If you own rental real estate, your goals include maximizing cash flow, which can be helped by minimizing the tax bite today and upon the sale or transfer of that real property. BeachFleischman PC helps individuals and businesses that own residential and commercial real estate—in Arizona (AZ) and nationally—balance both goals through proactive tax planning.
Tax Planning Boosts Cash Flow
Tax implications are not the only factor to consider when deciding whether to buy or sell rental real estate. But if you ignore those implications, you not may be able to realize the best rate of return or minimize your tax outflow.
Whether you own rental real estate as an individual or through a partnership or other entity, careful planning is essential to achieve the maximum tax benefits and greatest returns. For example, rental property owners may have the option to make certain elections that allow them to expense certain capital expenditures, such as tenant improvements, in the current year. It may also be worth the upfront cost to perform cost segregation studies in order to accelerate depreciation deductions into a shorter time span. This can leave more cash available now for reinvestment in the same property or others.
The new 3.8% Net Investment Income Tax (NIIT) is another example where taking some simple steps, such as grouping real estate activities to avoid being classified as a passive activity, can mean a difference in tens or even hundreds of thousands of dollars in tax liability.
Selecting the Right Accounting Firm
As an owner of rental real estate, you need guidance from tax consultants who understand all the short- and long-term tax implications related to owning and operating those properties, including those related to certain industries such as manufacturing and healthcare.
BeachFleischman serves numerous real estate professionals and business owners of real estate in the Phoenix and Tucson, Arizona (AZ) and in other markets throughout the U.S. As a result, we have the real estate taxation expertise to help rental real estate owners achieve their goals through:
- Operating, partnership, and management agreement reviews
- Rate of return analysis
- 1031 like-kind exchange
- Cost segregation
- Business structure and organizational consulting
Achieving maximum cash flow and profitability in the operation of rental real estate requires close attention to the tax implications of those investments. If you are looking for sage advice from experienced real estate tax professionals, please contact us via the submission form below.