make doctors aware of out there?

Just, I think it’s important to be proactive. It’s important to communicate with your tax professional and it’s important to your future really to keep more of what you make legally.

Great thought. Great thoughts. Well thank you so much for being with us Craig, and if people have more questions, how can they get in contact with you?

They can reach us at 516-869-4051. Our web site is craigcody andcompany.com. It will be a link on your website, and email Craig@Codycpa.com.

And Cody is spelled c o d y, correct?

Correct.

Wonderful. Well, again, thank you for being with us, Craig and my friends, if you are a physician, if you’re someone else servicing physicians and you want to tell your story, if you have other resources to recommend, I would love to share it in the next “Freedom Formula for Physicians Podcast”

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