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Transcript

Mike:

You said you only want to increase taxes on the rich. I’m not rich. Well, guess what? Congratulations. You’re learning the politicians lie now. Right? They’re not very truthful.

Zach:

Welcome back to your retirement today. I’m your cohost, Zach Holcomb. And alongside me, we have Michael Reese. He’s a certified financial planner, founder of the Prosperity Planning system and president and CEO of Centennial Advisors right here in Austin, Texas. On today’s show, we’re talking all about taxes. That’s one of our favorite topics and it’s one of Mike’s as well.

Mike:

Yeah. We’re also talking about how I have very low opinion of politicians in general, right?

Zach:

Agreed.

Mike:

Oh my gosh. I hate these guys. Anyway, here we go. I promised at the end of our last segment that we would pick up and talk about step up of basis at death. What is it? What does it mean? How does it affect everybody? Because this is one of those areas. So here’s the deal. Politicians/Weasels. they’re always trying to promote, you know, right now they’re trying to promote increased taxes on, who Zach?

Zach:

The rich,

Mike:

Just the rich though.

Zach:

Yes, only the rich.

Mike:

Only the rich. That’s how they’re selling this thing. And they’re weasels because they’re ly- I mean, like I swear to goodness, I just wish I could put a truth detector on every politician that every time they uttered a lie, it would just buzz and like shock them.

Mike:

Like, wouldn’t it be cool if we had some kind of device, like a shock shock treatment for politicians? You give them, you put a device, you clip it onto them. Every time they utter a lie, boom, they’re shocked. And you know what it would just be. Then it would be fun to watch politicians speak, right?

Zach:

They’d do it so much, they’d just become immune, Mike.

Mike:

No, no. This is going to be an ever increasing charge. Anyway, right now politicians are out there talking about, we want to increase your taxes because we want your money. We believe we can spend your money better than you can. You know, you’re not smart enough. We’re smarter than you. We want to spend your money tax and spend liberals. That’s what they are. Right. And so what they’re doing is they’re trying to sell their i- they know that they tell the truth.

Mike:

Nobody would ever allow them to do it, right. They know if they say to you, look, we’re trying to increase taxes on everybody, which is what they’re really trying to do. They know if they say that, that you’re just going to say, you guys are idiots. Get out of here, we’ll vote you out office, bring somebody else in. So they don’t do that. Instead, what they do is they say we’re only going to tax the rich because as we all know, everybody hate, well, they’re jealous of the rich or envious of the rich. You’re thinking those rich, they got enough money. They can do whatever. Right? and that’s a topic for another day, right? Nevertheless, what they’re not telling you is in of this part of their ideas is they want eliminate step up of basis. Well, what the heck is step up of basis at death.

Mike:

Here’s how it works. Let’s imagine that your parents let’s imagine you are not one of the rich, you’re not one of the rich, you’re just like an everyday person and your parents they bought a house 30 years ago for 150, a hundred thousand dollars. They bought the house for a hundred thousand dollars. Well over 30 years, you know, they live on it. They get older, they die. And when they die, they leave you the house. You are an only child. They leave you a home. And that home is worth when they die. After 30 years, $600,000.

Zach:

This sounds like Austin, Texas.

Mike:

It sounds like Austin, Texas, right. 30 years ago goes a hundred today at 600. Pretty much how it works with all housing in Austin, Texas, I think. Oh no. Except if you sell it today, they get 700.

Mike:

Whatever, the point is, let’s say they pass away, house is worth 600 and you’re the only child. That’s your inheritance. They spend all their money. This is all you get. And so you say, I don’t need the house. You sell the house for 600,000 under the current tax code, you get something called a step-up of basis at death. So what does that mean? They say, okay, your parents die. And they say, all right, we don’t care. What they paid for the house. Step up a basis means what’s the value of the home when they die say, oh, well, when they died, it was for 600,000. That’s what it was worth when you received it. So you sell the house for 600. It was worth 600. When you received it, that’s called your basis. So there’s no gain there from when you, you know, from when you received it to when you sold it, there’s no gain. So you get the full 600,000 tax free.

Zach:

Love that. Right?

Mike:

Well, they, they want to get rid of that. They want you to say, they want to change the rules. What they want to do is they want to say no, no, here’s what we really should do. As we’re only taxing, remember we’re only texting the rich, not you, but here’s what we want to do. When your mom and dad die, we want you, you get the house. It’s we’re 600,000 when you get it and you sell it for 600,000, but we’re like, no, no, no, no, no. We don’t want to give you the step up a basis. We want you to assume your parents’ cost basis, which by the way, 30 years of records, I’m not sure how you’re going to figure out what it is. But we want you to assume your parents’ cost basis. That means what will they bought the house for a hundred thousand, right? If you sell it for 600, that’s 500,000 of gain in that house. We want you to pay tax on that.

Zach:

It’s going to cause a lot of problems for a lot of people,

Mike:

But you’re saying, wait a minute, wait a minute. You said, here you go. Because you listen to politicians who lie. You said you only want increase taxes on the rich. I’m not rich. Well, guess what? Congratulations. You’re learning that politicians lie now. Right? They’re not very truthful. In fact, they probably, if we, if we did some kind of a count of how much of what they say is true versus how much, what they say is untrue. I wonder what percentage of the time. And I would love to see the numbers. I pretty much know what the number is. Yeah. Like 90%, not true. 10% true. If it’s even that good. Right? So step up of basis. So that has to do with a house, right? Well, what if your heck I had a client the other day. Mom, what happened? Dad died left mom stock portfolio.

Mike:

Mom got step up of basis at death, but mom she’s lived like 15 years, never sold the stock, kept them all. She’s lived 15 years and she’s now in a nursing home. Probably not going to live much longer. But anyway, she has about 700,000 of stock cost basis is like a hundred thousand, 200,000. And all this stuff there, we know 500, 600,000 that now she’s holding onto the stock because she knows when she dies her children. In this case, there’s two sons, the two boys get the stock, step up of basis at death. They pay no capital gains tax, but that’s not what the politicians want. Right? Policies say, no, no. We’re going to raise tax only on the, the rich, the rich. And so we think that those boys should pay tax on the gain. Right? That’s what we think they should. That’s what politicians think. Not me. Right? Me. I think politicians are weasels.

Mike:

That was right on cue. I hate those guys and gals, I think I’ll tell you what I mean, but here’s the problem. I mean, who really wants to be a politician anyway? Like seriously, what kind of person says yes, that’s something I really, really want to do.

Zach:

Doesn’t sound like fun to me.

Mike:

Yeah. Normally they’re, they’re different thinkers anyway. In any event, here’s the deal they say, we only want to tax the rich and here we are with, they’re really trying to sneak through while they’re talking. Do they talk about this step up of basis? Do you ever see them talk about it?

Zach:

Nope. Not being talked about at all.

Mike:

No, they don’t not in the public. They don’t talk about that at all. They only talk about we’re going to tax the rich. We’re going to, if you’re making over a million dollars, if you’re making over 400,000, if you’re making less than that, you’re not going to be affected.

Mike:

Don’t worry. Liar, liar, pants on fire. That’s what I call. Right. I remember as a kid, we used to say when, when one of our friends would lie, we just saw a liar, liar, pants on fire that applies to about every politician, right? Especially, especially those politicians that are to sell you on how you should, how their idea of increasing taxes is a good idea. Right? That’s those guys are, oh my liar, liar, pants on fire. But anyway, here we go. We got to make sure we talk about this. Special event tomorrow night. We’re going to talk, I mean, live event, right? In-Person, I’m going to get up there. I’m going to share with you here is what they’re talking about. This is, these are all the different things that they want to do that they’re not talking about, but it’s in the, in their system, right? It’s in their documents. Say here’s how it affects you. And most importantly, here’s what you need to do now to protect yourself. There are steps you need to be taking. Now education knowledge is power. I want you to come to this live event. It’s free. Let’s get you the knowledge. So you have the power to protect yourself from what these weasels in Washington want to do to you. So Zach, what’s the info here? How do they sign up? Tell us all about it.

Zach:

So tomorrow night we’re hosting retire tax smart. This is going to be at the movie house and eatery, in Northwest Austin, right off 620, across the street from Concordia university. You can sign up by going to taxfreemovie.com again, it’s taxfreemovie.com. It’s got all the information tomorrow night at 6:30 PM. Gonna run about an hour and all the information’s on the website. You fill out a simple form. You sign up, boom, we’ll send a confirmation your way. But if you want to call us instead, you can leave a message at our office right now, 5 1 2, 2 6, 5, 5,000. Again, it’s 5 1, 2, 2 6, 5, 5,000. Again, it’s after hours, you just leave us a message and say, Hey, my name is Bob and I want to attend retire tax smart tomorrow night. I’d love to receive more information. Just leave us a message. And we’ll get back in touch with you tomorrow morning.

Mike:

Yeah. Now here’s the deal. This is tomorrow night, starts at 6:30 PM. Sharp. Don’t be coming in late. Right? You come in late. I’ll probably lock the doors on you. I’ll probably say shut the doors at six 30. Nobody like I’m not going to be complete jerk, but don’t be that person coming in late that gets in the way of everybody and creates you know, a problem. Right? Be respectful show up on time. Now, why do you want to show up? Because I’m going to share with you here is what they’re talking about. This is what they want to do with their tax planning. Your I’m sorry with this tax bill Misha. Here’s what they want to do. Here’s how it’s going to affect you. And then here are strategies you can employ to protect yourself. This is a no brainer tax storm is coming. You got to protect yourself. All right, we gotta take a break here. We’re up against the clock. Now coming up next for all you real estate investors, I’m going to share with you what they want to do with 1031 exchanges.