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John Harman, CPA PLLC

Real Estate

Contact Us (469) 742-0283

Tax and Accounting Services for the Real Estate Industry

If your business is the fast-paced world of real estate, you already know you’re in an industry with complex transactions and reporting requirements. You also know how competitive it is and that economic downturns, however unpredictable, may cause your business to be less profitable than you imagined. The good news is that we are here to help you navigate the financial challenges you face in building a profitable real estate business.  

Whether you’re a residential builder, a commercial land developer, a property manager, or a real estate investor, as experienced real estate accounting professionals we provide a customized approach to each and every client with the goal of improving profitability, managing cash flow better, and improving operational efficiency - everything your business needs to stay ahead of the competition.

Real estate tax law is complicated, but our knowledge of current real estate tax law enables us to work with your company in developing innovative tax planning strategies that minimize your tax liability. We'll also help you evaluate potential land and property acquisitions and dispositions and assist you in understanding the implications of various methods of financing should you need it.

Top Real Estate Tax Deductions 

My first suggestion.  Keep a separate bank account and use a separate credit card for all business expenses.  Accumulate the expenses each month in a spreadsheet or use QuickBooks online. Keep it simple.  Using a separate credit card makes the tracking of expenses so much easier. 

Vehicle Expense: There are two ways to take your vehicle expense.

Every year the IRS sets a “standard mileage rate” which factors in gas, wear and tear, and other expenses associated with driving. For 2020, the mileage rate is 57.5 cents per mile. In order to take the deduction, you simply need to multiply the mileage you put on your car for work by the IRS mileage rate. For example, if you drove 18,000 miles last year in your business, your mileage deduction would be $9,720 (54 cents x 18,000). It is required that you keep a log of your miles.

The alternative is to take a portion of the actual expenses of your vehicle such as gas, oil changes, repairs tires, inspection, depreciation, interest on car loan or, if you’re leasing, the yearly lease cost (there is a limit on lease expense for luxury cars). To find the business portion of your car expense, use your total business miles as the numerator and your total mileage as the denominator and apply that percentage to your total yearly expense. For most people, taking the standard mileage rate is preferable for its simplicity and also because it’s fairly generous. Even if you take actuals, you still must keep track of your business miles to arrive at the percentage of business use. Either way, we highly recommend one of the new mileage tracking apps for your smart phone to make this easier.

Home Office Deduction

If you have a dedicated workspace at home that you use only for your real estate business, you can deduct a portion of the cost of your home as a business expense. For instance, if you used 10% of your home for business, you can take 10% of the cost of operating your home as ‘indirect’ expense. If you have expenses that only affect your dedicated office space such as curtains, specific business furniture, etc., you can take that expense in full as a ‘direct’ expense. As an alternative, the IRS has developed the standard home office deduction. In 2019 you could take $5 per square foot with a maximum of 300 square feet without having to calculate all of your expenses and the deductible portions.

Client Gifts

You can deduct up to $25 per gift per person for business purposes. Your gifts may cost more, but your deduction is limited to $25 per gift.

Other Common Deductions

The rule of thumb is if it is related to your business, it is probably deduictible. Signage, advertising costs, software for your laptop, youir laptop, education and conferences, travel snd much more. . 

What we do for you:

We provide business consulting and outsourced CFO services such as cash flow and budgeting analysis, payroll and bookkeeping services, sales and use tax exemptions and credits, tax compliance and tax planning, and financial statement audits and review.

Specialized Real Estate Accounting Services:

In addition to our business consulting and outsourced CFO services, we are also available to assist you with the following specialized real estate accounting services:

  • Dispositions of real estate
  • Section 1031 Exchange assistance
  • Due diligence for proposed real estate transactions
  • Lease audits
  • Real estate investment trust consulting
  • Bank Financing
  • Tax credits – energy, solar, enterprise zones, and low-income and affordable housing
  • Business and real estate valuations
  • Internal control audits
  • Succession planning
  • Litigation Support and Fraud investigation
  • Capital acquisition and disposal

Our Clients: 

  • Private equity real estate funds
  • REITs (real estate investment trusts)
  • Hotel operators
  • Residential commercial and retail land developers
  • Building owners
  • Property managers
  • Agents/brokers
  • Property investors
  • Commercial and residential builders

Leave the accounting to us.

Our specialized knowledge of the real estate industry has helped many real estate professionals thrive, and we're ready to help you too. If you’d like to learn more about our real estate accounting services, don’t hesitate to call or fill out the contact form below. It’s that easy!