Taxes will always be a part of all corporate life. But just because it’s inevitable doesn’t mean business owners don’t have any means of minimizing the taxes.
Business owners who are eligible can make use of RPT or restricted property trust so they can minimize the tax on annual income. Restricted Property Trust or RPT trusts help business proprietors save money on taxes.
Just what’s an RPT all about? Below are some insights about this often overlooked way of reducing tax.
The Restricted Property Trust.
An RPT allows business proprietors to save a good amount of money on taxes and grow assets.
Business proprietors will be making totally tax-deductible annual contributions to a restricted property trust.
This simply means that the accumulation of the money is virtually tax-free until the owner wishes to withdraw the funds.
This will cause businesses to be able to minus all the contributions they have made to the RPT, pay no tax on said contributions, and pay less taxes on distributions.
Once an eligible corporation has set up a restricted property trust, participants will contribute annually for 5 years a minimum contribution of $50,000. Inorder for you to participate, you must be in some way a corporation shareholder.This will include both business owners and the employees.
The participants are obliged to take a portion of their contributions in the form of taxable income.But inorder to do so they need to specify that the 30{8a111b8e87d2217e89ca18cf9006e3f7691622cb9f11e03b1e2f936e3486f2aa} of the contribution as being such.
This equates to about 15{8a111b8e87d2217e89ca18cf9006e3f7691622cb9f11e03b1e2f936e3486f2aa} tax rate, a much lower number compared to the rates you pay from individual income taxes.
Restricted Property Trust Eligibility
All of the corporate entities are eligible for restricted property trust. Sole proprietors however are not eligible. This is based on the fact that corporations usually experience the highest number of tax rates.
The Capacity to Handle the Yearly Contributions
To be able to enlist an RTP trust plan participants will contribute annually for 5 years a minimum contribution of $50,000. Bigger more established corporations are not threatened by this amount and can even handle to contribute a higher amount.
Fifty-thousand dollars is a big amount of money, this is especially more apparent for the smaller corporations. This is the reason why RPT funds are only ideal for bigger corporate business proprietors with bigger assets.
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With proper usage, Restricted Property Trust can reduce the burden of corporate taxes. As well as being a great tactic for businesses with higher income who would want a tax easy way of asset management.