How you ask? Work an extra 7 hours a day? Not even close. It requires no extra work, its all in how you record and file your taxes. It all has to do with Timber Tax law. Using timber tax laws to your advantage lets income and expenses move from the realm of partnership or self employment income to long term capital gains income. If you aren't a tax geek that may mean little, so let me translate...depending on your tax brackets for income tax you can save 30 percent tax on every dollar moved between these kinds of transactions. There are plenty of 'what ifs' but it should be at least 15% saved by not having to pay schedule SE taxes.
There are a couple of things that need to get done to make this happen and they include:
- Having an accountant or tax preparer that knows what a Form T is and a timber basis is
- Having a timber inventory prepared by a forester to calculate timber basis
- Having good book keeping records of expenses, transaction dates and time spent on site as a landowner
We are certainly able to help on the forester, book keeper, accountant and tax preparer parts. That is the kind of work we do here at Windigo. Get in touch with Avery to find out how we can get you in good shape to take advantage of these savings . Also go ahead and read up some more on Timber Tax if you are still curious about the subject at http://www.timbertax.org/
* Disclaimer, this is not tax advice. I am a forester, not an accountant. CPAs are accountants and so are Enrolled agents.