Smart Tax Strategies for Assisted Living Investors

Transcript

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hey friend it is Brandon Gustafson with Assisted Living investing I help beginners like you launch their Assisted Living business in the next 12 months excited to have you here with me on the channel today we're going to be talking about Tax Strategies for uh assisted living your Assisted Living business what does that look like how do a work some of the things that I've learned having run these businesses myself for over four years now and uh just wanted to share a little bit about that as we

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get into this now before we get started want to remind you to go and grab the free business plan checklist um I've got a link for it here on the on the thing I don't know where it's it's down here when as you're looking at me on the video um it's just kind of in different places than than it used to be um I'm trying to upgrade a little bit of the the production value here of what we do uh so make sure you go and grab that free business plan checklist Assisted Living investing. netb checklist and

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that will help you out in uh moving things along and and getting your um you know getting helping you launch your Assisted Living business that's what I'm here to do for those of you that are new here would love for you to just type in newbie down below I love seeing the new people um that are here that am making sure I'm helping you we're going to have time for Q&A here at the end so make sure you are typing in your questions as we go uh and I will get to those here at the end of the video as well and um

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apart from that I've about got uh everything done here to share this out some of the stuff that has to be manual so um there we go got that one up and we should be good so let's jump into it um again today we're talking about Tax Strategies for assisted living uh for your Assisted Living business so you can understand exactly what that's going to look like how that's going to work for you um my name is Brandon Guston for those of you who don't know me um I own and operate two assisted living

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facilities I've been doing this since 2020 um I've secured over1 A5 million dollar in SBA funding uh I operate out of state I live in Utah I operate in Colorado and in Idaho so I've been doing that uh since 2020 as well I also have a masters in healthcare administration I've worked in the healthcare industry for over a decade have a lot of experience just in the healthcare industry in general uh making sure uh you know I I I love being in this industry and the impact that we could

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have on people it's it's something I'm super passionate about and when I found out about assisted living and my interest in real estate this was a really great blend for me to get in here and and have the impact that I love having on people's lives through through the healthcare industry and then uh being able to do well by investing in real estate so excited to have you here um with me now as we get into this want to just give you a quick disclaimer I am not an attorney um so the information

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that I give you here today um is should not be taken as legal or professional advice um this is general information um I highly encourage you to talk to a tax professional to understand understand the impact on your taxes to talk to an attorney to understand the different entities that you should be sending setting up um how that's going to impact you um it's protection um everything there please go talk to a professional I'm going to share some of my experiences I'm going to share a little

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bit of the strategy around why I did the things that I did um to kind of give you some insight from somebody that's actually doing this why I did it the way that I did it but for your situation it may be very different from mine so I encourage you to go and talk to somebody about that with that disclaimer out there let's talk a little bit about entity structure so something that I found to to work really well for us was separating the real estate entity from the the business entity so basically

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when we do this we have a real estate holding company we go and buy the house let's say it's just a million dooll home and we go and and we close on the property now the way that we would do this is we would actually that entty that's going to own the property that entity is the entity that is going to do the closing it's going to be in that entity's name now you might come across lenders that they want it in a personal name there may be situations so um take that for for what it's worth but if you

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put the the name of the the acquiring entity the the inquiring individual entity whatever you want to call it is that business it's going to hold the real estate it keeps it siloed um keeps it keeps it there keeps it clean um from an accounting perspective from a legal perspective so you have that entity that that owns the business or owns the real estate then you have an operating entity The Entity that's actually going to run the business for you so for us our our our facility is called be well Assisted

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Living so we have be well Assisted Living um that comes in here and they own the business now we create a lease agreement and I actually have um a a template of this so if you're like landlord you're trying to figure out some of this um go check out that free resource it's at Assisted Living investing. net le- agreement so it's a little bit of a long um so in YouTube we're going to have links down below for it so make sure you go and and check out those links um so if you're watching on

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Facebook or somewhere else make sure you go to YouTube and grab the links after the fact and you'll be able to get that free lease agreement but it's a really great tool to help you um see exactly what that relationship might look like so us as an operating entity we are going to lease the building from our real estate entity uh we just set up an agreement typically for us it is just basically what that Debt Service payment what that mortgage payment is we're going to do that we review it on an

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annual basis we make sure everything's up to date um payments because SBA Loans are often adjustable rates so our rate our payment will adjust a little bit so we have to adjust the paperwork to to reflect that super um important for you to do something like this from a legal perspective what it does is you have your operating entity let's say resident Falls or um you know something happens um with with a resident and they want to come after you from a legal perspective they're coming after the operational

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entity now that operational entity is um doesn't have a lot of assets it doesn't own the property it doesn't the the margins here in these businesses are slim enough that there's like not much cash in them either and so when a you know an entity or an individual who has fallen they get with an attorney who's going to sue you they look and see what is available to be to try to get they're going to see this maybe it's not worth it for us to do this so that's just kind

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of a quick example of what that might look like um something for you to kind of keep in mind and it keep by having your real estate and your entity in different silos it can protect them so there we have a pretty complex I would say legal structure complex enough that every time we have to go close or do taxes or anything like that I have to have pretty in-depth conversations with lenders or other people about the structure of our entities um but it it's good that complexity and and maintaining

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those entities does give us a little bit of extra liability protection uh and protects our personal assets the assets of the business um and everything else that that goes into it so something for you to keep in mind it can complicate things when it comes to taxes we'll get into taxes here in in just a minute on and the impact on that there's actually some benefits to it it's little a little more complex but there are some actual actual benefits that you can find from that so speaking of tax benefits you've

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got your depreciation deductions for the property um that so you you have the property there uh you can do the deductions on that um I believe I got the schedules here in a slide or two uh but depending on if it's residential versus commercial it's 39 years or 27 and a half years just kind of depends um on on the situation there there's other strategies we we'll talk about those here in just a a few minutes um but that rental income that comes into the business can be shifted around as as

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profit as well so you've got money coming into the business that business then has to pay the the real estate entity but the profits there can come from the operational entity rather than from the real estate side uh you can shift those around U it gives you a little bit more flexibility to play with as as you're looking at those these are conversations strategies to have with the tax professional um to I I don't claim to know or understand all of them and they shift from time to time as as

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new rules come up um and then I mentioned liability protection really can help you out a lot there between the two different assets the business and the real estate so really helpful for that um let's get into depreciation stat strategy so depreciation is let's say you've got a a million doll home um and you you well let's see yeah let's just I'm going to try to keep math as simple as I can um let's just say that the the value let's there's there's a million

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dollars that that's available that needs to be depreciated okay so uh if it's a residential home you're going to take that million doll valuation you're going to divide it by 27 and a half and I'm not going to try to let's let's say that let's do this okay this will be easy let's say you have $227,500 um in in just assets that that are available you're going to depreciate that by 27 and a half years that means you're going to depreciate $1,000 per year with something that that values at

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27 and a half $227,000 $27,500 now if it's a commercial thing and you have the the assets there that are $39,000 over a 39 period that's $1,000 per year so that's that's a very super basic way so you can see how the math works but you're going to take whatever that value is um divided by the 27 a half for residential property 39 for a commercial and that's going to give you how much you can depreciate which means you're putting that number on your taxes to say hey I had a an asset and it's

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depreciated by x amount over that period of time um you put it in there as a um as a deduction on on your taxes okay there's also the chance to do bonus depreciation um there's also yeah bonus depreciation these could be deducting larger portions of FFN Furniture fixture and equipments um or other leasehold improvements so for us our our our our facility in Colorado we had a million dollar Grant we made a bunch of improvements to that now the money that we received for the grant was free it

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was you know here's a million dollars go go do this stuff make sure that you follow the rules of the grant make sure you're documenting everything get the receipts and and all of the things that go into that but as a for-profit organization getting a grant that is now taxable income is is what it counts as now some of that is income that comes in and it's going out for services that's different but we are doing a lease hold Improvement let's say we're upgrading our HVAC there's a certain depreciation

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schedule that happens for HVAC systems um and so you have to understand exactly what that's going to look like and the impact of that and could you do a bonus uh depreciation on that these are all strategies we're having conversations with our accountant about right now so anything that you are doing that's that's bigger bigger purchases you know you're buying all new furniture for the facility you're upgrading the HVAC system you're doing your sprinkler system um all of those things are going

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to be deductions when it comes to a TA comes to the taxes it comes to tax time um but they're going to have different depreciation schedules and so you need to understand what that's going to look like but there are some really good strategies there to either do a bonus depreciation and take all of it in year one versus hey you know what we spent $80,000 on our sprinkler system um and that is something that we can actually depreciate over a fiveyear period so I chose a a bad number 80 let just say

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it's a 100,000 for easy math $100,000 um in a sprinkler system and you're going to be able to depreciate it over five years that's five divided by 100 so it's $20,000 deduction in each year for the next five years so there are strategies and things around that again not a tax professional I'm giving you round numbers to make math work and and hopefully illustrate uh how some of this is going to impact you from a tax perspective there's also cost segregation um this is basically going

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to say um you know certain updates can be made uh to be able to have a shorter depreciation schedule so we talked about the 27 and a half or the 39y year there are ways to do a cost segregation and to accelerate that a little bit um over a shorter period of time so you can get um larger deductions this is really helpful for somebody that isn't necessarily going to do a Buy and Hold on a property so if you have the intent to sell it in three to five years a cost segregation might be something that that you would

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want to look at these are conversations for a professional something for each individual your situation you got to determine is it going to fit for me or not is it going to work for me or not and then you can move forward from there but these are all depreciation strategies and those deduction deductions can really help you out um to offset some of the um income that's coming in from the business um and and can really benefit you from that standpoint let's talk a little bit about some of the tax deductions that come so

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we talked a little bit about depreciation but there's also other tax deductions that you can do now that you're a small business owner so you've you've done your assisted living facilities and and this doesn't necessarily need to be the facility per se these could be things that you're doing um individually and and deductions that you're going to to qualify for and be able to use home office is is a great one um me owning businesses and operating remotely my home office is a

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deduction because I do a ton of I mean I turned the camera around but I have five screens over there um so for doing different types of work and I just have a very uh clean setup that works really well for the way that I like to to do things but my home office my YouTube Studio everything that I do here is kind of dedicated for that it's a dedicated space and so it would qualify for a home office deduction talk to your accountant about that um Staffing costs and payroll tax credits you're you have to pay

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people and so those are going to be there's going to be deductions in that as you're paying your your St for the services that they are rendering to to people so you have to make sure you have a really good software I use gust we're I have a link down below for that in YouTube um and make sure you go and use something like Gusto to help you out we actually have videos on Gusto on the channel um to really help you understand how to use payroll um super useful and having a good solid payroll system is

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going to help you track those numbers so you can get the deductions that you need at the end of the year medical equipment and supplies anything you've got to buy there um from that standpoint we buy medical supplies for our residents on a consistent basis to make sure they have the things that they need that we're fully stocked with with anything that that a resident might need um Mills and entertainment so if you are as a business owner you know we are we go up and do a trip up to Idaho or to Colorado

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for our facilities um the lodging and the Mills and and everything that kind of uh encompasses that trip it's a business trip so those are deductions marketing and advertising efforts that you're putting into to bring people into the facility Professional Services um you know working with a consultant um working me you working with me business deduction right um so there there's that um there is the um there's tax professionals there's attorneys any of the fees that you're paying there those

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are deductions because you you need that professional guidance uh from people vehicle donations as well so if you had an old van that you had been using for transportation you don't need it anymore you you donate it you know those types of things there are so many different deductions out there what I just touched on here is not even scratching the surface um so there's there's just a lot out there to help you make some progress as as you are looking to to move forward and uh one of the really big reasons to

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get into real estate to get into small business is the uh types and amount of deductions that are available to you um to offset a lot of what you're doing some people don't like it some people don't um they they think it's it's bad that that people are doing this but these are the games that are out there um it you look at politics and I don't want to get political but you look at one side and they say oh these tax benefits are are for billionaires when in reality they're billionaires that

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have benefited from um from these other tax breaks for decades any any ways they just they just want to say it so they can get um in with the people and it goes both ways um and and so that's something that you just have to be aware of that everybody know the people that are in the know the people that are in politics the people that are investing doesn't matter where they're at from a political standpoint they are benefiting they understand the rules of the game and they are playing it and so that's

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why you need to also understand these rules so that you can play the game with them and that's why you I cannot stress enough that you hire a good accountant that understands what you're working through um and help you kind of make some progress and do some tax planning and know how to take advant of some of these strategies to benefit you from a tax standpoint um it like it will the amount of money that you pay for a good accountant you will make that up um through the way that you are running

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your business so that that is what should happen just like me coaching you you should get 10x the value of what you pay for me to coach you whether it's the Launchpad the accelerator or The Mastermind program um you pay me I'm going to help you reach your goals and 10x off of everything that that you're investing in me that that's my goal if not more so that that's what my hope is for you that's that's what I'm here to help you do okay let's talk about retirement and some tax advantage

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investment strategies as well so these are ways that you can um put put money into tax sheltered um locations um put your funds into a tax sheltered location so that it doesn't have to get taxed again it doesn't have to be taxed multiple times can really benefit you out quite a bit um work with a retirement adviser work with your accountant understand what these are how they impact your taxes um so make sure you you do that but some that you should be aware of are a solo 401k or an SCP Ira um a they're going to

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help shelter more income from the taxes while you're saving for retirement you can put that money in you can pay taxes on it upfront you put it in there you don't have to pay taxes when you pull it out at the end of things um you can use it to invest um there there's a lot of incredible strategies out there around using IAS and 401ks to do investment strategies um not something I'm going to get into in this video but there's a lot of options out there that can really allow you to do that and keep that money

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in a spot where you don't have to pay the taxes on it which is nice HSA so Health Savings Account um is another great way so this is pre-tax dollars you say if you work uh and you have a high deductible insurance plan um your place of work may have an HSA a Health Savings Account option um when you do that what that's going to do is you're going to take that money you're GNA pay taxes on it and then you're GNA put it in uh into your HSA account so let's say it's $1,000 you have it taxed and so you get

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to keep $650 of it you're going to put that $650 now over into your HSA account and it will never get taxed again um and you you use it for um Healthcare expenses specifically but if you get to a certain amount in the HSA and I can't remember the the amount it's 2, 2500 or 5,000 somewhere in there between two2 and $5,000 um you can actually invest that you can go and and do stuff with that money just the money has to come back into it but you could buy real estate with it you could um buy Super Bowl

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tickets you could do art uh it just there there's rules around it you have to understand um so you don't want to get in trouble with it but there are ways to invest that money put it back in and grow your health savings account um just exponentially uh it's something that's actually pretty incredible which can help you when you are old enough where you're going to need assisted living and you could pay somebody you know 10 20 $30,000 a month who knows what it's going to be like in in 40

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years um but you'd be able to do that because you've invested in your HSA account and and this is an expense that goes towards that um real estate deferral strategies as well so you could do things like a 1031 exchange where you're where you don't you can kind of avoid some of those capital gains um taxes that are going to come if you sell something so there's there's other ways to do that there's so many different strategies out there there from an investment um from a retirement

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standpoint uh things that you should be looking at and getting familiar with as you're getting into this uh these are things that you are probably not thinking about because you're just so confused you're overwhelmed by I need to figure out how to get funding and I need to know how to um I need to know how to start like I I just don't even know how to build a foundation so if that's you and you don't know where to go you're probably not thinking about these things but Tax Strategies and and planning it's

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going to benefit you just so much if if you take the time to do that some other Advanced strategies could be uh creating doing an es Corp election so you start out with an LLC you transition that into an escorp there are some um advantages there to avoid some self-employment taxes but there's there's kind of a matrix that you want to look at um kkos Mark ker at kkos is he has incredible YouTube videos that kind of explain a lot of these Tax Strategies so encourage you to go watch him um he's great at

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doing it kind of funny fun guy to listen to talk he used to do boxing and stuff you he's he's fun guy um R&D tax credit so if you create something that's kind of innovative you have an Innovative process you're putting it out there there are tax credits that are out there for that as well um which which is kind of cool you develop a new a new process you can put those things out there um do you want to avoid common mistakes as well so you have to keep detailed records keep all your receipts you want

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to document everything you need to make sure you have all that just in case you get audited um misclassifying your employees as contractors can be a problem that's why using something like Gusto is going to benefit you a lot because you can assign them as W2 or 1099 tracks everything make sure they get the proper um documents their tracking time and everything it helps out a ton um and then failing to plan for any tax payment so if you have a large tax payment one year um things just that's just how it worked out and

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you haven't planned to make those tax payments that can really hinder your bill it could eventually shut your uh business down result in huge fines possibly even Jael time so you want to make sure you're avoiding that uh and so planning for those types of things can be beneficial for you as well so there's a lot of Advanced Tax Strategies that are out there I'm not going to cover all of them because they are going to be specific to you and and what you're trying to figure out in in your

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situation so there's a lot taxes can be dry uh they can they can be hard but they're such an important part of running a small business and something that you really need to grasp as you are trying to move forward uh something that you need to understand as you're trying to move things along and and move things forward and if you need some help and guidance on that um my accelerator program kind of goes through the process of how to launch an assisted living business from start to finish using my

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five-phase process in there we also talk about some of those those strategies about setting up entities why you would do that um contacts and things like that for how you can really move forward and take advantage of this so if you need some guidance on that would love to help you out go check out the accelerator program at Assisted Living investing. netal uh would love to have you there and and kind of Coach you and and teach you more than just this this little subsection of taxes and help you launch

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your Assisted Living business here in the next 12 months to help you reach that time of Financial Freedom that you're looking for so with that said want to remind you to like the video subscribe and ring the bell as well so you get notified every time we put out content um and you can ask questions we're going to get into our Q&A stuff right here um but just want to remind you make sure you do those things so you get um when we go live on Tuesdays when we are putting out our content on

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Thursdays when we're posting things on Facebook Instagram uh LinkedIn that you're getting all of those and if you go and grab the free business plan checklist you will get on our newsletter email as well so if you miss anything we will make sure we get it out to you blog um podcast uh videos we'll make sure we get that out to you in a uh nice little email at the at the beginning of the week so you can see what you missed last week would love to help you out with with that um and with that said let me

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shift over here and get into my mode of question asking um all right so shifted this around a little bit from last week hoping that we can pop things up in the right spot so um if there are any questions go ahead and type those in would love to help you get some of your questions answered and help you move things along uh I know there's quite a few of you in here we're just not getting any questions so um I'm going to go ahead and close that out I don't want to just sit here and talk about nothing

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uh while while you're doing that uh but want to thank you all for watching thanks for being here uh make sure you go and grab the the business business plan checklist Assisted Living investing. netb checklist would love to help you out and give you some guidance um there make sure you are taking the right steps as you're trying to launch your Assisted Living business and and make some progress uh towards reaching your investment goals um and okay my video was off I was wondering if my thing shut down but yeah want to thank

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you all for watching thanks for being here uh does residential Assisted Living sound interesting to you but you don't know how to get started at Assisted Living investing here to help beginners like you launch their Assisted Living business in the next 12 months I love helping and coaching people just like you to help you reach your goals and would love to be able to do that and and help you along and with that remember it doesn't take a lot just a little bit just keep going step by step by step and

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I promise you if you do and you're consistent and persistent you're going to be successful thanks for watching and have a great day