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Denver Property Management Blog


Complying with Tax Laws for Owner Disbursements

Complying with Tax Laws for Owner Disbursements

If you're trying to grow your wealth, real estate is a form of investing that has paid off for many people.

There's a lot of movement in the real estate market right now, which is excellent news for current and budding real estate investors. Home sales in December of 2022 are up more than 54% compared to that time the prior year.

Whether your focus is flipping, long-term rentals, short-term rentals, or other avenues, you have an obligation to correctly handle your taxes.

These tips will help you learn more about owner disbursements so that you can get the most from your real estate investments.

Consider the Types of Taxes

Anytime you take a draw of profits as a real estate owner, it's potentially subject to taxes. Understanding the tax laws for real estate will help you know when they apply and how much you'll have to pay.

This lets you handle and stay ahead of tax regulation. Real estate properties are subject to capital gains taxes depending on several circumstances. Some examples include real estate-related income tax, estate tax, and new property taxes on a piece of real estate that you recently acquired.

Each tax has its own obligations and penalties you need to understand. A pro will help you stay on top of them while also correctly filling out the right forms.

A thorough rental analysis will let you know what types of taxes you're subject to so that you can stay on top of them.

Work With a Tax Professional

To stay ahead of your real estate taxes, it pays to get the help of a tax professional. Many of these pros wear a lot of hats, such as financial planning, property management, and real estate accounting.

Vet the pro that you want to work with, and make sure that they have the skill and experience to keep track of every dime for you. This will keep you ahead of the curve and help you avoid tax penalties later.

These pros will also help you set up accounts specifically for your tax money so that you never end up with shortcomings.

Understand the Main Violations and Risks

Another role of a tax-focused property management company is that they'll assist you in avoiding major violations and risks. For example, some of the main snags that investors hit involve things like:

  • Underreporting profits and income
  • Keeping subpar or inaccurate records
  • Exaggerating deductions on tax returns
  • Not handling calculations correctly
  • Hiding assets or income

When you have the help of a professional, they'll tackle these risks head-on and make sure that you don't fall prey to them. They can also use their expertise to help you weigh your options and choose strategies that will matter the most.

It's easier to grow and manage your real estate portfolio when you correctly handle these obligations.

Tax Laws for Owner Disbursements

Understanding owner disbursements will help you handle your taxes with impeccability. All you need to do now is reach out to a professional that can take on your tax issues.

Laureate LTD can help you out when you need assistance with real estate accounting, property management, and other services. To drop us a line, send us a message on our contact form or call 303-692-9200 to learn more.