There are a lot of subtle or even hidden rules in real estate tax. That’s part of why it makes sense to hire skilled professionals. A good real estate CPA will help you determine your real estate financial strategy – and make a lot more money!
Some of these real estate rules have to do with how you operate rental properties. Others have to do with the innate value of the real estate parcel, and how to manipulate that over time. For example, when you subdivide a lot, you come up with two isolated real estate parcels. Depending on the price of subdividing that lot, you easily made an enormous amount of money.
But here's another thing that we often consult with clients about. It's the benefits of passive income.
The most obvious benefit of passive rental property income is that you don't go to work every day to earn it. Instead, as a landlord, you're responsible for managing all of those various elements of property rental maintenance, including:
- Showings and leases
- Routine maintenance
- Emergency solutions
- Tenant issues
Now, to be sure, all of these things can be extremely frustrating to manage, but they don't require that traditional 9 to 5 full-time work schedule. In fact, landlords with any significant strategic efficiency can operate various units on a very part-time schedule. The quality of tenants and the quality of your rental process also make a big difference.
There are other technical aspects of passive income, though, that benefit many of our customers. Unlike wage-earned income and self-employed income, passive rental income is not, in many cases, subject to the FICA Social Security and Medicare taxes that take such a big bite out of everyone's income up to a particular dollar amount.
The way this works is somewhat sophisticated, and we provide a detailed guide on our website, but the basic thing to know is that you can reinvent your financial world and save quite a lot of money on taxes.
Some of the consulting that our customers put in with our CPAs brings them over 1000% return on investment, or even much more, simply because they're able to create tax strategies that work for them. The tax code is complex – everybody agrees on that! Besides, it treats real estate in a certain special way – which is why so many experts say that real estate is a unique opportunity. If you need help figuring out what’s right for you, give us a call. We’ll listen, and help you to build a game plan for your property.