Certified Public Accountants (CPAs) play a critical role in assisting millions of people with meeting their financial goals. They provide valuable financial advice, consulting, certainty, and confidence to their clients who know their money is taken care of. But what specifically do they bring to the table when preparing for a real estate transaction?
Within this article, we explain just how beneficial CPAs can be when preparing to buy or sell a property so that next time you do not overlook this crucial piece of the puzzle.
What are CPAs?
Certified Public Accountants are highly trusted and trained professionals within the finance and accounting industries. Through rigorous and extensive education, they have received certifications that allow them to offer an array of accounting needs. This includes but is not limited to tax planning, auditing, and financial reporting.
How CPAs can add value to real estate transactions
Optimal Tax Planning
The first and foremost capability of a CPA that can directly benefit the sale of property is their extensive knowledge of tax codes and regulations. Bringing a CPA onto your team can provide you with individually-tailored strategies to minimize your tax liabilities.
Additionally, CPAs will be able to structure your real estate business in a way that works best for you and your wallet, whether it be an LLC, S corporation, or something else. If your goal is to grow your business over the long-term, CPAs stay up to date with how tax codes affect your ever-growing investment portfolio.
And with the tax code rapidly changing from year to year, it is prudent to have someone on your team that can understand these modifications. Even if the IRS makes a small tweak to the tax code, the ramifications can be significant.
How CPAs can mitigate risk within real estate transactions
Purchasing a property can be a risky endeavor. Whether it be due to physical conditions, such as unforeseen compromised aspects of the property or the environment, or market conditions and the general fluctuations in market prices, there is a lot of uncertainty out there.
Due Diligence
CPAs aid clients in buying, selling, investing, financial planning, and more. As a result, they know a bad deal when they see one, and can identify the financial health of the property. They can look out for any hidden fees, risks, and other concealed liabilities before the purchase of property.
Financial Analysis
CPAs can accurately and promptly identify the financial feasibility of a real estate investment. They do this through meticulous analysis of cash flow statements and financial modeling, with the ultimate goal of deriving the profitability of a property or portfolio. As a result, investors like yourself can make the most informed decision about a real estate transaction as possible.
Risk Assessment
By reviewing contracts, formulating financial projections, and identifying potentially risky areas of the investment, CPAs effectively identify and mitigate the risk associated with the property. They also can develop strategies moving forward that will help manage risk and protect the interests of every stakeholder involved.
Next Steps
Ready to bring on a CPA onto your real estate investment team? Not sure if your property is where it needs to be in regard to its financial health? Contact us today to discuss how our CPA firm that has decades of experience operating in the real estate sector can best help you.
At The Hechtman Group LLC, we understand that tax laws and regulatory and IRS requirements for real estate are vastly different from other financial services. Rich in industry experience, our CPAs and accountants can guide you through all the necessary steps while also creating best practice opportunities for long-term growth.
The Hechtman Group LLC specializes in accounting, tax and business consulting services for individuals, small business owners, and entrepreneurs, with expertise in real estate accounting.