In real estate investments, there are certain instances that have tax consequences where the guidance of a CPA can help you mitigate costly mistakes and navigate opportunities for reducing taxes altogether.
As such, we’ve compiled a list of ten situations in which you should consult with your CPA to potentially save you thousands.
1. When you need advice on investment strategies.
A CPA who is well versed in the real estate market can help you find properties that offer the best return while managing the legalities, red tape and paperwork to make sure you are following through on all of your tax obligations.
2. When you need to stay organized.
It’s important to stay organized and efficient when it comes to your taxes and accounting records. Your CPA can help set guidelines for you to follow that will keep your tax records and accounting files organized, easily accessible, and in order.
3. When you need to account for depreciation.
Often called a ‘phantom expense,’ depreciation makes it so that you don’t have to spend any money after purchasing a property to receive the annual write off. Your CPA can not only help you remember to write it off, but can also help you recover years of missed depreciation.
4. When you need to allocate value to land.
When you purchase a rental property, you are purchasing the building, the building’s contents, and the land the building is on. Your CPA can help you calculate how much of the purchase price needs to be allocated to the land.
5. When you need to deduct monthly escrow payments.
Your monthly mortgage payments include interest, principal, insurance, and property taxes. Your CPA can make sure you don’t deduct the escrow portion each month as you pay your mortgage bill.
6. When you think you need an LLC to deduct business expenses.
A business expense is a business expense regardless of whether you have an entity set up. Your CPA can help you identify potential business expenses – LLC or not – and make the necessary deductions.
7. When you want to deduct travel costs.
While travel costs may come in countless shapes and sizes, they are not all created equally – and are not all deductible. Misreported travel costs can cost you – big. Your CPA can help you understand when your travel and expansion costs are deductible – and when they’re not.
8. When you use a home office.
When seeking to take advantage of a home office deduction, not only is the space itself a deduction, but your transportation costs to-and-from your home office and another business are deductible. Your CPA can help you take advantage of all the deductions a home office affords.
9. When you need to boost your negotiation power.
When you have an experienced advocate on your side, you’re better poised to get a better price, better terms, and better conditions. Your CPA can help you save money by ensuring you recognize important points and avoid any common mistakes or pitfalls in your real estate investments.
10. When you need to use a 1031.
A 1031 exchange allows you to defer capital gain on the property you’re selling by rolling over the profits into the next investment property. Your CPA can ensure that you don’t leave money on the table by not taking advantage of a 1031 exchange.
Bottom line: Having a CPA on your side is fiscally smart and strategic – and will be money well invested in the long run. Contact Bedinghaus & Co. today for more information on how we can save you money on your real estate investments.