Attention, Diligence, And Experience – The Courage Miller Pillars

on July 24, 2018 Comments Off on Attention, Diligence, And Experience – The Courage Miller Pillars

When we started our business, we had a goal, to provide our clients the service they need with a singular focus on them, not on any products or external motives. We believe we accomplish that goal like this:

  • Attention – We believe that a partnership requires open communication about the details of your life that makes your story unique.  To truly understand the dreams and goals of our clients, we must be dedicated and focused on listening to your story.
  • Diligence – Our foundation in service is built upon delivery of services based on your needs.  Hard work is at the core of everything we do. We pride ourselves on our dedication to service, and we strive everyday to embody the motto of our founders’ alma mater, Virginia Tech, “Ut Prosim” – That I may serve.
  • Experience – We have been honored over the years to serve clients with their diverse financial needs. We work with families and individuals on their personal finances, foundations and trusts on their institutional investments, and small businesses on their retirement plan needs.  We strive to build trusted relationships, so that you are able to focus on things that are more important to you such as your family and career.

So, whether you’re looking for help in a fiduciary role, retirement planning, financial planning, or any other of the services that we provide, our team is here to help you and give you the attention, diligence and experience that you need to help you accomplish your goals.

CLICK HERE TO CONTACT COURAGE MILLER

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Jase TeamAttention, Diligence, And Experience – The Courage Miller Pillars

Should I Pay My House Off Early?

on November 21, 2017 Comments Off on Should I Pay My House Off Early?

In today’s financial climate, there are many different options and strategies that can result in personal success. Often times when we hear of a new strategy or trend, there are often as many “cons” as there are “pros”. That’s not to say that you should or should not try a new strategy, it’s just to say that you should do your research and best see how that strategy would benefit you.

In that vein, one question we get asked often is, “Should I pay off my house early?”

Our advice would not be to pay your home off early or don’t pay your home off early.  Since mortgage loans are amortized with interest being front loaded because mortgages have an equal payment for the life of the loan, it is important to understand where you are on the spectrum of the loan.  If you have already paid a significant portion of the interest, it may be more beneficial to direct extra money into a savings account.  If you still have a significant amount of time on the loan, it can make sense to get principal paid down to alleviate the significant interest burden that exists on long loans.

Additionally, if you are in a high tax bracket, some of the interest burden is offset with a tax deduction.  For the highest earners, this can be very favorable because a federal bracket of 33% or higher means that this is a deduction that needs to be considered for taxes.

Rarely do we view finances as purely black and white.  Our goal is to help families make better financial decisions based on their personal situation through analysis.

If you’re interested in learning more about how Courage Miller Partners can help you, contact us today!

CLICK HERE TO CONTACT COURAGE MILLER

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Jase TeamShould I Pay My House Off Early?

The Courage Miller Difference

on September 25, 2017 Comments Off on The Courage Miller Difference

Financial planning, retirement planning, investment advice, whatever the reason that brings you to us, there’s a distinctive reason for why we are different than our competitors. We value your success. It’s why we established our company as an independent fee only company. We eliminated the conflict that arises when commissions are made on certain products or services, so that we can focus on you.

Our business strategy and relationship with you is founded on four major principles: honesty, transparency, dependability, and continuous improvement.

To find out more about what makes us different, contact us today. We’d love to talk with you.

CLICK HERE TO CONTACT COURAGE MILLER

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Jase TeamThe Courage Miller Difference

5 things to consider about investing your IRA in Real Estate

on January 7, 2016 Comments Off on 5 things to consider about investing your IRA in Real Estate

For so many, retirement account assets comprise the bulk of their savings. As a result, there is always interest in understanding options for investments using those retirement funds. There are many traditional investment options such as real estate investment trusts, mutual funds, ETFs, bonds and stock for publicly traded companies. Recently though there has been an increased interest in real properties such as rental properties as an investment option within an IRA. As a result, I wanted to provide some information on items that should be considered when thinking about purchasing real estate in an IRA:

Prohibited Transactions – The IRS maintains strict guidelines on what is considered a prohibited transaction within an IRA.

  1.  You may not borrow money from your IRA – Some have heard that you can borrow money from your retirement. This is partially true. While you are able to borrow money from a 401K plan if the plan allows it, you are not able to borrow from an IRA. In a 401K plan, you can borrow up to 50% of the balance of the account or $50,000 whichever is less.
  2. Sell property to the IRA – you and any member of your family are not allowed to engage in a transaction to sell property to the IRA.
  3. Secure a loan with it – you cannot use an IRA as a form of collateral for a loan.
  4. Purchase property for personal use – while purchasing real estate and other forms of property is allowed, the property cannot be intended for personal use. For example, you cannot purchase a vacation home with an IRA, as the purpose of the property would be for your family to use on vacation. You could however purchase an investment property.

Leveraged Purchase – The best option is to have a large enough balance for a cash purchase. I say this because while lending options are available the prevailing rates and fees are going to be higher than traditional mortgages. Why? Lending to an IRA is a very specialized loan. These loans are riskier for the banks because there is no recourse other than the property used for collateral. The loan is made directly to the IRA, and the beneficiary of the IRA is not at risk personally. As a result of the increased risk, these loans have higher down payment requirements. In some instances, the lender may require as much as 50% of the value of the property. The lenders might also require a reserve in the IRA to cover the mortgage payment if the property is vacant for a period of time.

Custody – In a traditional purchase, the property is deeded to you or a business as the owner. Because the purchase of the real estate is made within an IRA, the formal deeded owner of the property is the IRA. As a result a custodian must be willing to hold the real estate property as an asset within the IRA for your benefit. Because IRAs have specific IRS rules as a retirement plan, a custodian is required to track all the activities of the IRA. The custodian has a responsibility to report or track activities such as contributions and distributions. The problem with a real estate purchase in an IRA is that traditional institutions such as Charles Schwab or Fidelity will not take responsibility for the tracking and providing the services necessary to facilitate the transaction. The good news is that there are custodians that will hold these assets, but you will want to research them carefully before choosing one to use. In my research, I found both Equity Trust and Millennium Trust will provide the services for real estate purchases.

Taxes – In a traditional real estate investment, depreciation on the property’s structure is a great benefit. The depreciation offers a deduction on your taxes to reduce your tax burden given the income stream generated by the investment property. Because the IRA is tax sheltered and is the owner of the asset, there is no tax benefit for depreciating the asset. Fortunately, this also works in your favor. Any cash flow generated from the property is paid directly to the IRA and not taxed as income. Taxes will be paid in the future when distributions are done from the IRA.
Another tax consideration is unrelated business income. According to the IRS, an activity is identified as Unrelated Business Income if it meets three requirements.

  1. It is a trade or business,
  2. It is regularly carried on, and
  3. It is not substantially related to furthering the exempt purpose of the organization.

The IRS does identify certain activities that are exceptions to this rule. Specifically, rental income and gains or losses from the disposition of property are listed as excluded activities.

Maintenance and Improvements – Since the property is formally owned by the IRA, all maintenance and improvements need to be made with capital available in the IRA. It is important to maintain a cash reserve to insure that immediate maintenance needs can be addressed. Since there is an annual contribution limit imposed for IRAs, you are not able to quickly add capital for use to maintain the property. Planning for unseen events is critical.
While real property is a potential option for investing in your IRA, you should carefully consider all the implications. The goal of these considerations is to begin the process of thinking through what should be addressed, but it does encompass all aspects that must be reviewed. I highly recommend seeking guidance from a professional for your personal situation before making an investment that potentially risks the tax exempt status of the entire IRA.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this article, will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this article serves as the receipt of, or as a substitute for, personalized investment advice from Courage Miller Partners, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Any links to outside organizations or information is not an endorsement of their products or services. A copy of our current written disclosure statement discussing our advisory services and fees is available for review upon request.

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Jeffrey Miller5 things to consider about investing your IRA in Real Estate