Novice investors rarely understand the value of a great accountant until after they need one.  Real Estate accountants specialize in tax planning to help investors better understand the tax consequences of their investments.  Numerous laws govern taxes around profits and losses in real estate and a good accountant can help an investor navigate these laws to maximize their return on investment.

Before considering any real estate investment, an investor should speak with their accountant.  Many accountants provide free consultations and typically want to build a relationship in expectation of future services.  Like all real estate professionals, accountants should be vetted with a focus on their real estate experience.  Most accounts will have a cursory knowledge of the real estate tax code; however, an accountant that specializes in real estate taxes provides a much broader knowledge base and stays up to date on all of the latest tax changes.  While investors will certainly pay more for these professionals, the long run value will far outweigh the short term cost.

Investors should familiarize themselves with the following real estate tax terminology: Depreciation, Depreciation Recapture, 1031 exchange, and capital gains and losses.  Accountants also provide guidance around corporate structure.  Many investors don’t understand the value and simplicity of a Limited Liability Company or other forms of partnerships.  Accountants can recommend structures that supply protection against personal liability, while minimizing incremental tax burdens. 

Investors should utilize accountants year-round.  Paying too much in taxes is the same as giving money away.  Additionally, holding a property an extra month or year might not make a difference from a market price perspective, but that simple decision might represents thousands of dollars in tax savings. 

Finally, real estate accountants know real estate investors.  In real estate, access and relationships add value.  Accountants know investors that need to sell or buy properties right away for tax purposes, as well as investors looking for partners.  Their needs should be your gain.