There will always be taxes, the OPs question was about one answer to reduce/avoid taxes. . There are several ways to avoid future taxes, ROTH IRA is one . . However a ROTH IRA does have a disadvantage over a large withdrawal to a standard taxable account, and tax planning is better done sooner rather than at realization that oops, I have new taxes that I didn't have while working.
Always look at taxes as a by product of investment/income success.. . and the management of taxes as an option to retain more of that success. . while working did you wake up one day and start looking for alternative investments once you went into a higher tax bracket?? most likely not. . Would you be better off if you didn't have the investment success so that you can have a lifestyle you want? definitely not. . And remember, at some point, the additional taxes won't impact your life style. .
Yes, we bought before the pandemic and was unable to move down, so we rented. We had some excellent renters, and then we had a couple of poor renters. There was alot of minor and some minor permanent damages everywhere. We were cash positive and tax loss carry forward for most of the time. except one year. However, the rentals were slowly drying up in the off season . . . biggest reason, was that many renters were looking for houses for sale, and the closer you are to new houses being built, the better the chances of more off season rentals.
So we have removed the house from the rental LLC, moving down within the next year, and will have to pay capital gains on the house sale when we sell, all depending upon the scenario in the future, how much, when etc. I don't mind paying them as they will be from proceeds, may be a very small percentage, don't know don't care at the moment. House value went from $365K to $500K, for $135K in cap gains over 5 years, so $13,500 in taxes for every 10% of capital gains tax, for a back of the envelope discussion number.
New tax law: yes, does have some more advantages for rental losses against current income, for LLC owners, small increase. The bigger increase is the offset for SS income for ROTH IRA or other conversions. But the tax offset is currently temporary, for three years, and so if you are going to do some ROTH conversions, then meet with your tax/financial planner, and get a plan in place..
Then you need a new financial investment plan for best how to diversify and invest your three investment accounts to best take advantage of building wealth due each of the three sources each having different tax rates and taxable events.
its a financial Rubik's cube for sure
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