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If you’re wondering how to qualify as a real estate professional to deduct rental losses beyond the $25K limitation, you’re not alone. It’s a challenge to navigate real estate rules, especially as they are ever changing. The world of real estate is vast, but there are a few ways a taxpayer can be considered a real estate professional, in order to deduct rental losses. Our team at Advanced Tax Advisors can give you the advice and guidance to help you qualify as a real estate professional.
The short answer to, “Are real estate agents and real estate brokers one in the same for passive income loss rules” is yes. Real estate agents can claim the same exceptions as real estate brokers. There was some debate about the situation between the courts and the IRS. While the IRS attempted to argue that a taxpayer should be a broker in order to pass the material participation test, the courts thought differently. From the court’s point of view, they decided that the term “brokerage” is a common meaning. Additionally, they pointed out that the business a real estate broker does is very similar to that of an agent.
There’s no denying the profit margins. There are many benefits of owning rental real estate, which of course can be very lucrative, especially over the long haul. And it can help diversify your portfolio. However, navigating the process can be complicated, especially if you go into business with someone else. Following are some examples of the different legal structures available.
The best real estate brokers know that hiring a tax professional to strategize and prepare important fiscal documents is key for success. In the fast-paced world of real estate deals, you can’t afford to waste a second of your time fumbling through your own tax preparation services. Instead, call on the team of professionals at Advanced Tax Advisors for tax planning and strategizing for real estate brokers.
We are a successful tax advisory and accounting firm with locations in Miami and Plantation. We focus on tax planning strategies that result in significant tax savings for our clients. In the last 6 months alone, we have helped dozens of clients in multiple states and in 4 different countries save tens of thousands of dollars in income tax. We can also help you. Call us at (954) 888-6941 for a complimentary consultation.
Now – the good news is—studies show that the IRS is filing fewer audits each year. However – you still could be one of the unlucky ones and get hit with an audit. If that happens, here are the records you’ll need to submit, according to the IRS:
Being audited is not the end of the world. A qualified tax professional can help you through it. Call Advanced Tax Advisors at (954) 888-6941 for a complimentary consultation.
Cost segregation is a widely accepted tax planning strategy that may be highly beneficial. Cost segregation can add massive acceleration to the depreciation deductions you claim on a building. That savings can add up to a lot of money in your pocket. Depreciation is an annual allowance for the deterioration and wear and tear of the property.
You might be wondering how to audit-proof your time spent on rental properties. At Advanced Tax Advisors, this is a common question we receive, and it’s no surprise as to why. The world of taxes can be incredibly confusing, especially as the rules change often. Most individuals aren’t trained in the tax field, and therefore miss fundamental elements that can benefit them or their business for tax season. At Advanced Tax Advisors, we help our clients audit-proof their rental properties. Here are a few facts and tips if you’re audited.
A big question for many is how to materially participate to deduct rental property tax losses. It’s a common question, and rightfully so. If a rental property has tax losses, naturally, an individual will want to be able to have access to the $25,000 deduction allowance. Sometimes, a person is not applicable because they have earned too much money, however striving for a real estate professional status may be an option.
Let’s start by examining the similarities. Obviously, they both purchase real estate, but in different ways. Real estate dealers buy real estate and sell it to customers. Basically, that’s their job; his or her business. A real estate investor, on the other hand, buys property with the intention of building wealth. Real estate to them, is an investment. And you guessed it – the main difference in the two has to do with taxes and how the Internal Revenue Service (IRS) defines their roles.
There are distinct differences when it comes to the subject of tax rates, which differ greatly. Classifications deemed by the IRS could significantly impact your tax liability. For starters, real estate developers are able to take tax advantages not afforded to real estate investors. The tax professionals at Advanced Tax Advisors can sit down with you and go over tax issues with you and help you navigate that part of your business.
The best real estate brokers know that hiring a tax professional to strategize and prepare important fiscal documents is key for success. In the fast-paced world of real estate deals, you can’t afford to waste a second of your time fumbling through your own tax preparation services. Instead, call on the team of professionals at Advanced Tax Advisors for tax planning and strategizing for real estate brokers.
To say that running a business is challenging would be an understatement. There are so many moving parts, which means you need to be extremely organized in general, but especially when it comes to record keeping.
We hope that it never happens to you and your business, but obviously, it can. You, too, can be audited by the Internal Revenue Service (IRS). But as a business owner, there are steps you can take now to audit-proof your records.
As we mentioned earlier, organization is key. You can start by keeping good records and report income and expenses, accurately. Here are some more tips:
We are tax advisors and accountants providing accounting solutions, tax, payroll, representation in front of the IRS, CFO services, business consulting.
Learn all of this and more at the Tax Planning Strategies Webinar For Real Estate Investors, Brokers, Realtors, Landlords, Wholesalers, Rehabbers, Airbnb’ers