With the constant evolution of financial & tax issues for real estate organizations, having an accountant with demonstrated expertise in this area is crucial for success. If you are a residential or commercial real estate landlord looking for accounting and tax support, then you are in the right spot! As a team of Toronto’s best accounting professionals, SDG Accountants are here to deliver outstanding financial services in this rapidly growing industry.

Accounting for residential buildings and commercial complexes require different treatments and knowledge. Challenges can arise if the expenditures for both building types are not adequately tracked and documented. SDG Accountants offer a variety of services to meet these needs.

Property Accounting:

We are here to help commercial and residential landlords on the financial side of real estate. We specialize in resolving the many financial requirements needed for the acquisition and disposition of property. We also actively participate in other areas of the due diligence process.

Some other services included with property accounting are: maintaining asset and fund records, preparing portfolios, drawing up budgets, setting up escrow accounts, drafting statements, and monthly bank reconciliation, maintaining and amending working papers, following up on monthly and annual general ledger account reconciliation, ensuring the abidance of relevant laws, processes, policies, and deadlines, and bookkeeping for property accounting, including accruals for operational expenditures, income accruals, amortization, depreciation, and any other entries.

Liability Recognition

Supplier invoices can be account payable on receipt, either with terms or due. Loan payables are other significant liabilities accounts that keep track of long-term debt or ongoing debt. If you have a long-term mortgage on a property or a renovation loan, it is essential to maintain those accounts to understand your property portfolio’s total value.

Rent Receivable Accounting

Essentially, rent receivable accounts are accounts to maintain as they are the rents paid. In an ideal scenario, there should be no receivables after 30 days. More significantly, at the beginning of each month, receivables should be tied to the monthly rent rolls charged.

Operating Cost Recoveries

Commercial or residential leasing mostly use cost recoveries. A commercial lease generally describes a base rent that can be measured as a dollar amount per month, six months, or year but is more likely to be calculated as an annual dollar amount per square foot of rentable space occupied by the tenants. In order to cover expense reimbursements, an individual commercial lease may require extra rent over the base sum. Discuss with us with more details of typical operating expenses recoveries.

Capital Expenditures & Tax Planning

In any real estate investment, capital expenditures are an essential factor to consider for tax planning. Typical capital expenditures for residential and commercial real estate include investment funds, equipment, and other fixed business assets.  Since the costs associated with these improvements are usually substantial, many property owners would set aside reserves for capital costs. Discuss with us your concerns with certain capital expenditures and future tax planning.

Analysis of Sale or Purchase of Real Estate

Markets in real estate are dynamic. At any given moment, changing economic factors, changes in supply and demand, or property sales and income will affect property value. As a real estate investor, it is necessary to understand how to use and perform an analysis of the real estate market.

An analysis of the real estate market is a comprehensive property analysis that helps identify the value of a commercial or residential property. Market analysis identifies market patterns such as market area average rental rate, vacancy rate, and supply and demand. It looks at the comparable properties (comps) and uses related property sales data in terms of attributes, location, and property type to derive a price range or possible sales price.

Budgeting & Forecasting for Commercial or Residential Business

We conduct budgeting and forecasting for commercial and residential owners. Provided are comprehensive assessments and comparisons of current and future income and expenditures. With our data, we produce multiple forecasts in various scenarios. It includes property acquisition or disposal, estimates of significant tenancy changes, or substantial changes in seasonality and weather that may affect property operations based on different potential market conditions. Our models cover a variety of assumptions to create the most accurate and insightful forecasts.

Year-End Statements & Tax Preparation

We offer year-end statements and tax preparation services for real estate landlords. The CRA has specific property rental rules to follow: Capital Cost Allowance – is specified to the class of asset. For example, buildings may be depreciated, but land can never depreciate. We guide you on how to depreciate your capital assets.

Personal occupation of a rental unit – we can guide you on claiming portions of personal use and business use of your real estate property.

Co-owned property – we will guide you on reporting the percentage of ownership on each owner’s income tax return.

Disposition of property – we can guide you to determine whether you have capital gains or loss as well as recapture or terminal loss.

Accounting for Mortgages & Covenant Compliance

To ensure your funding fits your financial goals, we can consult you on the different financing options available and which is the right fit for your real estate property.

The primary source of financing available for a commercial real estate acquisition is a mortgage loan.

Working capital loans are mostly short-term loans intended to help landlords pay for their growing investments and are handy for acquiring and leasing real estate.

Deductibility of Expenses for Tax Purposes

According to the CRA, Mortgage Interest, Property tax, Maintenance, Capital Cost Allowance (CCA), Professional Fees, Management Fees, and Salary expenses are some of the expenses you can claim against real estate income. We will assist you in claiming the maximum allowable deductions to lower your tax payable. Be sure that all receipts are retained for reporting real estate expenses if you are audited or otherwise required to submit receipts to verify your claims. Your claims will possibly be excluded if you do not provide them.

Conclusion

SDG Accountants is a reliable partner providing excellent accounting and tax services for residential and commercial real estate landlords. If you want premium service at a fraction of the price, SDG has got your back.