CPA for Investors of Commercial Real Estate
Strategies, Compliance, and Tax Matters for Commercial Real Estate Investors, Developments, and Managers
Many commercial real estate investors previously invested in residential properties, so they enter the business with an understanding of some basic and advanced real estate investing topics. Other investors choose this avenue for the first time, lured by the stability of long-term tenants or possibly the risk reduction of Triple Net leases. Either way, these investors need a CPA Firm specializing in real estate and managing this business’s challenges.
Depreciation and its strategies are some of the most complex areas of real estate tax planning. If you are familiar with real estate and started here because of a 1031 Exchange from a residential portfolio, the concepts will be familiar with some new details. The IRS requires depreciation based on a predefined schedule and the purchase price. One area uncommon in residential real estate but very common in commercial real estate is the cost segregation study. This allows you to divide your purchase into sub-categories with different depreciation schedules. When combined with bonus depreciation, this can be a large deduction immediately.
If you are primarily owning and managing your real estate business, you can easily establish yourself as a real estate professional. This is especially valuable for married couples where one spouse has a traditional job or business, allowing you to offset the paper depreciation losses from real estate against the actual cash income from a job or business. When combined with other aggressive real estate investments like short term rentals, you may find massive tax advantages as you build up steady cash flow from real estate.
Commercial real estate investors have special benefits and gotchas for their industry. As a real estate CPA firm, we highly focus on helping our real estate investor clients make the best financial and tax decisions.