Accurate Tax Returns, Timely Filed for Real Estate Investors and Business Owners

Professional tax preparation services for real estate investors and business owners of all shapes and sizes.

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Did you know that taxes are often your largest expense?

Unlike most tax returns, real estate tax preparation is complex.

So complex that over 80% of the tax returns we review during our sales process contain errors or missed opportunities that cost real estate investors thousands in taxes over the years.

This is because many tax preparers aren’t experts on the real estate tax code and miss opportunities, or simply rush through the process to file as many returns as they can before the deadline.

They churn and burn as the saying goes...

However, when it comes time to file your returns, our team of expert real estate tax preparers simply don’t make these critical mistakes that cost you tons of money…

Each tax return we prepare goes through three levels of review to ensure everything is filed accurately and you're not missing deductions or opportunities to reduce your tax liability. 

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Common Errors & Missed Opportunities That Most Other CPAs Miss

Tax Strategy Foundation is our premier service for real estate investors. It provides you with a roadmap of the tax strategies available to you and the actions you need to take to minimize your taxes based on your current situation and goals for the future.

You'll work closely with one of our Tax Strategists over a 45-60 day window to identify opportunities and develop a tax plan to minimize your tax bills based on your current situation and goals for the future.

We start by collecting information and you'll hold a Kick-Off Call to meet your Strategist. Your Strategist will then schedule two additional Planning calls with you to dive deeper into your tax position and present you with a tax plan.

What to Expect

Calendar

Kick-Off Call

Meet your Tax Manager to discuss the tax preparation process including expectations for the engagement and what information and documents we'll need to prepare your return.

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Tax Preparation

Our team will prepare your tax return and review it for accuracy and missed opportunities for tax savings. 

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Delivery & Filing

After our team prepares and reviews your return, we will send it to you for your review before filing it on your behalf.

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Tax Compliance Case Studies

When you replace a component on your rental property, you get to write-off the cost of the old component that no longer exists. Take a roof replacement, for example. The new roof may cost you $10,000 to install… but what was the remaining value of the old roof that was removed? That remaining value can be written off as a partial asset disposition. 

That’s what happened to our client, Kevin. His prior tax preparer didn’t dispose of property components that no longer existed. This cost Kevin thousands of dollars in taxes over the years because his taxable income was higher than it needed to be without writing off the value of the components being replaced. We helped Kevin fix prior issues and requested itemized rehab schedules so that we could apply partial dispositions to his rentals.

For any taxpayer claiming real estate professional status, material participation in your rental activities is a requirement. A taxpayer must materially participate in each rental separately unless the -9(g) election is made to “group” all interests in rental real estate together and treat them as one activity. Making this grouping election allows you to materially participate in all rental activities by working only 500 hours across the entire rental portfolio. 

Failing to make the -9(g) election is detrimental to landlords with large portfolios. Without the election, you’ll have to materially participate in each rental property separately… which can mean spending 500 hours per rental property per year. Imagine spending 500 hours per property on a 10 property portfolio - 5,000 hours a year is impossible!

Our team will ensure that if you are qualifying as a real estate professional, we make the -9(g) election or have a really good reason not to.

When you switch CPAs, you may think the new CPA will successfully transfer all necessary data. One mistake we often find is that CPAs forget to check Form 8582 for suspended passive losses. If you have passive losses from your rentals that can’t be used, they become suspended and carry forward forever. If you switch CPAs and the new CPA forgets to report your “prior suspended losses” you will have lost thousands of dollars worth of future tax deductions. You’ll be able to use your suspended losses at some point, either when you generate passive income or when you sell your rental property. 

That’s what happened to our new client Mike. We reviewed his 2017, 2018, and 2019 tax returns and realized that he had a $350,000 suspended passive loss reported on his 2017 return that disappeared on his 2018 and 2019 returns. He didn’t sell his properties and didn’t have passive income… so what happened?

Mike switched CPAs in 2018. His new CPA didn’t carry forward his suspended passive losses on Form 8582. This mistake would have cost Mike over $85,000 in taxes had he sold his properties (because he wouldn’t have the suspended losses to offset the gain). 

We were able to correct this mistake by amending his tax returns to capture the carryforward losses. This issue occurs more frequently than you think.

Depreciation is an expense that tracks the deterioration of an asset over time. If you spend $10,000 on a roof restoration, instead of claiming a $10,000 expense in the current tax year, you’d write-off the $10,000 over 27.5 years ($363/year). 

Jessica is a new client who was not claiming depreciation on her rental properties. Her reasoning was that she did not want to pay the eventual recapture tax on the depreciation she had taken when she sold her rental. The problem with that logic is that the IRS will assess depreciation recapture taxes on the depreciation you have taken or should have taken (even if you didn’t) when you sell your rentals. 

We filed a Form 3115 to correct the missed depreciation and also change the class lives of components within her rental properties which boosted her current year tax loss providing for a heft refund.

Do you invest in Syndicates and Funds as a limited partner? If so, are you tracking your capital account?

Doug is a client of ours who had invested in several syndicates. Like most limited partner investors, Doug assumed that the syndicate’s accountant was properly tracking capital accounts. After all, Doug received a Form K-1 with a bunch of numbers on it annually that made it seem like everything was accounted for. 

However when the syndicate liquidated, our team reviewed all of Doug’s K-1s because he thought he was short-changed on the final distribution. Sure enough, the syndicate’s accountant had improperly recorded a transaction to Doug’s capital account which reduced his capital account by $20,000! This reduction meant that Doug received $20,000 less of his final distribution than he should have. 

We worked with the syndicate on Doug’s behalf to resolve the issue. After much back and forth, and several spreadsheets being built out, Doug got his $20,000 check.

If you own a short-term rental property, you likely meet the exception under the 469 Treasury Regulations that says your short-term rental is not a “rental activity” under Section 469. This means that you do not need to qualify as a real estate professional to make your losses from the short-term rental non-passive (and deduct the losses against your W2 and business income). Instead, you just need to meet one of the seven material participation tests to make the losses non-passive. 

Many CPAs (even real estate tax specialists) are unaware of these rules and frequently report short-term rentals as passive activities even when the owners materially participate. In doing so, the owners are unable to deduct the short-term rental losses against their W2 and business incomes which often costs them in excess of $10,000 in taxes. 

In 2020 alone, we discovered this specific issue on over 100 tax returns of potential customers. 

And to top that off, we’ve discovered just as many issues with accountants reporting short-term rentals on Schedule C rather than Schedule E (where they generally belong).

Meet Your Tax Preparation Team

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Billy Withers, MST

Billy Withers is a Tax Partner at the firm that leads our tax preparation practice. He has over 10 years of experience providing tax preparation and resolution services to real estate investors and business owners of all shapes and sizes.

Giana Deer, EA

Giana is a Tax Manager with experience preparing and reviewing partnership, corporate, and individuals tax returns with an emphasis on real estate investors and business owners. She also has experience with low-income housing tax credits (LIHTC) and has prior experience at a national accounting firm.

Jenny Platt 026-Edit-WEB

Jenny Platt, CPA
Tax Manager 

Jenny is a Tax Manager with experience preparing and reviewing partnership, corporate, and individual tax returns with an emphasis in income-producing properties and REITs. She also has experience with accounting method changes (Form 3115) and has previously worked at the Big 4.

Becky Withers 34794-WEB

Rebecca Withers
Project Manager

Rebecca is a Project Manager with over four years of experience coordinating the tax preparation and filing process of the firm. 

Frequently Asked Questions

We can prepare federal and state tax returns of virtually every type. Most common returns include:

  • Individual returns: Form 1040
  • Partnership returns: Form 1065
  • S-Corp returns: Form 1120
  • State returns across all 50 states.

We work with real estate investors and small business owners of virtually all types. This includes single-family, multifamily, and commercial investors of all sizes. We’ve worked with clients who are just getting started to clients with dozens to hundreds of properties.

We also work with wholesalers, flippers, agents, brokers, syndicates, funds, and other real estate businesses.

Yes, we do. We offer accounting system setup (QBO) and on-going monthly full-cycle accounting for real estate investors and small businesses.
 
At the moment the service is generally only available to our tax-planning clients, large investment portfolios, syndicates, and funds. Feel free to ask your Advisor about these services.

Generally no. However, we do believe good tax planning is the foundation to minimizing taxes and have a few different ways we can help you get a tax plan in place. You can learn more about your tax planning options here.

At The Real Estate CPA, we truly believe that every real estate investor should have a Tax Plan in place.. It's really the actions you take throughout the year, sometimes years in advance, that will impact the results of your tax return. 

That is why we strongly encourage real estate investors to go through one of our tax planning services prior to onboarding for tax preparation services. 

For clients that have gone through our tax planning process, return minimums are generally $1,000 per return.

Real estate tax is often more complex than other businesses, and many generalist CPAs will rush through the preparation and filing process in order to file as many returns as they can before the deadline. This often leads to errors that can cost you money. 

What’s more, most generalist CPAs aren’t even aware of the opportunities available to you and thus miss them,also costing you money. But it gets worse, not only will they miss opportunities, but sometimes they make mistakes that will cost you, even more, to correct down the road. 

At The Real Estate CPA we pride ourselves on the ability to prepare your return accurately while at the same time ensuring that you're not missing out on opportunities for substantial tax savings.

If you want your return filed for the lowest cost possible and risk missing out on opportunities for tax savings, or worse having to pay more to have it fixed later, you’ll have to go work with the other guys. That’s just not us. 

We currently extend all of our first-year clients for quality control purposes to ensure we are preparing your return accurately, and that you're not missing out on major opportunities for tax savings during our first year working together. 

In addition, this prevents you from having to rush to get all the information and documentation to us before the filing deadline.

After working with 600+ clients over the last five years, we found this process leads to a better experience and results for our clients.

Then the following year we can generally file your returns on time assuming we have all the information and documentation to us before the requested deadline.

Yes, with the exception of our administration staff, all members of the firm are required to take at least 40 hours of continuing education (CPE) per year.

In addition to CPE, we have professional research software and subscriptions that provide updates on changes to the tax code.

We understand we may not be the lowest priced option around.
 
However, unlike most CPAs who simply prepare and file tax returns and never give any advice on how to improve your tax situation, we will be providing you with advice on how you can best take advantage of
the tax code to minimize your tax bills and have the peace of mind that you’re not missing out on major tax-saving opportunities.
 
Additionally, most CPAs are generalists and aren’t even aware of all the opportunities, and in some cases, we’ve found they may actually be costing you money - making them not so cheap after all!

The Real Estate CPA is currently a 100% virtual organization with members across the United States.  

When transferring data to and from potential clients we use Google Suite, and for clients, we use CCH Axcess. 

Both platforms meet SOC 2 compliance, a framework designed by the AICPA to safeguard the storage and transfer of customer data in the cloud.

SOC 2 reports are issued by independent third-party auditors covering the principles of Security, Availability, Confidentiality, and Privacy.

 

 

We generally recommend using one of two methods:

  1. The IRS safe harbor method of paying in 110% of last year's tax liability, through W-2 withholding and estimated tax payments. This will not be 100% accurate but will reduce potential exposure to penalties and interest.
  2. We can create a tax estimate at an hourly rate.

You can engage our firm at any time, however, we may not be able to file on time depending on when you engage us. 

Yes, all new clients meet with one of our Tax Managers for a Kick-Off Call to discuss the tax preparation process, expectations, and what information and documentation you'll need to prepare your returns.

We are always taking on new clients. Our recruiting efforts allow us to grow our team of expert real estate tax preparers to support our clients with unparalleled tax preparation services. 

To get started please visit our Become a Client webpage. If you fit the description of clients we work with, please fill out a webform and provide as many details about your tax and financial situation as possible.

To get started please visit our Become a Client webpage. If you fit the description of clients we work with, please fill out a webform and provide as many details about your tax and financial situation as possible.

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