If you’re an investor who wants to make sure you are correctly handling your taxes without spending more than what’s required, you should consider hiring a CPA who specializes in real estate portfolios. Not only will you walk away with greater confidence that you are fully tax compliant, but you will ensure that you are maximizing the return on your investment. Here are a few examples of how a real estate CPA can be especially helpful. Keep this information in mind as you shop for homes for sale in Park Ridge, IL.
1. You’ll learn more about best practices
Your real estate CPA can help you understand differences and nuances that often exist within various federal and state laws. Most people don’t understand what straight-line depreciation and accelerated depreciation are, let alone how the two concepts are different. A CPA who is trained in the world of real estate has a wealth of knowledge and experience working closely with each of these methodologies and will use this information for your benefit.
2. You’ll better structure your business
Is it better for your investments if you structure yourself as an LLC or an S-Corp? Most investors have no idea how either business structure could benefit them, so they choose to continue as a sole proprietor. Your CPA can advise you on how to best structure your business so that you are protected from increased liability and able to function fully as your own legal business entity.
3. You won’t miss any changes to tax laws and codes
Taxes seem to become more complicated each year, and you shouldn’t assume that things will always be a certain way simply because that’s how they are right now. Real estate CPAs are well-informed about current tax laws and any changes that may have happened since the previous filing season. These changes can impact the way that you file your taxes (and how much money you’ll have to spend) regardless of how small or subtle they may seem like they are.
4. You’ll have a partner who can advise you on key business decisions
You feel like you have a good understanding of the best way to do business right now, but how can you be sure that the same method and mindset will be effective in the future? Your real estate CPA probably has a better handle on market trends than you do. They can use the information to share insight and advice on how you may want to change things in the future. They will also help you to stay grounded at times when you may want to react quickly or emotionally. A real estate CPA can offer an opposing point of view that is well-informed based on their exposure and expertise.
5. You can grow your investing business more quickly
Many investors have hopes of growing their business, and a real estate CPA can help make that happen. They fully understand the consequences of buying, owning, and selling rental property – especially once your portfolio becomes larger. It’s their job to offer you unbiased advice about how to best proceed as you consider different opportunities and possibilities. They will do everything they can to ensure that you are positioned for growth and that you have the best possible chance of building lifelong wealth.
6. You’ll be prepared to deal with unique situations
Many investors will acquire real estate through non-traditional methods such as inheriting a trust. One common type of trust is a REIT, or a Real Estate Investment Trust. These trusts don’t appreciate much but often provide a steady stream of income for those who hold them. These trusts are modeled after mutual funds and are usually managed by an outside company. Acquiring a REIT or another type of trust comes with unique tax responsibilities, and your real estate CPA will help you understand what each process means for you – especially in light of your existing portfolio.
7. You’ll have no trouble categorizing expenses
Some operating expenses are obvious as far as how you should categorize them. Others are complicated and nuanced. You can try to handle these yourself, but you may become frustrated or spend more time than necessary trying to sort through the mess. A real estate CPA is better equipped to handle these concerns with speed and accuracy. You can trust that your expenses will be well-organized and correctly sorted.
Reach out to Jack Guest when you’re ready to begin shopping for homes for sale in Park Ridge, IL. Jack is an expert when it comes to buying and selling homes and uses his expert knowledge of the local market to empower his clients and educate them on how to make the best possible decisions. Jack would love to partner with you when you decide it’s time to begin searching for a new home or if you’re interested in selling your existing home.
