Tax Preparation: Overland Park Deductions

Whether you are an avid real estate investor or a part time player, property ownership can offer very lucrative tax advantages. Residents from western Missouri, in the greater Kansas City area, can fully realize all the tax benefits from their real estate endeavors by using the services of a CPA in Overland Park.

The first area that investors can see benefit is in the property depreciation deduction. Depreciation, which is required by the IRS on all investment properties, is an estimated paper loss for the typical wear and tear on a building – not the land. Mortgage interest is also deductible if a loan is secured for the property, as well as the amounts paid to real estate taxes. In order to take full advantage of these benefits during tax preparation, Overland Park owners and investors should consult a certified tax specialist. Depending on the portfolio of property and other factors, you may even qualify as a “real estate professional,” which offers virtually unlimited tax deductions.

CPA in Overland Park: Real Estate

There are certain criteria that must be met in order for a real estate investor to qualify as a “real estate professional” in the eyes of the IRS. First, you must spend at least 750 hours per year dedicated to real estate activities – managing, buying, or selling. Even a retiree that wants to be a casual investor as a side project may qualify once his hours are actually tabulated. Mortgage brokers and attorneys cannot qualify for these benefits, as opposed to sales agents, property managers, builders, and others, unless they have a side business in the buying and selling of property that consumes roughly 50% of their time. A CPA in Overland Park is qualified to determine if the amount of time and the activities qualify you for a “real estate professional” status.

As with most items considered in tax preparation, Overland Park investors must also meet several other criteria to reach this status, namely, the material participation requirement. This facet details that an investor can delegate many tasks to outside sources, such as collecting rents, evicting tenants, and making basic repairs, but the investor must make all major decisions, such as setting the rent and qualifying new tenants.

If you are a casual real estate investor or believe you may actually qualify as a professional, contact a local CPA to help take full advantage of all the tax benefits that accompany ownership.

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• Tax Advice and Planning