Concentrated power has always been the enemy of liberty. - President Ronald Reagan

I don't want to be political, but I can feel a change in our Nation and it struck me how it applies to what I do for a living.  I have discovered Politics will never make you friends or clients - I will keep the political commentary brief.  Whether we like it or not, the society we live in is changing dramatically or at least our view of society is.  On the front page of USA Today, June 17^th, they noted a story about an agency that is being created by the current Administration from the Office of Consumer Finance.  The article stresses how consumers need financial protection; Big Business has made some major mistakes that have cost us all financially. 

For example, giving a credit card to every college student (90% of whom don't have jobs) was probably not Citibank's best move.  Every time I go to a Florida Gator football game and I see the credit card companies giving out a free Gator T-Shirt if you sign up for a card, I am amazed by the number of students and non-students lined up to get a free T-shirt.  Either they have no clothes or they are really hurting with the economy the way it is; that same shirt is $7 at the corner vendor. 

By creating this new department, what we are doing is saying that consumers don't need to think or take responsibility for their financial actions.  Uncle Sam will save them and the new department will only cost 100 Billion Dollars per year to run.  It would probably be cheaper to send the money to everyone that does not want to take responsibility for their financial actions.  As a society, we have decided that consumers don't want to read the fine print, so the Government will do it for them.  I am sure Former President Reagan turned over in his grave at thought of this new agency.  God rest his soul.

Government does not solve problems; it subsidizes them.  - President Ronald Reagan

One of the things our government has done right is to allow for Self-Directed Retirement Accounts.  The spirit of Former President Reagan lives in Self-Direction.  Self-Direction is independence, free thinking, control and most of all risk-taking.  This is your retirement and it is your responsibility.  

Self-Direction allows investors to buy alternative assets like real estate, private notes and mortgages, private LLCs, hedge funds, small community bank stock and gold.  What is more American than an investment in gold?  You can also buy more traditional assets like stocks and bonds with a Self-Directed IRA.  With Self-Direction you must do the research, read the fine print and decide what is best for you.

I think the government does not realize that most of us want to take risks; it is in our nature, we are Americans.  If some individuals don't want to read the fine print on their mutual fund statement and find out they are getting charged  an 8% load fee a year,  they need the suffer the consequences.  They do have options with Self-Direction.

Thank you President Reagan for your inspiration and the opportunity you gave us to think for ourselves and control our own lives.

Government's first duty is to protect the people, not run their lives. - President Ronald Reagan

 Dave Owens, CPA, CES is the managing member of Entrust Freedom.  Please feel free to contact him at 239-333-1031 or owens@entrustfreedom.com.

There was nothing better than being a Real Estate Flipper in 2004 and 2005.  The Flippers would buy a piece of property today and literally sell it for a 10, 20, 30% return in a matter of days, weeks or months.  These returns were unheard of in market history.  We should have all known.  The interesting things was, the Flippers were not a small group, there were thousands of these “investors” involved in transactions throughout the country.

Unfortunately if you were holding a property around mid 2006, your pumpkin came due and you turned in to a Flopper.  Floppers got upside down on properties.  Also many Floppers did not have the financial means to carry the properties resulting in the enormous foreclosure numbers we have today.

But do not despair; the Flippers are back in the 2009 real estate market.  Real Estate is making history again, this time for large price decrease.  Cookie cutter real estate developments throughout Florida have seen price decrease as much as 60%.  Markets in Las Vegas, Chicago, and California have seen similar price decrease.  It is to note prices in metro areas that actually produce jobs have not seen the huge price decrease as have the speculative or vacation areas. 

So here they come in full force, the Flippers are making their come back.  With depressed prices, investors are buying property from sellers that must get out at bargain prices.  The savvy investor can find tremendous deals. The nice part is that these properties have solid fundamentals that make investing a good move at these low prices.  Cash flows on rentals make sense again and investment ratios are inline to make decent returns.  With appreciation on the horizon, we see clients buying real estate in their Self Directed IRA.  Assets inside a Self Directed IRA are tax free when sold guaranteeing additional funds are available for the next investment, not paid away as taxes.

At the Lee County Court house in Florida, on average there are 10 foreclosure specialist on any given day, that number the last month has jumped to over a 100 investors bidding on properties.  The typical strategy of the foreclosure specialist was to buy the property so low and then quickly put it on the market for a price that was usually the lowest in a neighborhood to guarantee a quick sale.  There have been so many foreclosures flooding the courthouse that smart buyers have figured out the deals. The effect is that now that demand is up, prices are not at rock bottom levels the are increasing because of the competition at the foreclosure auction. We are starting to see the signs of prices leveling off and actually increasing because of the demand.

Flippers need to be smarter than last time.  The highest price was only price that was accepted for a Flipper to sell in 2005, now they are notching their price just below the market to guarantee a quick sale.  Flippers will always be around; this time there will be a lot less.  In parting, next time my barber or waiter tells me what they are flipping real estate; I will run home and make sure I that I am selling.

Dave Owens is a CPA that specializes in Self-Directed IRAs and 1031 exchanges.  Please feel free to call him at 239-333-1031 or email him at owens@1031company.com.

Guess who is making a comeback.  Other popular investments in Self-Dircted IRAs are private notes, LLCs, bank stock, managed commodities and even Gold.  Real Estate is flexing its muscle and growing in popularity daily.  The real estate boom of 2005 has cause maybe one of the greatest real estate depressions of all time. Real Estate is very affordable and now it is a great investment again.

Prices are dropping to levels not seen in 10 years.  In Southwest Florida, Gulf access canal homes, built in 2005, are selling for less than $150,000 and duplexes in Cape Coral are selling for $40,000.  These are great investment opportunities.

Add the stock market crash of the Fall 2008, investors are turning to Self-Directed IRAs and purchasing real estate to diversify and solidify their investments.

How does one get started purchasing real estate in an IRA?  Opening a Self-Directed IRA is easy.  Download the forms at www.entrustfreedom.com.  The application is three pages long.  Now that the account is open, the account must be funded.  Typically the most popular way to fund an IRA account is to transfer from an existing IRA account.  This transfer can take about 2 weeks. There are ways to speed this up if up if necessary. The other two ways fund an account is an annual contribution, or a rollover from a 401k. 

Now that the account is funded, you will need to find the investment.  It is important to know with Self-Directed Accounts, to make money, you must find investments, the administrator cannot sell you investments.  If you are working with a realtor, the contract for your real estate will be titled in the name of your Administrator, with our company it is Entrust Freedom for the benefit of John Doe IRA #12345 for example.  After the contract is accepted, Entrust will work with the closing agent to purchase the asset in the name of your retirement account.  Title will be the same as the contract.

All income and expenses associated with the real estate now belong to the IRA.  If rent is recieved it must be deposted to the IRA account.  All expenses must be paid by the IRA account, for example property taxes, and insurance.

The neat thing about Self Directed IRAs, All Real Estate can qualify to be purchased in an IRA.  The most common examples are rental properties including houses and condominiums, vacant land, commercial land, fixer uppers, and foreign properties.    If you dont have enough money in your account you can also purchase a percentage of the real estate as tenants in common with a partner purchasing the difference.

This is just a brief overview of Real Estate IRAs.  Please feel free to email me at mail@entrustfreedom.com or call me at 239.333.1031.  Have a great day!

I always get questions about what the hot investments are today?  Precious metals including gold are at the top of the list right now.  Many clients have told me that with the current spending of the federal government, inflation is a real concern.  Tangible assets like Gold and Real Estate become more valuable during inflationary times.  

Buying Gold in an IRA is easy.  Entrust has streamlined procedure to that make it easy.  The client is free to choose the storage location but many choose the Delaware Depository.  

If you would like more information on how to buy Gold or other precious metals in your IRA, please send me an email or call and I would glad to forward you some information.

Dave Owens, CPA, CES, is the managing member of Entrust Freedom, LLC and can be contacted at owens@entrustfreedom.com or 239-333-1031.  The Entrust Group is an national administrator of Self Directed Retirement Plans.

Now that Bernie is in the poky and we all feel a lot safer, how do investors treat their losses for tax purposes.  The IRS has recently released two Revenue Rulings to help.  This ruling applies to all “ponzi” losses not just Bernie’s mess. 

The IRS released Rev. Rul. 2009-9 addressing the tax treatment of "Ponzi" scheme losses, and Rev. Proc. 2009-20 which provides safe harbor options for deducting these losses. This is a safe harbor rule, which mean it is not law just guidance.  The guidance is welcome relief to the thousands of investors who have lost money in the Bernard Madoff scandal and others who have incurred similar Ponzi scheme losses.

The revenue ruling states that the losses are considered theft losses not subject to casualty loss limitations under §165(h) or the itemized deduction limits under §67 and §68. The rulings will allow the losses against ordinary income and goes so fare that it even allows an NOL generated by Ponzi losses to be treated as sole proprietorship losses potentially eligible to be carried back 3, 4, or 5 years under the business tax breaks enacted by the American Recovery and Reinvestment Act of 2009.  This is good news that the losses are not treated as capital losses because they would only be eligible for a maximum deduction of $3,000 a years until the losses are used up.

The safe harbor options under Rev. Proc. 2009-20 allow a 95% deductible loss for investors with no potential third-party recovery or a 75% deductible loss for investors with potential third-party recoveries. The investor may have additional losses or income in later years depending on actual recoveries. The returns in those years would reflect the actual loss and be reported accordingly.

This ruling my also apply to the 1031 exchange industry where several qualified intermediary companies lost client’s proceeds while held in escrow.   

Dave Owens, CPA, CES, is the managing member of Entrust Freedom, LLC and can be contacted at owens@entrustfreedom.com or 239-333-1031.  The Entrust Group is an national administrator of Self Directed Retirement Plans.

As we all know last fall thousands of banks rushed out for Tarp Money.  Unfortunately for them the rules on what to do with it were not clear and the Federal Government have change rules as the months have passed.  While it might have been cheap money, many banks found out they either did not need it or did not want it once the rules had changed.

Last week there were a slew of banks that wanted to pay the TARP money back.  The money was not free at a minimum the banks had to pay 5% for the money.  They have found in this economy making 5% can be difficult.  So as the bank prepared to give the money back, as of this blog, March 16, 2009, they found out that they cannot just give the money back.  Northern Trust took 1.6 Billion in Tarp funds and now the US Treasury will not just accept it back.  Talk about a prepayment penalty?

The  dally interest expense for Northern Trust is approximately $219,000 per day!  What a great deal for Uncle Sam!  While the idea of TARP can be debated until the cows come home, will someone at the top wake up fixed this problem ASAP.  In one week since Northern Trust has tried to "give" the money back, it has cost them over $1,400,000 in Interest Expense. Tick...Tick... Tick...  Did you know that if the banks pay income tax at the rate of 35% (which I would assume Northern Trust does), the federal government has just lost $536,000+ in tax revenue this week, by not allowing Northern Trust to repay the Tarp Loans. 

It is not all bad news for the government because they get the money one way or another, taxes or interest?  While TARP may not been the best idea, the US Treasury loaned out $350 Billion.  If my math is right at 5% interest, $1.4 Billion a month in Interest income is paid to the government.  TARP may be the best revenue raiser we have?

Who does not want our Country's economy to recover as soon as possible?  But typical government bureaucracy that will not let the bank repay these loans is just WRONG? TARP - Love it or hate, we are living it..

Dave Owens, CPA, CES, is managing member of Entrust Freedom, Entrust is the largest self-direct administrator in the United States.  To contact Dave please feel free to email him at owens@entrustfreedom.com or call him at 239-333-1031 x203.

The nice thing about Self Directed IRAs is that you can buy almost any type of asset.  Most Self Directed Administrators (the ones that I know)  specialize in Nontraditional Assets (Real Estate, Notes, LLC and other private investments).  For the first time, we have seen a unique trend.  In the last month, we have had an influx of client leave their money managers and move the stock and bond investments to a Self-Directed Account.  With a self directed retirement account you have complete control.

Suprisingly the reasoning was all the same, they were two fold, first of all with the market at record lows and many losing money, most investors believe that at these price, they can make as good decisions as their money managers and buy their own stocks (and to be honest, they dont have to pay the 1% fee to the broker) Second, a lot of Self Directed Investors are control freaks, and they all want to consolidate and hold their money in one retirement account.

At Entrust we hold our brokerage accounts typically in this manner, Entrust as Administrator will open a discount brokerage account for the client (clients choice).  We will move the client cash in to the account as directed, and then give the client full trading authority.  The client can buy and trade online with their account.  If the client has stocks or mutual funds that they currently own do not want to sell we, there are certain discount brokers that will allow us to transfer securities inkind, so the client can keep the same lot.

If you would like more information on how to open a brokerage account in a Self Directred IRA, please feel free call me at 239-333-1031 or email me at owens@entrustfreedom.com.  Have a great day.

Dave Owens, CPA, CES is the managing member of Entrust Freedom.

The numbers are staggering on how many Americans have lost their job in the last year.  The Department of labor reported 2.6 Million; the ripple effect will be felt for years.  The question is asked, what happened to your 401k, who is watching that money.  A CBS News study reported that more thany half of the displaced workers leave their money in control of their former company.   There are options for displaced workers.   Use this opportunity to reevaluate make the best of the situation.

Unfortunately most 401ks have a canned set of mutual funds to invest in with few alternatives. 

Option 1 – Take Control and move your money to a Self Directed IRA.  Workers that have been laid off can perform a 401k rollover.  This is a nontaxable event.  Choose a company with unlimited options and low fees.  Entrust is the largest Self-Directed Office in the United States.  It is important to know that 401k rollovers should be segregated and not moved to an existing IRA.  

Option 2 – Leave the Money in the account – This employer has  just asked you to leave and you are going to leave them with one of your largest financial assets.  While this might sound like a bad idea, you will be shocked how many people do this.  I am always amazed when I talk to clients about where their retirement money is located and they will tell me they left a job several years ago and have not looked at it since.  Please do option 1.  Don’t leave the fox in charge of the hen house.

Option 3 – Take the Cash, - Bad Idea.  If you cash out your plan, the IRS will withhold 20% for federal taxes and you could be subject to a 10% penalty for early withdrawal if you are under 59 ½.  Plus there could be state tax consequences.  Unless you are in dire straits, please consult your tax advisor before going this route so you know all the tax ramifications. 

Option 4 – Move it to your new jobs 401k – This IS not a bad if your new employer has a good plan.  While this is not a bad idea, you will still be limited to the choices that the plan offers.  Most standard 401ks will not allow you to self directed and there will only be a family of mutual funds to choose.  Be sure to ask if there is a provision in the plan that will allow you to Self Directed part of your retirement assets.

These are serious choices.  When you leave employment, just as you will be proactive in looking for a new job, you need to be proactive in taking control of your retirement assets.  Spend that extra time and contact the trustee of your former employer and take control with a Self Directed IRA.

Dave Owens is a CPA that specializes in retirement taxes and 1031 exchanges.  Please feel free to call him at 239-333-1031 or email him at owens@1031company.com.

Whether you believe it or not, Real Estate is the catalyst that drives our economy. Where I live in Southwest Florida, real estate is going gang busters again in terms of sales.  This is good for a struggling economy, because new home purchase require new furniture and more importantly repairs and remodeling which will help invigorate the battered building industry.

For investment real estate now is the time buy, the prices accurately reflect the going rents and properties can cash flow nicely again.  It continues to be a buyer's market no matter how you find d these properties via short sales or just great deals.  Unfortunately there are many displaced families that need rentals, this will fill vacancy and keep the rental market strong.  This trend will continue throughout the country. 

The hidden gems that I am surprised more investor have not embraced are forecloses and the purchase of tax certificates.  Investors know that the money is made on the purchase of the asset.  With Foreclosures real estate can be purchased on fraction of their original value and with the glut of foreclosure sales that has never been more true.  Tax Certificates in Florida are also the rage again.  After years no availability and low returns there are more certificates than buyers in many Florida counties.  Tax certificates can have returns as high as 18%. 

So how do get the capital for these great real estate deals.  The answer is easier than we know.  Self Direction is the up untapped gem of current economy.  Diversification of your portfolio is more critical than ever.  Diversification does not mean just various mutual funds, it now includes real estate, private stocks, and private LLCs.  Self Directed Retirement accounts give individuals the opportunity to control their retirement funds and have unlimited options.  Millions of dollars are sitting on the sidelines in IRA funds looking to find suitable investments. For more information on Self Direction go to the nation's largest Self Directed Administration,  Entrust's website at www.theentrustgroup.com.

If you would like more information on any of the information presented, please feel free to email me and I will get you more information.

Dave Owens, CPA is a specialist in real estate taxation.  He can be reached at 239-333-1031 or email at him do2009@1031company.com.

In our changing economic times it is more important than ever to focus on our retirement planning and financial futures.  For most of us, we have never seen the wild ride that the financial markets have shown us the last few months.  Just as we check our calories, blood pressure and weight on a regular basis, how are we doing with our finances?   It may be time for a routine check-up.

Studies have shown us the average American spends more time annually on vacation planning than on financial planning.  There was also a survey by Aetna claiming 31 percent of pre-retirees would rather clean their bathroom or pay bills than plan for retirement.  Allstate used to have an ad that claimed Last year Americans spent 19 hours planning for their retirement. That’s about the same amount of time they spent planning their Thanksgiving dinner. 

So how do we get started and what are our choices today?  Unfortunately retirement planning is not something the faint of heart can jump right into, but it can be done and with a little practice, and does get easier.  Here are some tips,

1.        Set time aside, I have heard many workers and retirees say over the last few month, “I don’t even want to look at my brokerage statement”.  This attitude will not help, if there was ever a time to face the facts and planning was needed, it is now.  Set time aside every month when you reconcile the bank statement to look at your investments.

2.       If you cannot do financial planning look to hire a reputable local financial planner.  Financial Planners can sing their accolades but would any one recommend them.  If you like to keep your finger of the pulse, hire a fee based financial planner.  A fee based planner is paid for work he/she does and not percentage of your portfolio.  If you don’t like to do any planning, consider hiring a Trust company that will be more accountable to your needs.

3.       Do some of planning yourself, with the internet today information is easier than ever.  Most mutual funds are rated online and can easily be compared.  There is always something you can do to help your retirement accounts.  Let’s talk about buying certificates of deposits(CDs), take the time to call the local banks and find out where the rates are going.  I will give you a tip, look at the successful local banks, typical they are growing,  they need capital and will pay the higher rates.

4.       Focus on the many choices available.  The saying could never be truer.  Diversify, Diversify, And Diversify.  If you need a fixed income, don’t put all your money in one bond fund, pick numerous funds and some bank CDs.  There are more investment choices than ever.  Self-Directed Retirement accounts are the greatest way to diversify.

As with any physical fitness planner, it takes a little extra work and time.  Why not become a Control Freak with your retirement.  One of the best opportunities in financial planning is a Self-Directed IRA.  Have you heard of Self-Direction?  Self-Direction is all about control and you making the best choices for your retirement.   This type of account not only lets you control the investments but allows you to have unlimited choices.  Stock brokers usually will only let you buy stock, bonds and mutual funds.  With a Self-Directed Administrator, you can choices stocks and bonds, plus real estate, private notes and mortgages, LLC, nonpublic stock; the list is endless.  If you are a control freak, and you used to own rental homes, now you can buy them in your IRA account.  Did you know that you can get a higher return on your investments by loaning money from your IRA?  The interest is tax free to the account and the rates are usually higher than bank rates.  Many Control Freaks invest in private bank stocks.  Investors like these stocks because banks are highly regulated and including the dividends can great returns.  The list is endless with Self-Direction in what you can invest in.  There are 5 national Self Directed Companies with Entrust being the largest.  If you are looking for the ultimate diversification become a Control Freak and learn about Self Direction.

As we all head in to unchartered waters in the next few years with our financial futures, now is the time to be proactive and look for opportunities.  The small steps we make to today will make big changes in the coming years.  So next month when you get ready to check your weight, cholesterol and blood pressure spend an extra hour, reconciling bank account and looking at every investment you have.  Now is the time to take control.

Dave Owens is a Certified Public Accountant in Southwest Florida that specializes in Individual Retirement Accounts.  Dave can be reached at owens@1031company.com or 239-333-1031.