Now is a good time to invest in Nashville real estate. As the metro’s robust economy and job opportunities bring an influx of new residents, the demand for housing has been increasing at a rapid rate. As a result, home prices have been rising to unprecedented heights, making renting a more viable option for many.
When it comes to real estate, your investment options include buying a property for its long term value appreciation, renting it out, and home flipping. To ensure you get the highest possible profit, seek the help of experts who can guide you in the various aspects of the business. In addition to a real estate agent and an attorney, you will also benefit greatly from the services of a CPA firm.
How can a CPA help in your real estate investment?
1. They can guide you in deciding how to structure your business
Just as in any other type of business, you need to think long term and consider the best and worst case scenarios. How can you get the most flexibility for future expansion? How can you protect your assets in case you run into problems? Tax-wise, what type of organization will benefit you the most?
Your best option will depend on the type and number of assets you acquire. If you plan to invest in only one or two properties, perhaps a single proprietorship or partnership would be the least complicated option. If you’re investing in three or more properties, however, you will likely need the protection of an LLC or a corporation.
For example, buying property and selling it in less than a year can have different tax implications from buying property and holding on to it for more than a year. Structuring your business based on your investment goals can ease your tax burden. You may need to set up more than one LLCs if you plan to hold one property for less than a year, and another property for more than a year.
2. A CPA can help you maximize your tax benefits
If you rent out a home, you may be eligible for a number of tax benefits. Rentals help provide housing to the general population. The government views this as a kind of service to the public and rewards landlords and investors with tax deductions.
In your tax declarations, you may deduct your operating expenses, depreciation, home improvement costs, and other expenses from your rental income. How the government applies these tax benefits may vary from case to case. Your CPA will help you determine how they may be applied to your particular situation. In addition, your CPA will make sure you’re taking full advantage of all the tax benefits available to you.
3. A CPA can help you keep track of your profitability
If you’re a property flipper, how much budget should you allocate to renovating a house so you can sell it at a certain price range? If you’re a landlord, how much should you charge for rent? If you sell the property now, will you make a good profit? A CPA can help you determine these critical figures. They can provide you with the financial data and advice you need so you can plan your next step.
Real estate can be a lucrative venture, but only if you always keep yourself on your toes. A CPA can help you succeed by providing the information and guidance you need at every stage of your business.
Sources:
Why You Definitely Need a Real Estate Accountant, BiggerPockets.com
Why Should I Care About Real Estate Accounting, FortuneBuilders.com
Donating to a Charity? Ask Your CPA About Potential Tax Benefits
