Hello,
I have recently become a landlord of two properties and I am trying to educate myself on how best to limit my tax consequences. I am curious if it is best to find a financial planner who focuses on Real Estate or an Accountant. I am thinking the latter, but just had a friend advise me that a financial planner would be better to advise on how to create a separate business and provide overall strategy.
My main focus is to make sure i am not leaving money on the table for Uncle Sam. I still work full time for an employer, which - from my research - limits my ability to write off a lot of the expenses and depreciation.
Any advice of which is better suited for my needs?
And does anybody had any referrals for accountant or planner in San Francisco area?
I recommend reaching out to a tax accountant because ongoing negotiations in Washington are going to lead to more and more changes in the tax code. As time goes on I believe taxes will go up by deductions being lowered. It is best to speak with a pro so you can prepare yourself for an uncertain tax climate.
My main focus is to make sure i am not leaving money on the table for Uncle Sam. I still work full time for an employer, which - from my research - limits my ability to write off a lot of the expenses and depreciation.
**I am not an acct., but I don’t think that limits your ability to write off a lot of expenses and depreciation (unless you are trying to have passive income losses to offset your job income - then there is some truth to it). If your rentals make money, you can expense and depreciate up to break even for sure, and depending on your income, maybe even some losses.
You might want to start with some education, because how do you know a good accountant if you don’t even know what questions to ask them? I went through three accountants before I finally found one that knew more about rental property taxation than I did - and two of them were recommended and supposedly owned rentals of their own! I would ask them a question, and after researching it, they would come back with the same answer I already read in IRS literature, that didn’t answer the question. Someone worth their salt should be able to answer the tough questions - you know, cover the ‘gray areas’ and even give you background details such as what is happening in court cases involving the issue. I suggest you start with a quick read of something like “Real Estate Loopholes” - Diane Kennedy & Garrett Sutton, though it might be quite dated by now. Then, when you search for a good acct., pose the tough questions and see if they know what they are really doing! Do they know the latest changes, and changes that are coming up? Plus, do they care about their clients and trying to legally save them as much in taxes as possible (some don’t know enough, and some just don’t care enough)! Good luck.
“You can have your dreams, or you can have your excuses, but you can’t have both.” -Chris in FL