Understanding the Role of a Real Estate Tax CPA

The world of real estate is a complex one and one of the factors needed to maximize profit is efficient tax management. Certified Public Accountants also referred to as CPAs are professionals that help their clients navigate matters that have to do with taxes of all kinds and in different sectors. When we talk about real estate CPAs, we are referring to CPAs that specialize in real estate related tax issues. 

These tax issues include real estate investments and helping clients to understand and navigate the ever evolving laws and regulations governing the industry. It is important to note that you cannot have a successful real estate business or investment without leveraging the services of a CPA that specializes in that niche. Whether you are a veteran or novice in the business, you need a professional to keep an eye on your financials and ensure that your taxes do not undercut the profitability of your business or investments. 

In this article, we will help you understand the role of these professionals and the benefits of having them in your corner. We will also share tips on how to choose the right Certified Public Accountant for your property investments or business.

Services Rendered by Real Estate CPAs

The role of a CPA in this industry is covered in 3 broad categories and they are advisory services, tax preparation and audit support

We will expatiate on these roles below:- 

Advisory Services

The advisory services rendered by these professionals cover the following aspects:-

1. Investment Analysis– This entails evaluating how taxes will impact the potentials of their clients’ investments in properties. 
2. Cash Flow Management – They assist their clients in managing their cash flow by coming up with effective strategies for taxation. 
3. Estate Planning – They provide expert estate planning guidance which ensures that their clients’ assets are passed on to their heirs without any problems or hassles. 

Tax Preparation

This is one of the most important tasks that these CPAs carry out for their clients and it entails the following:-

1. Annual Tax Returns – They prepare tax returns for federal, state and local taxes.
2. Quarterly Estimates – They calculate and file estimated payment for taxes to avoid fines or penalties. 
3. Amended Returns – They file amended returns if needed to either correct the previous ones filed or enjoy the benefits of new taxation laws. Click here to check out some fact sheets about taxation in America. 

Audit Support

In the event that a client is facing an IRS audit, these professionals offer support in the following ways:-

1. Preparation of Documentation – This involves collating and organizing all the documents needed for the audit. 
2. Respond to Inquiries – They stand in for clients to provide explanations and answer to questions from the IRS. 
3. Negotiate Settlements – They work to negotiate settlement or plans for payment for any additional taxes. 

Benefits of Hiring a Real Estate Tax CPA 

There are many benefits of hiring these professionals and we will list them under 3 broad categories which are:-

1. Tax Planning and Strategy
2. Compliance and Reporting 
3. Cost Segregation 

Tax Planning and Strategy

The development of strategic tax planning that is customized to the unique need of property owners and investors help in the following ways:-

1. Minimizing tax liabilities 
2. Projecting the right timing for transactions 
3.  Helping in selecting the right business structure 

Compliance and Reporting

In order to avoid audits and penalties, businesses and individuals must comply with laws governing taxes and a specialized industry CPA ensures this compliance by doing the following:-

1. Proper and accurate preparation and filing of tax returns.
2. Provision of representation and support in case the client has an IRS audit. 
3. Keeping clients updated on property tax laws and related issues. 

Cost Segregation

This is an advanced technique employed by these professional to maximize savings on taxes. Companies such as Advise RE employ this strategy to help clients maximize profitability. This strategy entails a detailed analysis of assets (properties) to identify and reclassify them for accelerated depreciation. The breaking down of a building into different parts or units such as electrical, plumbing and landscaping by these CPAs can increase the depreciation deductions in a significant manner to result in appreciable savings on your taxes.

Quick Tips for Choosing the Right Real Estate Tax CPA 

Before we round up this piece, the following are quick tips to help you choose the right professional to work with:- 

1. Check out their credentials and experience 
2. Look out for specialized trainings 
3. Read client reviews and testimonials
4. Look out for personalized service 
5. Carry out thorough research and comparison of services and charges

Conclusion

Hiring a CPA that specializes in taxation laws of the industry gives you an edge in managing the complexities of real estate taxes and attendant issues. We have shared information about their roles and the benefits you gain by working with them. Bearing these pieces of information in mind and the tips shared, we believe you now know the importance of these professionals and also how to go about choosing the right fit.