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Deciphering the Tax Code for Real Estate

2 Min read
Deciphering the Tax Code for Real Estate

Table Of Contents

    Here at The Real Estate CPA, we make a practice of keeping our clients well educated and well informed about how taxation applies to real estate investment.

    Without this kind of specialized support, many landlords and real estate investors struggle with annual tax filing details. This can be complex and difficult!

    This arbitrage of complicated federal tax systems isn't something that you learn in high school, and there aren't even a lot of resources for beginner landlords who want to wade into the real estate market.

    That's why it's important to have this kind of professional assistance because these secrets of the trade can help boost profit from a real estate business. Here's some of what you can expect in optimizing your rental or real estate investment income in a filing.

    Rental Investments and Passive Income

    One of the most basic things to understand at the outset is that rental income is different from the types of income you get from working.

    "But real estate is a job!" – yes, but it's also different in terms of taxation. At least, there are different options that can benefit the filer.

    The IRS allows landlords and real estate investors to use a different part of the 1040 form than those who run their own service businesses. The Schedule E form treats income differently from some of the other corresponding forms. That's important to know if you're trying to organize your filing, which should tell your whole financial story over that given year.

    We go over all of this in our introductory documentation for clients, because it's so important for these investors to structure their finances the right way to save money on taxes.

    The Ins and Outs of Filing

    At The Real Estate CPA, we actually offer a fairly detailed guide on our website. Still, landlords and real estate investors who are too busy to do a deep dive into this type of esoteric tax law can schedule a consultation with one of our knowledgeable financial professionals. We'll help you figure out what's going on.

    The ability to mitigate payroll tax is one of the best favorable financial elements built into real estate investing as a whole. When you understand these advantages, it's easier to create a winning real estate investment strategy that works. Ask The Real Estate CPA what you can do to re-organize your finances for your own gain.

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    Hall CPA PLLC, real estate CPAs and advisors, helped me save $37,818 on taxes by recommending and assisting with a cost segregation study. With strategic multifamily rehab and the $2,500 de minimus safe harbor plus cost segregation, taxes on my real estate have been non-existent for a few years (and that includes offsetting large capital gains from the sale of property).

    Mike Dymski - Business Owner