Real estate investors often juggle multiple properties, complex deductions, and fluctuating income streams—so it’s no surprise that IRS issues can sneak up if you’re not careful. A little preparation goes a long way toward avoiding tax-time stress.
1. Keep Detailed Records
Maintain organized records for every property: rental income, expenses, receipts, mileage, and correspondence. If you’re ever audited, this will make the process far easier.
2. Don’t Mix Personal and Business Expenses
Commingling personal and business funds is one of the most common red flags. Keep separate bank accounts for your rental income and expenses.
3. Understand Estimated Tax Payments
If you earn rental income, you may need to make quarterly estimated payments. Skipping them can lead to penalties, even if you pay your full tax bill later.
4. Handle Back Taxes Promptly
Falling behind happens, but ignoring it only compounds the problem. A CPA experienced in IRS tax resolution—like Holmes & Associates—can negotiate payment plans or penalty reductions.
5. Plan Ahead for Capital Gains
If you’re selling property, planning your sale timing and using strategies like a 1031 exchange can help you avoid unnecessary taxes.
The IRS can be intimidating, but with proactive planning and guidance, you can stay compliant and keep your investments running smoothly.
Holmes & Associates helps real estate investors resolve tax issues and create long-term strategies for financial success. Contact us today for support.