Tax Planning for Investments

Think the new $40,000 SALT cap solved your tax problem? Think again. For high-income business owners, the real solution is still the Pass-Through Entity Tax (PTET). Here’s why PTET remains the smarter play even with the higher cap: 1)The $40K SALT cap phases out fast: If your income exceeds $500K (joint), the cap quickly shrinks, often back to the $10K minimum. For high earners, the benefit is minimal or nonexistent. 2) PTET stays fully deductible: The OBBBA did not touch PTET. State income tax paid at the entity level is still fully deductible on the federal return, and that benefit flows to owners regardless of itemizing. 3)Works even if you don’t itemize: Since PTET is deducted before income passes through, you get the federal benefit no matter what. 4)Predictability matters: The $40K cap is temporary (2025 to 2029). PTET remains steady and reliable for long-term planning. 5)State rules differ: PTET elections vary, so you must coordinate with your CPA and review annually. For most high-earning pass-through owners, PTET still delivers far more reliable savings than the new SALT cap ever will. 📌 Bottom line: The SALT expansion helps some, but for high earners with large state tax bills, PTET continues to be the stronger strategy.

Most Family Offices don’t lose wealth by making poor investment decisions—they lose it through inefficiencies. Taxes, fees, and outdated structures quietly erode returns, often without investors realizing it. The most sophisticated Family Offices have figured this out. Instead of focusing solely on higher returns, they prioritize something far more impactful: Structural Alpha. This isn’t about choosing the best hedge fund or private equity deal. Structural Alpha is about optimizing how investments are structured to maximize after-tax returns and eliminate inefficiencies. It’s a way to achieve stronger outcomes not by taking on additional risk but by being more strategic about how capital is deployed. A prime example is Private Placement Life Insurance (PPLI), a tax-efficient structure that allows Family Offices to significantly reduce the tax burden on investments like credit funds. Without it, returns on a credit strategy might shrink from ten percent to seven percent after taxes. With PPLI, those gains can be preserved for a fraction of the cost. Another example is tax-aware investing. Tax-loss harvesting extends far beyond its original application, allowing Family Offices to structure portfolios in a way that minimizes tax liabilities without compromising performance. For Family Offices, this isn’t just an advantage—it’s an essential approach to wealth management. Family Offices exist to preserve and grow generational wealth, yet many still operate within traditional investment frameworks that leave money on the table. By integrating Structural Alpha strategies, they can improve after-tax returns without taking on unnecessary risk, reduce compounding inefficiencies, and ensure long-term capital preservation through smarter structuring. The most forward-thinking Family Offices aren’t just searching for strong investments—they’re refining how they invest. Structural Alpha isn’t a trend; it’s a shift in approach that separates those who quietly optimize their wealth from those who unknowingly give a portion of it away.

Hot off the press from the CRA: “Although these proposed changes are subject to parliamentary approval, consistent with standard practice, the CRA is administering the changes to the capital gains inclusion rate effective June 25, 2024, based on the proposals included in the NWMM tabled September 23, 2024. For all taxpayers, the new inclusion rate will apply to capital gains realized on or after June 25, 2024. Impacted forms for individuals, trusts, and corporations are expected to be on Canada.ca as of January 31, 2025. Arrears interest and penalty relief, if applicable, will be provided for those corporations and trusts impacted by these changes that have a filing due date on or before March 3, 2025. The interest relief will expire on March 3, 2025. More information will be made available in the coming weeks.” Not surprising but disappointing. In my view, advisors need to “read the room”, follow the continuing politics and advise their clients appropriately. There is a high probability that these proposals are never passed. If so, then this policy by the CRA will be cumbersome to reverse. https://lnkd.in/gDXWsnzt

The IHT changes to pensions announced in yesterday’s Budget are seismic, and it will affect many UK families, not just super high earners with enormous pension pots. 🥺 Most ‘working people’ have for some time built up their pensions pots through risk and fund based defined contribution plans. 📈 (Unlike the public sector that enjoy “gold-plated” defined benefit schemes which provide a guaranteed, index-linked income for life in retirement.) 🌟 To recap, if you die with any pension pot left, then it will be subject to IHT. This is regardless of whether you die before or after 75 years of age. 😟 Your pension trustees will be expected within 6 months of your death to calculate the IHT and pay it to HMRC. What’s left after that can be paid to your successors, but if you were over 75 years old at death, they will also be subject to income tax. 😱 Let’s take a £2m pension pot (assume nil rate band used up already), so that’s £800k in IHT, leaving £1.2m to pay to your heirs. They will pay 45% income tax, a further liability of £540k, meaning that your heirs are left with only £660k from a £2m fund. That’s an effective rate of tax of 67%!!! 😫 However, let’s also take a £500k pension pot (assume nil rate band used up already), so that’s £200k in IHT, leaving £300k to pay to your heirs. They will pay up to 45% income tax, a further liability of £135k, meaning that your heirs are left with only £165k from a £500k fund. That’s also an effective rate of tax of 67%!!! 😫 However, the 25% tax-free cash allowance remains, and I expect to see many using this element as an effective estate planning strategy moving forwards in an attempt to remove it from the 40% IHT tax charge. 😊 Sensible and robust pension advice has never been more important. 👍 #budget2024 #pensions #tax #iht #advicealpha #sjpwealth

Most high-income professionals overpay in taxes not by a little, but by hundreds of thousands of dollars. And the worst part? Most of them don’t even realize it’s happening I recently worked with an executive who was unknowingly missing out on over $500,000 in potential tax savings. Like many high-income professionals, she assumed her CPA was handling everything. But here’s the problem: 🚫 Most CPAs think backwards, not forwards. They file taxes based on what already happened. 🚫 They don’t integrate financial planning, investments, and tax strategy. 🚫 Some of them miss opportunities that can save you money long-term. How We Fixed It & Saved Her Over $500K ✅ 1. The HSA Strategy – $20K+ in Lifetime Tax Savings She had access to an HSA (Health Savings Account) but wasn’t using it. Why does this matter? 👉🏾HSA contributions are tax-deductible. 👉🏾The money grows tax-free. 👉🏾Withdrawals for medical expenses are tax-free. By fully funding it every year, she’ll save $20,000+ in taxes over her lifetime. But here’s the kicker: we also helped her invest it properly so the account grows instead of just sitting in cash. ✅ 2. The Roth Conversion Strategy – $500K+ in Tax-Free Growth She was anticipating losing her job and had multiple old retirement accounts just sitting there. Instead of letting those accounts stagnate, we saw an opportunity: 👉🏾She was having a low-income year, which meant she could convert $100,000 into a Roth IRA at a lower tax rate. 👉🏾That $100K will now grow tax-free—meaning if it reaches $600K or $700K in retirement, she’ll never pay a cent in taxes on that money. ✅ 3. The Bonus Strategy – Tax-Loss Harvesting We also helped her offset investment gains using tax-loss harvesting, a strategy that allows you to sell underperforming investments and use the losses to reduce your tax bill. By combining these strategies, we helped her: 💰 Save $20K+ in taxes on HSA contributions 💰 Unlock $500K+ of future tax-free income through Roth conversions 💰 Offset capital gains and lower her tax bill through tax-loss harvesting And she almost missed out on all of this because she assumed her CPA was handling everything. If you’re making multiple six figures, but you aren’t actively planning your tax strategy, you’re leaving money on the table plain and simple. The best financial strategies aren’t about making more money they’re about keeping more of what you earn. If you want to see where you might be overpaying, shoot me a message. Let’s make sure you’re taking advantage of every opportunity. P.S See the look on my face…don’t make me have to give you that look because you’re paying more than your fair share in taxes. 😂

Two people. Completely different incomes. But similar investment outcomes?!? 𝗣𝗲𝗿𝘀𝗼𝗻 𝗔 – 𝗛𝗶𝗴𝗵 𝗲𝗮𝗿𝗻𝗲𝗿, 𝗘𝗧𝗙 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝘆 • Gross income: 250.000 € • Net income: ~12.000 €/month • Invests 10% of net → 1.200 €/month into an ETF • Plus: 22.200 € lump sum at the start (same as Person B’s purchase costs) • Assumed ETF return: 10% p.a (optimistic). After 10 years: • Total paid in: • 22.200 € upfront • 1.200 € × 120 months = 144.000 € • → 166.200 € cash in • Portfolio before tax: ≈ 299.000 € • Gain: ≈ 133.000 € After 25% + Soli on the gains (~26%): • 👉 Net profit after tax: ~98.000 € Strong result. Until you meet Person B. 𝗣𝗲𝗿𝘀𝗼𝗻 𝗕 – “𝗡𝗼𝗿𝗺𝗮𝗹” 𝗲𝗮𝗿𝗻𝗲𝗿, 𝘁𝗮𝘅-𝗼𝗽𝘁𝗶𝗺𝗶𝘀𝗲𝗱 𝗿𝗲𝗮𝗹 𝗲𝘀𝘁𝗮𝘁𝗲 • Gross income: 80.000 € • Net income: ~4.000 €/month • Also invests 10% of net – but into an investment property • Buys a 250.000 € new-build in Brandenburg • 100% financed, mixed interest ~3,2% • Upfront purchase costs (notary, tax, fees): 22.200 € (paid at the start) • The property qualifies for double depreciation: • 5% degressive AfA • + 5% Sonder-AfA (§7b EStG) Calculator assumptions: • Property price growth: 3% p.a. • Rent growth: 3% p.a. • Marginal tax: ~41–42% From the calculator over 10 years: + 85.979 € appreciation + 47.765 € tax savings from depreciation – 28.599 € operational result This –28.599 € is the sum of all yearly cashflows (rent – mortgage -maintenance) and the upfront costs. In other words, over 10 years, Person B has to top up ~6.399 € from salary to carry the property – that’s their “10% of net” at work ➡️ Total profit (property side): 105.145 € And total cash out-of-pocket is: 22.200 € upfront purchase costs 6.399 € cumulative top-ups → ≈ 28.599 € paid in over 10 years So the deal for Person B is roughly: Cash in: ~28.599 € Wealth created via property: 105.145 € 👉 They more than trippled their money. IRR: ~19,9% p.a. Side-by-side Person A (250K salary, ETFs) Cash in: 166.200 € 𝗡𝗲𝘁 𝗽𝗿𝗼𝗳𝗶𝘁 𝗮𝗳𝘁𝗲𝗿 𝘁𝗮𝘅: ~𝟵𝟵.𝟬𝟬𝟬 € Person B (80K salary, new-build rental) Cash in: ~28.599 € 𝗡𝗲𝘁 𝗽𝗿𝗼𝗳𝗶𝘁 (𝗳𝗿𝗼𝗺 𝗰𝗮𝗹𝗰𝘂𝗹𝗮𝘁𝗼𝗿): 𝟭𝟬𝟱.𝟭𝟰𝟱 € Lower income. Same 22.200 € at the start. Same idea of “I invest 10% of my net every month”. Higher absolute profit due to leverage and German tax rules. What this actually shows: 1️⃣ It’s not just how much you earn – it’s where you steer your 10%. 2️⃣ Tax savings can be more powerful than a higher salary. 3️⃣ A clean, tax-optimised real estate setup can beat a high earner’s ETF 4️⃣ Doing nothing with your savings is the most expensive strategy of all. Don't get me wrong, I love ETFs as well, but most people forget that during a crisis, ETFs can slide 55% in a given year. The optimal strategy is a combination of both, typically starting with a property and then investing the excess returns into ETFs.

What is Indexation?? In the latest Budget 2024, the Government of India made a significant change regarding the taxation of property sales. Previously, when someone sold a property, they could use a method called "indexation" to adjust the purchase price based on inflation. This adjustment helped reduce the amount of capital gains (profit) that was taxable. What Changed? In the new budget, the Finance Minister announced that this indexation benefit has been removed for real estate assets. This means that when you sell your property, you will no longer be able to adjust the purchase price to account for inflation. As a result, the taxable capital gain (the profit you make from selling the property) will be higher, leading to a higher tax bill. New Tax Rate To somewhat balance this change, the government has reduced the long-term capital gains (LTCG) tax rate on property sales from 20% to 12.5%. However, even with the lower tax rate, most property owners will end up paying more tax because they can't adjust the purchase price for inflation anymore. Let's say you bought a property for ₹50 lakhs several years ago and now you sell it for ₹70 lakhs. Old System (with indexation): Adjusted purchase price (after indexation): ₹64.82 lakhs Capital gain: ₹70 lakhs - ₹64.82 lakhs = ₹5.18 lakhs Tax at 20%: ₹1.04 lakhs New System (without indexation): Purchase price: ₹50 lakhs Capital gain: ₹70 lakhs - ₹50 lakhs = ₹20 lakhs Tax at 12.5%: ₹2.50 lakhs As you can see, under the new system, you would pay significantly more tax despite the lower tax rate because the capital gain is much higher when you can't adjust the purchase price for inflation. This change is expected to increase the tax burden on property sales, particularly for those who have held their properties for a long time. While the government aims to simplify the tax process, the removal of the indexation benefit might make real estate investments less attractive. Some experts believe this could slow down the resale market for residential properties and potentially lead to more cash transactions in real estate deals, which can be problematic. #indexation #LTCG #BUDGET #Inflation #2024 #realestate #investments #capitalgain #taxable #assets #Tax #sales #profit

Tax loss harvesting can be a massive value add for high-income investors If you’re like most of my clients, your capital gains are being taxed at 23.8%- 37% depending on the state you are in: - 20% long-term capital gains rate - 3.8% net investment income tax - 4–13.3% state taxes, depending on where you live That means every $100,000 of gains you offset with harvested losses can save $23,800–$37,000 in taxes This is huge Tax loss harvesting is particularly impactful for those who: - Have a liquidity event coming from a business sale like many of my clients - Need to diversify from concentrated equity compensation - Hold older investments with very low cost basis You can do this with stocks and ETFs But there are also some tools that make this easier: - Direct indexing - Long/short direct indexing - Boxx spread loans (comes through as capital losses) These allow for more precise harvesting, more losses, and keeping your portfolio aligned while capturing tax benefits along the way

This summer, a single vote in Congress rewrote the playbook for America’s wealthiest families. With the passage of the “One Big Beautiful Bill,” sweeping estate law changes and expanded exemptions are forcing Family Offices to take a hard look at their future. For years, estate planning has often been treated as a technical exercise in tax efficiency. But 2025 feels different. What we’re seeing at Family Office Access is not just paperwork shifting from one folder to another. Families are reimagining what to do with farmland, private operating companies, and philanthropic vehicles that carry their values into the next generation. The numbers tell the story. Early 2025 surveys show that more than half of single-family offices are revisiting legacy structures this year. Our analytics show a 30% increase in inquiries about estate transition strategies in our client network. UBS and Campden Wealth reports confirm the same global trend: succession planning and governance now rank alongside direct investing as top priorities for Family Offices. The OBBA has become a catalyst. Families are asking harder questions around mission, continuity, and the role of capital in shaping long-term legacy. Farmland is being treated as a commitment to sustainability. Operating businesses are being restructured with generational leadership in mind. Philanthropic vehicles are moving toward impact models designed to outlast their founders. Aviation, surprisingly, has also become part of the conversation. Buried in the bill is a generous incentive that allows private aircraft to be written into estate structures with favorable treatment. For some families, this means jets can be transitioned across generations with reduced tax friction. For others, it opens the door to structuring ownership through trusts or family partnerships, turning what was once viewed purely as a lifestyle expense into an asset that supports both mobility and long-term planning. This moment extends well beyond tax mechanics. Families are navigating generational purpose and deciding whether these changes will create opportunity or present new burdens. Do you believe the OBBA will ultimately benefit or hurt Family Offices? And beyond families themselves, what ripple effects will these changes create across the broader business world?

There’s a more tax-efficient way to own an index. But is it worth it? Here’s a breakdown of direct indexing: What is direct indexing? It’s still passive investing. But instead of owning an index fund, you own the individual stocks that make up the index. Same market exposure. Different implementation. The goal isn’t higher returns. The goal is tax efficiency. Index funds are already very tax-efficient, especially ETFs. But there’s one thing they can’t do: They can’t pass individual stock losses to investors. Losses inside a fund stay inside the fund. With direct indexing, you own each stock directly. That allows for: Ongoing tax-loss harvesting Offsetting capital gains Deferring taxes while staying invested Over time, this can increase after-tax wealth even if pre-tax returns are similar. Some studies suggest direct indexing can add incremental after-tax value over long periods (often cited at 1%–2%), but results vary widely based on volatility, tax bracket, cash flows, and implementation. Important tradeoffs to understand. This strategy is not a free lunch. Here’s what actually matters. 1) Cost Most platforms charge roughly 0.10%–0.20%. But additional costs may include: Trading costs Cash drag Tracking error Etc. These reduce the net benefit and must be weighed against expected tax savings. 2) New money works best Selling existing index funds to switch strategies often creates taxes that wipe out the benefit. Direct indexing tends to work best with new dollars, such as: Income Liquidity events Sale or acquisition proceeds Using fresh capital avoids unnecessary tax friction. 3) Tax benefits depend on markets The biggest advantage comes from harvesting losses, which requires volatility. In prolonged bull markets: Losses become harder to find Unrealized gains accumulate Tax benefits shift from harvesting losses to deferring gains, and eventually decline. 4) Wash sale coordination matters Loss harvesting must be coordinated across taxable accounts, spousal accounts, and any index funds held elsewhere. Poor coordination can reduce or eliminate the benefit. 5) You need an exit strategy Deferred taxes eventually come due unless there’s a plan. Is this money for retirement, charity, heirs (step-up in basis), or future liquidity? Direct indexing works best when paired with broader tax and estate planning. 6) Benefits skew toward higher earners The tax alpha is largest when tax rates and taxable balances are high. For lower brackets or smaller portfolios, added cost and complexity may outweigh the benefit. Bottom line Direct indexing isn’t a magic upgrade. It’s a tax optimization tool. For the right investor, at the right time, with the right plan, it can add meaningful after-tax value. For others, a low-cost index fund may be the better answer. That’s why this should be a planning decision, not a product pitch. If you’re exploring it, talk with a fee-only planner to see if it actually fits your situation.