Tax Deductions Available to Real Estate Businesses

by Jack John Outsourcing Partner for Bookkeeping and Accounting

Accounting and bookkeeping services prepare business records for financial insights to the stakeholders and tax calculations to pay to the IRS. No matter which industry a business belongs to, it can never escape tax and legal regulations. Real estate businesses deal in voluminous transactions with large sums involved in purchasing and selling properties.

Moreover, rent, leasing, and related activities have different accounting impacts. These firms must maintain proper records to ensure accurate tax payments and deductions to maximize savings. Firms can always consider virtual bookkeeping services if the in-house doesn't work correctly. 

Virtual bookkeeping service providers hold proficiency, experience, and knowledge of handling accounting and bookkeeping for a specialized industry. They employ people with the necessary qualifications and expertise to provide quality services. Real estate accounting has unique complexities, which an experienced individual can detect early and protect the firms. Thus, investing in virtual bookkeeping services is beneficial.

Apart from this, these service providers keep themselves up-to-date with everything about real estate accounting, from legal to technical. They let firms carve out tax-saving strategies and enhance the efficiency of their practices. Real estate firms need to have complete documents to avail of the deductions. The tax-saving opportunities available to them are as follows:

Car deductions:

The most claimed tax deduction for real estate owners is car deductions. It involves deducting all the driving expenses related to business purposes. Along with mileage, maintenance and other vehicle expenses can also get claimed as deductions. However, accurate record-keeping is crucial to filing claims. Firms need to track their mileage and assess how much they've used for business, especially when there is one vehicle for business and personal use. However, when the company does not have a complete car expense record, it can use the standard mileage rate by the IRS and multiply it by car miles for the year. In such cases, car expenditures become irrelevant.  

Office expenses:

The costs spent on routine office activities and maintenance are tax-deductible. These include rent, utilities, etc. Even work from home provides opportunities to deduct the home office expenses from taxes. The virtual bookkeeping services provider maintains complete records for deductions. 

Business travel expenses:

Real estate firm owners have to move from one place to another for business dealings and communication. The expenses they spend on traveling for business purposes are tax-deductible. These expenses involve keeping receipts for airfare, hotel, lodging, or accommodation expenses, 50% meal costs, etc. It enables firms to save money on taxes. The virtual bookkeeping services can guide you on how to mix pleasure and business and still avail of deduction. 

Depreciation:

Depreciation is one of the most beneficial deductions to businesses. Its cost spreads over the years through division. Every year, a portion gets availed of as a deduction in taxes. Tangible properties like copy machines can get deducted in a single year. However, building, land, and related properties get deducted over the years. 

Insurance:

The real estate accountant near me classifies insurance as a deductible expense for business liabilities, property, etc. Even work from home personnel can deduct a portion of homeowner insurance. Self-employed people can also deduct 100% of their health insurance premiums as deductions from taxes. 

Commissions paid:

The commissions real estate firms pay to agents or employees under them is a fully tax-deductible expense. 

Training and education:

Learning and education never stop. Thus, real estate owners who update themselves with current and future real estate trends by obtaining qualifications and training courses can deduct these expenses from their taxes. 