Running and managing a real estate isn't easy and maintaining a real estate investment portfolio takes time and effort. So if you need assistance with all things related to real estate, let me come in and put my knowledge to work for you. I offer reliable accounting services for companies, agencies and individual investors.
Often investors choose real estate because it will be an “easy” way to watch your value grow and at the same time benefit from deducting tax losses. Often the management of the properties and tenants becomes more time consuming than expected. Many of these tasks are handled on evenings and weekends “after” a full day of work at your “real” job.
Another “advertised “ benefit of real estate is the benefit of deducting tax losses. If you experience a rental loss on your real estate properties, can you deduct the loss on your current return? Maybe.
Variables affecting deducting a real estate loss
The amount you are “at-risk”
Are you a real estate professional (defined by the IRS) or a material or active participant or a “passive investor”?
Do you make less than $100,000? You may be able to deduct a $25,000 rental loss. Entity Selection – discussed below.
Reporting for Multiple Properties:
Should you report each property separately on your tax return? What is the benefit of combining properties? Are you materially participating in your “rental activity” – will the answer change if you do not combine the entities? Have you made the proper election to combine the activities on your return?
What is the benefit of reporting the properties separately? Are you buying and selling properties frequently? It may be beneficial to report them separately. This will allow you to deduct the cumulative passive loss in the year that the individual property is sold.
What type of entity is the best option for holding your real estate investments?
Property can legally be owned by an individual, S-corporation, a partnership or an LLC.
Holding real estate held in a partnership or LLC can be beneficial for tax purposes, however, it may make it complicated to keep track of the “basis” in partnership interests.
Holding the property in a S-corporation is allowable and sometimes easier to on an accounting level, however, it may not offer you the best option for tax purposes.
Property purchase by an individual or single member LLC will be taxed on your individual tax return.
Customized Accounting Solutions
At SusanCPA, I understand the complexities involved in purchasing, selling, and maintaining real estate. That's why I'll go out of my way to arrive at solutions to suit your specific needs. No matter the size of your real estate portfolio, I'm equipped to tackle all of your accounting needs, all the while providing the great customer service you should expect.
Don’t’ spend hours each week crunching numbers without guidance on proper reporting and understanding how the income and expenses should be reported, which expenditures should be capitalized, or understanding what information should be kept to allow you to use the tax benefits you are entitled. Call me today for more information or to schedule a consultation.