When it comes to real estate accounting services, you want the right professionals working with your business to deliver real estate tax knowledge that supports your best interests. While assessing the best fit for a new real estate accountant, it’s important to choose an industry specialist over a generalist. Why? Because those who live and breathe real estate share your interest in protecting assets and making smart investments. Paying more for specialized services pays off in the value it adds to your investment strategy.
Our real estate investment and development team compiled a few tips to consider when choosing a real estate accountant.
Be on the same page
When both you and your accountant understand the end goal, only then can the appropriate planning be put in place to get you there. Ensuring your needs are met requires significant time spent in researching and applying practice systems, accounting measures, and tax planning strategies. It’s important to be on the same page as those supporting your ambitions for real estate investments. That’s why you need to establish alignment at the very beginning.
Stay current with all the rules and legislations
An industry specialist should always be on top of the evolving changes to income tax rules and industry trends. Balancing general accounting updates along with changing real estate tax regulations can be challenging for a single person to maintain. Especially when considering discrepancies between geographical regions. As it’s rare to find a single individual with in-depth expertise in both areas, your chosen accountant should have a solid team with experience working with a variety of investors. That way, you have peace of mind in all the bases being covered. It’s not just about watching for the new rules, but applying their impact towards real estate investments now and in the future.
You want a fellow real estate investor
Practical experience beyond technical knowledge is imperative to ensure your best interests are kept in mind. That’s why you want your real estate accountant to invest in real estate themselves. That way, they have a true understanding of what’s at stake and how to go about it. Someone who knows the dynamics between tenants, lawyers, accountants, municipal officials, and financing representatives gives a fundamental perspective you can’t get any other way. This kind of perspective gives a thorough and relevant understanding of all the key areas real estate investors should be focusing on.
Choosing a generalist vs. a specialist
There are areas of specialty within accounting that are specific to different industries. General accountants are a good fit for certain areas of business. However, there are very specific nuances to real estate accounting that must be considered to make the most informed decisions. You want the support of someone who knows the ins and outs of those nuances. The right knowledge and experience helps to make better business decisions when assessing tax impacts, weighing options, and making cross-border considerations. The wrong advice can be costly; whether as a missed opportunity, lost time, or lost dollars.
Let’s use medicine as a way to put this in perspective: if you required bypass surgery, would you feel more comfortable with a clinical physician performing the surgery, or a seasoned heart surgeon?
Keep up the momentum
So you’ve found a good real estate accountant; what now? Sometimes clients think they can leverage specialized expertise to set them up with an action plan, then use a cheaper accountant to maintain the progress. Something to ask yourself in this case: do you want to work with a leader or a follower? This type of guidance will impact your business performance, so the decision lies in knowing which path you want to be on.
Further, if you want to see your vision through, you need to leave it in the hands of those setting you up for success in the first place. It’s in your best interest to have the professional who set up your real estate investment plan monitor its progress and ensure everything is on track. Most plans involve multiple stages that require changes over time, factoring in new milestones, growth, and changes in family situations. Plus, you need to evolve with new and changing industry rules pertaining to tax, accounting, finance, and legal. Taking all these considerations over from one accountant to another with limited background knowledge would be extremely challenging at best. If you want to keep your momentum going, you’ll want to hold onto your first choice.
Questions to ask your accountant
Whether you’re already working with a real estate accountant or are looking to expand your options, these questions can help steer the conversation to narrow down their level of expertise. Ultimately, it should give you a better understanding of whether they’re the right fit for you.
- Do you invest in real estate?
- How long have you been investing in this space?
- What kind of real estate holdings do you and your clients have?
- What percentage of your accounting practice is devoted to real estate matters?
For any questions and guidance in real estate tax, development, or consulting, our team would be happy to discuss whatever is of interest to you. Please feel free to reach out at any time.
Tags: real estate accountant, real estate investors, real estate tax
George E. Dube, CPA, CA
Tax Partner, BDO Canada
Real estate accountant, real estate investor, speaker, author