Year End Planning Questions

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Year End Planning Questions

Tick Tock…..time stops for nobody.

We are quickly approaching the end of the calendar year and for most investors and property managers that means the end of your tax year, too.

As such, it’s time to consider how to best wrap up your 2016 for maximum effect towards your Financial Freedom.  Here’s some boxes to flip up the flaps and peer into:

YTD P&L:  Yes, it seems like this should be self-evident.  But after counseling hundreds of investors and property owners, what constantly comes across is how frequently this review gets skipped, especially when profits are strong.  However, doing a quick review now is beneficial to compare the P&L to past years to confirm if any expenses are perhaps out of line–both too high and too low.  Both can be valuable indicators of something to dig into deeper.  (Sidenote:  To get a quick and accurate ROI on your property’s profitability when you have debt in play, download and use the FREE property assessment tool.  It’s simple and gives you an immediate snapshot on your total ROI.  

FREE Rental Property Evaluation Worksheet

FREE Rental Property Evaluation Worksheet



Property Taxes: Since this is generally a Fixed Expense, it doesn’t get much attention and it certainly should especially given the gross assessed value of your units has likely risen this year.  As such, your tax liability will have risen.  The question you are looking to answer here is,”Are the taxes on each unit reasonable for the value?”  If you don’t know how to answer this or don’t like the answer, it’s time to hire a tax consultant who can possibly start researching if you need to file an appeal with supporting documents to change the value.

Entity/Ownership:  I preach and preach and preach until I can’t preach any more about how critical it is to take advantage of the legal options available for owning and holding rental property.  Yet even so, we have investors who still own their rental properties in their current names.  So, one last appeal:  Please consult your legal counsel to get guidance on how to limit your legal exposure.  There’s nothing worse than losing all the equity you’ve built up in your property plus other personal assets due to ignoring this critical issue.

Accelerate 2017 Expenses into 2016:  Assuming your unit(s) have been profitable so far in 2016, it might make sense to look ahead for significant expenses you know you’ll need to undertake in 2017 and accelerate them into 2016 to reduce your tax liability.  As with #3 above, consult your trusted CPA or tax professional to game plan your strategy here.

The Big Why: Finally, remember why you have investment properties in the first place.  Even the most stalwart investor can get bruised and bloodied from battling with market forces, tenants, and government officials, so sometimes a fresh look can give you that perkiness you need again in your focus.

As always, here’s to your Financial Freedom!


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