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 can help individuals and businesses that own residential and commercial real estate balance both goals through proactive tax planning.
Boost cash flow with tax planning
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 may not 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, allowing them to expense capital expenditures, such as tenant improvements, in the current year. It may also be worth the upfront cost to perform cost segregation studies to accelerate depreciation deductions into a shorter time span. This approach can leave more cash available now for reinvestment in the same property or others.
The 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.
Work with the right accounting firm
As an owner of rental real estate, you need guidance from knowledgeable advisors who understand the short and long-term tax implications related to owning and operating properties, including those related to certain industries such as manufacturing and healthcare. BeachFleischman serves numerous real estate professionals and business owners in Arizona and other markets throughout the U.S. As a result, we have the expertise to help rental real estate owners achieve their goals through: