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4 Ways CPAs Can Save You Thousands of Dollars in Real Estate Investing
The Austin CPA firms have a single primary goal in mind when they work with you — save your money. CPA can facilitate you in your business dealings in various ways, and that’s especially true when it comes to real estate investing. Here are 4 ways CPA’s assistance can save you thousands of dollars.
1. Improve Your Negotiation Skills
When you’ve hired an expert, it’s easy for you to meet clients and close deals successfully. They ensure that you get better terms and a better price for your property deal. You can save money because your CPA will ensure that you don’t overlook any critical points in the agreement and they’ll also help you identify loopholes and pitfalls of the real estate investment.
2. Get Discounts
CPA can save you tons of money by filing your taxes on time and taking advantage of it in terms of incentives, discounts, and tax breaks offered by the federal and state government. A CPA can facilitate you in finding tax breaks for which you qualify. They can then explain to you the process of counting every discount that you can get — ultimately saving you thousands of dollars in the long run.
3. Investing Strategies
A CPA, who’s aware of the ins and outs of the real estate market, is a fantastic asset for you. They can assist you in finding the properties which offer the greatest return on investment. They can also help you navigate through the confusing red tape, legal work, and paperwork involved with selling and buying property.
Suppose you have a real estate business, and you sell and buy property regularly. In that case, you must have an experienced CPA by your side to ensure that you aren’t making any blunder and are following through with the tax obligations.
4. Organization
When it comes to maintaining accounts and taxes, it’s vital to stay organized. Hiring a CPA will help you with that. When you know that you have to give your financial records to someone else, it’ll give you the urgency and responsibility to have them ready on time.
If you’ve hired a good CPA, they’ll set guidelines for your team to follow to keep accounting and tax files accessible and organized.
Get Expert CPAs in Austin, TX
To fully leverage the tax benefits of real estate investment, it’s best to consult a specialist tax accountant. For a CPA firm specializing in real estate, get in touch with us, at Harmon/Harmon. We operate in Austin, TX, and we offer accounting services for real estate and tax planning and compliance services for real estate agents and brokers.
How to Find the Right CPA For Your Small Business?
Look at you running a successful business out of your house! You're serving customers day in and day out, and in exchange, you're getting what every small business needs to flourish: money. Your business has started to grow so fast that you need to hire someone to keep track of your money. It's time for you to find a CPA (Certified Public Accountant).
But how can you find the right CPA for your business? We'll guide you!
Look Online, But Verify Their Credentials
Online search is the best place to begin looking. Since Google search shows your results based on your zip code, you'll get a long list of CPAs in your area. If you reside in a small town, you may have to tweak the search radius to get CPAs near you.
During your search, make sure that the CPA is actually certified. A certified CPA is one who's passed the test and is given a license by the state. Moreover, CPAs should also fulfil the requirement of continuing education so that they're abreast with local, federal, and state tax laws. If you need them to prepare your business's taxes, ensure that they've got a PTIN (Preparer Tax Identification Number).
Connect with a Reliable Professional
If you want to excel at something, look for a successful person in the field and emulate what they do. You can use this principle to anything. Want a good body? Get in touch with a person who's got a good body and learn from them.
Similarly, in your case, you can look for successful small businesses and connect with entrepreneurs. LinkedIn is a great place to start. Send them a follow request and drop them a message to start a conversation. What you'll learn this way is firsthand experience, and that's priceless.
Ask those entrepreneurs about how they went about finding a CPA and what financial advice do they have for you. There's a possibility that they might link you to their CPA and make your search easy. Always network!
Have an In-Person Meeting
A CPA will handle your money. Therefore, it's vital that you meet them in person. As you've put a lot of time and effort into establishing your business, you need a CPA whom you can trust. And the feeling of trust and reliability will only come with an in-person meeting. If the candidate is flaky about the meeting, cut them out from the list and look for someone else.
The meeting is all about gut feeling. Follow it.
Get Certified Public Accountants in Austin, TX
If you are a small business struggling with tax compliance and other accounting issues, get in touch with us, at Harmon/Harmon. We’re one of the CPA firms specializing in real estate operating in Austin, TX, that works with small businesses to assist them with tax planning and compliance. Get in touch to get your small business off the ground.
Real Estate Investment and Tax Benefits: A CPA’s Perspective
Real estate investment is a great way to develop a passive income source. While you work your 9-5 job, you’re also guaranteed revenue and capital gains through rental income and property appreciation, respectively.
If you’re particularly successful, you can even drop the job and focus on something else you enjoy while having a reliable income stream from your real estate investment. However, real estate investment offers more than just an income stream; it also comes with an assortment of tax benefits. Here are some of them.
Depreciation
Depreciation refers to the reduction in an asset’s value due to wear-and-tear, obsolescence, etc. The IRS provides guidelines for how to depreciate your asset, but that’s not where the tax benefit rests. Depreciation is a paper loss. For instance, if your house’s value decreases, you don’t pay anyone, but the provision for depreciation is still treated as an expense. Consequently, depreciation reduces your taxable income without you actually paying anything. However, this reduction may be offset by a capital loss in your asset’s value.
FICA
FICA refers to the Federal Insurance Contribution Act. This is a U.S. law that enforces a tax on employees and employers to fund Medicare and Social Security programs. This amount is taken directly from a person’s pay, and one can’t opt out of paying the tax. However, there are some kinds of incomes, such as rental income, that aren’t subject to FICA.
Refinancing
Refinancing refers to the process of replacing a current credit arrangement with another credit arrangement under different terms and conditions. Refinancing has an assortment of advantages, such as lower interest rates, reducing monthly repayments, and freeing up cash. The last advantage is particularly relevant to refinancing a real estate investment.
If your real estate has accrued significant equity, you can pull out that equity by cash-out refinancing your property. Cash-out refinancing involves extracting the appreciated value of your property by establishing a higher loan amount, which is non-taxable. While this does increase your debt, you also get more cash, which you can use to improve your property or invest elsewhere.
To fully leverage the tax benefits of real estate investment, it’s best to consult a specialist tax accountant. For a CPA firm specializing in real estate, get in touch with us, at Harmon/Harmon. We operate in Austin, TX, and we offer accounting services for real estate and tax planning and compliance services for real estate agents and brokers.