Category Archives: Real Estate Accounting

Tax Deductions and Tax Tips from a CPA for AZ Realtors

It’s August, so the last thing on your mind is probably taxes. But, there are things you can be doing now and throughout the year that will help you get the most out of available deductions. If your business involves real estate in Arizona, then read on for information on deductions you may not know about, and for helpful tips that can help you take full advantage of current real estate IRS tax laws.

Common Tax deductions for Arizona real estate professionals

  • Vehicle expenses, including mileage, insurance, interest on loans, parking expenses, tolls, license plate fees and depreciation.
  • Home office expenses (if you qualify – check with your CPA).
  • Advertising and marketing expenses – basically, anything you pay for advertising materials.
  • Bookkeeping, accounting, tax preparation and legal expenses.
  • Business meals and entertainment (deduction is limited to 50%)
  • Postage
  • Real estate franchise fees
  • Office supplies
  • Office rent, utilities and cleaning
  • Business-related travel expenses
  • MLS dues and dues paid to realtor associations and chamber of commerce memberships
  • Real estate license renewal fees
  • Continuing education expenses
  • Computers and related software and equipment
  • E&O, health, liability and equipment insurance
  • Wages paid to employees
  • Cell phone expenses
  • Business gifts (deduction is limited)

Tips to help make tax time “less taxing”

1. Get organized. Use a separate bank account and credit/check card for your business-related expenses, and organize your receipts. Remember to save receipts even for the smallest purchases, as they can add up to big deductions. Keep track of mileage as you go, rather than trying to recreate it later.

2. Understand limitations. Most business expenses can be deducted if they are “ordinary and necessary.” A CPA can help you determine whether an expense satisfies both of these requirements.

3. Get help from professionals. We get it; you’re entrepreneurial. That’s great! However, unless your business is a tax business, it will be incredibly difficult, if not impossible, to stay on top of the tax rules and regulations on your own.

We would love to help out. Please complete the form to set up an appointment with our real estate tax specialist at Sean Core CPA PLLC conveniently located on Chandler/Mesa border today.

Real Estate Rental Income Tax Q & A – 3 Top Questions

Many people who own real estate investment properties or are considering getting into this industry run into real estate rental tax concerns. Rental real estate owners are required to pay income taxes on rental income, just like any other income source. However, there are some nuances to the rules that could become traps for the unwary landlord.  Here are 3 of the most common questions that my CPA office hears about rental income:

I require my tenants to pay a security deposit at the start of their lease. Is this considered income that must be reported for tax purposes?

When you receive a security deposit at the beginning of the lease term, and you intend to return it when the tenant vacates and leaves the property in good order, you do not need to include it as income.

However, if your tenant moved out and now you are keeping some or all of the deposit because the tenant didn’t fulfill their lease obligations, you would include as income the amount of the deposit you are retaining, in the year you kept it.

My tenants paid their January rent on December 28. My tax year ends December 31, but because the rent wasn’t due until January 1, can I include it in next year’s rent instead of this year’s?

According to the IRS, advanced rent is considered income in the year you received it, regardless of when it was due and regardless of whether you use “cash” or “accrual” as your accounting method.

My tenant is a plumber and fixed the pipes at the rental property instead of paying rent. Do I need to report anything for income tax purposes?

Yes, you will need to include what he would have paid you in rent as income, even though he paid in services instead. But, you can probably also turn around and take a deduction on your tax return for the services the plumber provided.

To learn more about the accounting, bookkeeping, business strategy and tax services Sean Core CPA PLLC provides for Arizona landlords, contact us online or call(480) 626-5043. Disclaimer: Also, landlords may want to review these tax tips provided by the IRS.

We moved in December