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Real estate transactions have significant tax consequences. Buying, selling, renting, and investing all create tax obligations and opportunities that affect financial outcomes. Tax professionals help property owners understand implications, maximize deductions, and stay compliant with tax law.

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What This Section Covers

Types of Tax Professionals

CPAs, enrolled agents, tax preparers, and tax attorneys

Tax Implications: Buying

Deductions, credits, and establishing cost basis

Tax Implications: Selling

Capital gains, exclusions, and timing strategies

Rental Property Taxes

Deductions, depreciation, and landlord tax planning

1031 Exchanges

Deferring capital gains on investment property

Property Tax Appeals

Challenging assessments to reduce property taxes

Comparing Accountants

Questions to ask and how to evaluate options

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Why Tax Planning Matters

Establish correct cost basis from day one. Understand which closing costs are deductible vs added to basis. Identify available credits for first-time buyers or energy improvements.
Primary residence exclusion can eliminate up to $500,000 in capital gains (married filing jointly). Timing, residency requirements, and proper documentation affect eligibility.
Landlords can deduct expenses, depreciate the structure, and potentially qualify for pass-through deduction. Depreciation recapture affects eventual sale.
1031 exchanges defer capital gains indefinitely. Cost segregation accelerates depreciation. Entity structure affects tax treatment.

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When to Involve a Tax Professional

Before buying:
  • Understanding tax benefits of ownership
  • Evaluating rent vs buy from tax perspective
  • Planning for investment property purchases
Before selling:
  • Calculating potential capital gains
  • Timing sale for optimal tax outcome
  • Evaluating 1031 exchange options
Ongoing ownership:
  • Annual tax preparation with real estate holdings
  • Rental property record keeping
  • Property tax assessment reviews
Complex situations:
  • Multiple properties
  • Mixed personal and rental use
  • Business use of home
  • Inherited property
  • Divorce-related transfers
Tax law changes frequently. Strategies that worked in previous years may not apply currently. Professional guidance ensures compliance with current rules.

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Tax Planning vs Tax Preparation

Tax planning: Proactive strategies to minimize taxes before transactions occur. Done throughout the year, especially before major decisions. Tax preparation: Filing returns after the tax year ends. Reports what already happened. Both matter. Planning creates opportunities. Preparation ensures accuracy and compliance.

Find Tax Professionals

Research CPAs and tax professionals with real estate experience.