Tax-Saving Investments

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 Taxes, fees, and outdated structures quietly erode returns, often without investors realizing it.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.

What if you could channel every dollar of profit into your next real estate deal instead of handing it over to taxes? A 1031 Exchange, under Section 1031 of the Internal Revenue Code, lets investors defer capital gains by exchanging one qualifying property for another. In a traditional exchange, you sell your property, identify up to three replacements within 45 days, and close on one of them within 180 days. A reverse exchange uses a Qualified Intermediary to acquire the replacement first, completing the swap within 180 days of selling the original asset. An improvement exchange allows you to hold proceeds while renovating a replacement property under the same 180‑day rule. Even vacation homes can qualify if they meet IRS rental‑use tests and you keep thorough records. To comply, both properties must be like‑kind, match or exceed value and debt, list the same taxpayer, and follow strict deadlines. While many Family Offices recognize the power of 1031 Exchanges, our multi‑year Family Office Real Estate Investment Study shows fewer than one in three complete an exchange annually. This underutilization leaves millions in tax savings and reinvestment capital on the table. Leading offices embed quarterly or annual 1031 reviews into governance calendars, engage intermediaries and tax counsel at deal inception, and train teams on exchange criteria. Individual investors can adopt these best practices by partnering early with a reputable intermediary, integrating exchange checklists into transaction workflows, keeping accurate documentation, and consulting professional advisors for complex exchanges. By making 1031 Exchanges part of regular portfolio reviews, you preserve more equity, accelerate portfolio growth, and safeguard wealth for future generations.

Retirement taxes aren’t a single moment. They’re a journey. Most people plan for returns. Smart planners design for taxes. Because the IRS shows up at every stage, unless you control the path. Here’s how retirement taxes really work 1. Contributions, before the money grows Pre-tax saves you today, not forever. After-tax skips today’s break but buys future flexibility. The real question: Do you want relief now or later? 2. Growth, while compounding, does the heavy lifting Tax-deferred growth compounds faster. Taxable growth leaks returns every year, quietly, if not controlled. Taxes don’t scream. They erode. 3. Withdrawals, when income matters most Some withdrawals are taxed as income. Others can be completely tax-free if planned right. Timing decides your lifetime tax bill. 4. Sequencing, the order changes everything Ordinary income for lower income tax brackets. Long-term capital gains to avoid higher income tax brackets. Tax-free last. This controls brackets and preserves options. Random withdrawals destroy the strategy. 5. Legacy & required rules, beyond your lifetime Forced withdrawals can spike taxes. Inherited accounts play by different rules. Retirement planning doesn’t end with you. The truth? You don’t pay taxes once in retirement. You pay them at every stage, Unless you design the path. Follow me Marc Henn for more. We want to help you Retire Early, Supercharge Your Cash Flow, and Minimize Taxes. Marc Henn is a licensed Investment Adviser with Harvest Financial Advisors, a registered entity with the U. S. Securities and Exchange Commission.

Most family offices invest in institutional funds. They lose 30% to capital gains on every distribution. Purpose-built family office funds are structured differently. Here's why GPs are finally building them: Institutional real estate funds are designed for a specific type of LP: • State pension funds • Insurance companies • Sovereign wealth funds • University endowments These investors share one key characteristic: they're non-taxable entities. This shapes everything about how these funds operate. Non-taxable LPs want capital back quickly. Typical institutional funds target 5-year hold periods. Why? No tax consequences on distributions. They book the IRR and redeploy into the next fund. But family offices face different constraints. When a family office receives a distribution, it's a taxable event: • Capital gains hit 20% federally • Add another ~10% for state taxes • That "great" return gets cut by a third Smart family offices try to defer taxes using 1031 exchanges. The problem: You can't control timing. The fund manager decides when to sell and return capital. When you get that notice, you have 45 days to identify replacement property and 180 days to close. This creates a scramble: • Paying rush fees to advisors • Taking on concentration risk with fewer assets • Potentially overpaying because you're under time pressure • Finding suitable replacement properties on someone else's timeline Family offices aren't maximizing IRR on a 5-year basis. They're preserving wealth across generations. They want: • Stable cash flow they control • Long-term appreciation without forced dispositions • Tax-efficient structures that defer gains indefinitely This is where purpose-built family office funds create value. These funds structure differently: • 10-15 year hold periods (or longer) • Optional distribution elections (cash or roll forward) • Asset-level 1031 capabilities • Lower fees (not churning every 5 years) • Governance reflecting long-term ownership Sure, returns might show lower IRR on paper. But after-tax, compounded returns would be substantially higher. For fund managers, the opportunity is clear. If you want family office LPs: • Extend hold periods • Build in tax-efficient distributions • Offer step-up basis strategies • Create separate share classes for taxable vs non-taxable investors The GPs who figure this out access much deeper pools of patient capital. The next wave of fund formation will be purpose-built for family offices. Same assets. Different wrapper. Dramatically better outcomes.

The IRS just raised 401k limits for 2026 Starting January 1st, you can defer $24,500 into your workplace retirement plan, up from $23,500 this year. If you're 50+, tack on another $8,000. And if you're 60-63? You get an even bigger boost: $11,250 in catch-up contributions thanks to Secure 2.0. Sounds great, right? Here's the reality check: Only 14% of participants actually maxed out their 401ks in 2024, according to Vanguard's latest research covering nearly 5 million workers. The average combined savings rate (employee + employer) sits around 12-14%. That means most Americans are leaving significant tax-advantaged growth on the table, not because they don't want to save, but because they simply can't afford to max out in today's economy. Three takeaways for investors: First, if you're one of the 14% who can max out, congratulations, you're building serious wealth through tax-deferred compounding. Keep going. Second, if you're not there yet, focus on capturing your full employer match first. That's free money you can't afford to miss, even if maxing out isn't realistic. Third, and this is critical, maxing out isn't always the best strategy for everyone. Sometimes liquidity is more valuable than locking everything away in a retirement account. Building an emergency fund, saving for a down payment, or maintaining cash flow flexibility might be smarter moves depending on your situation. The bottom line: Higher contribution limits are a tool, not a mandate. The right strategy depends entirely on your unique financial picture, goals, and timeline. I'm happy to discuss what makes sense for your specific situation, so feel free to reach out or drop a comment below. #RetirementPlanning #401k #Wealth

At first glance, a 15% return from a real estate investment may appear equal to a 15% total return from stocks. But here’s what’s missing: When comparing investments, many focus on gross returns. But the real question should be: how much do I actually get to keep? Let’s say you invest $100K in a real estate deal and get a 6% annual distribution from the sponsor. That’s $6,000 a year in cash flow. Your K-1 may show a taxable loss—even though the property is generating positive cash flow—because of depreciation. Depreciation is a non-cash expense. This paper loss may offset taxable income depending on your passive income and tax status. Even though the property might be making money, the IRS lets you deduct a portion of the building’s value every year for “wear and tear.” That lowers your taxable income, many times to a negative number. So now you’re collecting this $6,000, and depending on your tax situation, you may not owe taxes on it immediately, especially if depreciation offsets the income and you qualify under passive activity rules. This often continues until there’s a capital event, such as a sale or refinance, which may result in a recapture tax and taxable gain. _____ Now compare that to stocks. You don’t have depreciation. If you receive dividends or you sell for a gain, you’re paying taxes. So even if a stock returns 10%, you might only record an 7%-8% return after taxes. And at the end of a real estate deal (let’s say after 5 years), you sell or refinance the property. After a capital event, now you’ve got a bigger chunk of money coming in, and more than likely, that’s going to be taxed. But the cool part is, you can potentially use a 1031 exchange. If you invest directly or the sponsor structures a 1031 exchange at the entity level, you can roll proceeds into a new deal and defer taxes - as long as you identify the next property within 45 days. This means you can keep growing your portfolio without reducing your investable capital. And that’s the key. These advantages compound. You’re not just saving money in year one, you’re reinvesting more capital, tax-deferred, again and again. And you’re earning cash flow that’s often shielded from taxes year after year. It’s a totally different equation. So while real estate might look like it has a 15% return in well-executed value-add deals, the reality may be much better when compared to stock returns, especially when you compare after-tax results. In the end, it isn’t about hitting the biggest number on paper. It’s about keeping more of the upside and letting it work for you over the long run. Have you already experienced the benefits of tax-efficient real estate investing?

I’ve helped clients save over £4 million in taxes. And it’s not because they earned less or cut corners. It’s because they understood how to use tax rules to their advantage. Here are 10 strategies I give to my clients: For Individuals: 1. Maximise pension contributions to reduce your taxable income. ↳ Accounts like SIPPs offer generous tax relief on contributions. 2. Take advantage of your tax-free allowances every year. ↳ Use personal, dividend, and capital gains exemptions before they reset. 3. Invest in tax-efficient accounts to grow your savings tax-free. ↳ ISAs, for example, shield interest, dividends, and gains from tax. 4. Claim deductions for eligible expenses if you’re self-employed. ↳ Things like office costs and equipment can reduce your tax bill. 5. Spread capital gains over multiple years to save more. ↳ This lets you maximize annual exemptions without overpaying. For Businesses: 6. Sell your business through an Employee Ownership Trust (EOT). ↳ This can eliminate capital gains tax entirely on the sale. 7. Claim R&D tax credits for innovation in your business. ↳ Even small projects can qualify for these lucrative credits. 8. Use salary sacrifice schemes to cut payroll taxes. ↳ Pensions, electric cars, and childcare vouchers all save money. 9. Pay dividends instead of a higher salary to reduce tax. ↳ Dividend income is often taxed at a lower rate than wages. 10. Invest in capital assets to use the Annual Investment Allowance. ↳ This allows 100% tax relief on qualifying purchases. Tax savings aren’t about avoiding what you owe. They’re about understanding the rules and using them wisely.

The same oil well. 3 investors. 3 different outcomes. One banks quarterly cash flow and tax write-offs. Another builds wealth through consolidation. The third? Chasing venture-level returns. What separates them isn't the asset. It's structure. While everyone analyzes fundamentals - rising demand, constrained supply, underinvestment - sophisticated investors focus on a different question: How do I participate? Because deal structure creates entirely different economics from the same barrels. Here's what most investors miss: there's a decision beyond asset selection. How you participate matters more than what you buy. Structure determines three critical outcomes: • When you get paid: now, later, or both • Tax treatment: ordinary, sheltered, or deferred • Wealth type: cash flow, compounding, or liquidity The framework I use breaks oil and gas into 3 distinct layers: Layer 1: Offshore Exploratory The venture capital approach to energy. Drilling new reserves, often deepwater, requiring massive infrastructure. High-risk, high-reward. Best for asymmetric outcomes and maximum tax write-offs. Layer 2: Proven Production This is where most income investors operate, but few understand the timing advantage. Take a well in the Permian Basin producing 100 barrels daily. The geology is mapped. The infrastructure exists. You're buying predictable output, not potential. But here's what changes the math: The IRS lets you deduct a significant portion of your investment in year one through intangible drilling costs and depreciation. This means immediate active income offsets while generating quarterly distributions. The sophisticated play? Deploy capital in Q4 to offset your highest-earning year, then collect cash flow for the next 7-10 years. Layer 3: Roll-Up Strategy Acquiring smaller producers at a discount, adding operational discipline, consolidating under one platform. Value creation through efficiency, data, scale. Best for tax-efficient compounding and eventual liquidity events. Most sophisticated investors operate between Layers 2 and 3. Your goals determine your structure. A tech executive earning $450K annually needs active income offsets now and quarterly distributions. Layer 2 makes sense. The tax benefits are immediate. The cash flow is predictable. A serial entrepreneur who sold his company and is thinking in decades might layer in Roll-Up strategies. Less concerned with immediate distributions, more focused on compounding and tax-efficient wealth building. For accredited investors who think in frameworks, explore more opportunities at https://walkerdeibel.com/

Financial planning for a physician earning $700k per year, who wants to know what else they can do to reduce their taxes... Before: >> Maxing out 403b plan ($23,500) >> Donating cash to charities >> No Roth contributions >> Investing money into the same investment allocation across all accounts After: >> Increased retirement accounts to $47,000 (403b + 457) >> Max contribution to an HSA ($8,550) >> Max backdoor Roth contribution ($14k) >> Donated appreciated stock to a donor-advised fund >> Bunch deductions to maximize >> Adjusted investments to be more tax efficient The outcome: >> Reduced tax bill (deferral) by about $20k each year >> Elected to contribute to a 457 on top of the 403b (yes, you can contribute to both!). $47k into pre-tax accounts in the highest tax bracket! >> Reduce lifetime tax bill and diversified taxes by getting money into a Roth >> Started contributing to an HSA and invested the money. Triple tax-free! >> Set up a donor-advised fund to contribute appreciated stock and maximize the tax benefits of giving (much better than cash!) >> Ran a tax projection to determine that bunching deductions with charitable contributions would reduce multi-year tax bill >> Created an investment plan that put the right asset in the right type of account to maximize wealth and minimize tax (No bonds in a Roth!) Taxes are most likely your biggest expenses over your lifetime. You want to address this in your financial planning. At Kinetix Financial Planning, we let tax planning improve the financial plan. Every year, we do these things for clients at a minimum: >> Annual tax review and tax planning opportunities >> Annual cash flow plan/ projection >> Investment allocation checkup and tax optimization >> End of year planning opportunities

For senior Apple employees making over $500k (I know there are a few of you out there 😉). Many tech employees can save > $100k into tax-advantaged savings vehicles between their 401k, employer match, Mega Backdoor Roth, Backdoor Roth IRA, ESPP and HSA. But for senior Apple employees, this is just the start. Apple's Non-Qualified Deferred Compensation plan (NQDC) allows you to defer up to 50% of your salary plus 90% of your bonus (no dollar limit) into a plan that is similar to a pre-tax 401k but with some important differences. While this will materially reduce your tax bill this year, you are kicking the can down the road and will be taxed at a later date on this money. If choosing to use the NQDC plan, the hope would be that a) enough time will pass to allow for you to benefit from the investment of these deferred taxes and b) you would ideally have a lower (or at least similar) income when you receive distributions from the plan to achieve what we call tax rate arbitrage. The major difference between a Non-Qualified Deferred Compensation plan and a normal pre-tax 401k, is when you will receive the money. Rather than waiting until retirement or age 59.5; these funds are usually paid out when you terminate employment at Apple, regardless of your age… and you must make the election today if you want to receive those funds as a lump sum or in installments (max election is up to 10 years) when that time comes. A common use-case for a NQDC plan such as Apple’s, is a high earner who expects to retire early, take time off (extended sabbatical), or pivot to a lower paying encore career prior to full retirement. If done correctly, this would not only defer 10’s (potentially hundreds) of thousands in taxes today, but could also result in material lifetime tax savings if the funds are accessed in a lower tax bracket. Aside from liquidity concerns, which hopefully have been addressed, the potential downside scenario would be leaving Apple (triggers distribution) and continuing to work in a similar or higher paying job while receiving the NQDC distributions which are taxed as income – potentially pushing you into a higher tax bracket. If you’re already in the 37% federal tax bracket, this issue is less concerning, but future tax rates may certainly go up on high earners between today and when you receive distributions. Punchline – Use of a NQDC plan involves more complexities than normal tax-advantaged vehicles, but can be a powerful tool if used correctly.