Roseville, CA Accountant for Real Estate Developers
Roseville accountants for real estate developers at Cook CPA Group provide tax-related accounting services for the real estate industry in California.
Real estate development can involve several complex tax regulations for even what appears to be a simple transaction. With the passing of the Tax Cuts and Jobs Act, real estate developers must pay close attention to how new tax laws may affect their business. If you need accounting services for your real estate development business, contact an experienced Roseville accountant for real estate developers. At Cook CPA Group, our real estate accountants are here to address all your tax-related concerns regarding your real estate business. Our team understands the complexity that can accompany real estate transactions, and we will work tirelessly to ensure that you receive the accounting services you deserve.
How the Tax Cuts and Jobs Act Affects Real Estate DevelopmentThe Tax Cuts and Jobs Act (TCJA) changed the tax law for taxpayers and several industries, including the real estate development business. One major change for businesses is the permanent lowering of the corporate tax rate from 35% to a flat 21% tax rate. However, there are many other changes instituted by the TCJA. The following is a list of new TCJA regulations that affect real estate developers.
Deduction on Taxable IncomeThe TCJA has provided a 20% deduction on taxable income for taxpayers. To qualify for this deduction, a taxpayer must hold their taxable income no higher than $157,500 if they are unmarried, or $315,000 if the taxpayer is filing a joint return. There are multiple ways that a real estate developer can lower their income to claim this deduction. For example, a developer could transfer their income to a C corporation, which would also permit them to take advantage of the 21% tax rate. It is also possible to use charitable contributions and transfers to your retirement account to lower your income.
Changes to Bonus DepreciationBonus depreciation is a tax tool that is often used by real estate developers. Bonus depreciation permits a real estate developer, and other taxpayers, that invests in a business property that is then capitalized and depreciated across the useful life of the property. The 100% bonus depreciation allows a taxpayer to write off any property that depreciates in less than 20 years within the first year. The IRS increased the types of property that are eligible for 100% bonus depreciation if they meet the following requirements:
- The taxpayer or the party they purchased the property from did not personally use the property
- The property was not transferred from a party related to the taxpayer
- The taxpayer did not receive the property from a subsidiary of a corporation or multiple corporations
- The taxpayer’s basis in a used property is not considered when looking at the adjusted basis of the seller