Work With a Team of Real Estate Accountants
Stop losing profit to taxes, structure mistakes, and missed deductions.
Those in the real estate world know: managing properties is only part of the job. You’re also juggling income streams, expenses, and tax rules that seem to change every year. Sure, the deals may be different, but the objective is the same: keep more of what you earn and make smart financial moves for the long run. Montgomery Accounting, PC’s real estate accountants help business owners and investors do just that.
We take care of the accounting, tax planning, and back-end structure that keep your operation running smoothly. We’ll show you where mistakes happen, and how to keep your books and your taxes working for you (not against you).
With Montgomery Accounting, PC, You Get…
The Right Structure From the Start
Different real estate activities call for different entity types. And the IRS treats them differently. The choice between an LLC, Partnership, or S-Corporation can make a major difference in how you’re taxed and how much flexibility you have with profits and losses.
Here’s how we guide our Greater Houston area clients:
Rental Property Owners
Usually benefit from an LLC taxed as a partnership or disregarded entity. This setup allows for simple management, flexible ownership allocations, and avoids corporate-level taxation.
Active Real Estate Businesses (Flipping, Brokerage, Construction)
Often see advantages with an S-Corporation structure. This can help reduce self-employment taxes while still allowing income to “flow through” to the owners.
Multiple Entities and Holding Companies
For clients with several properties or activities, we review the overall structure to avoid overlap and ensure each entity serves a clear purpose.
We also review your operating agreement to make sure ownership interests, cash flow distributions, and special allocations are clearly defined. Small details here make a big difference when the IRS or a lender reviews your file.
A Firmly Established Foundation
We talk to a lot of owners who set up an LLC or corporation without realizing how that decision will affect their tax liability, flexibility, and protection later.
So, we take a look at how your business actually operates (whether you manage rentals, flip properties, or run a brokerage) and make sure your entity supports those goals. We also coordinate with your legal advisor to confirm that your setup provides the liability protection you expect.
Powerful Tax Opportunities
When you start treating your real estate activity like a business (not just an investment) you unlock powerful tax opportunities. The difference often comes down to documentation and how you participate in the work.
For qualified clients, we help establish and support Real Estate Professional Status (REPS): a designation that allows certain investors to treat their real estate income and losses as active rather than passive.
Which might let you offset other types of income and reduce your overall tax bill.
We also help our Greater Houston area clients make the most of depreciation and cost segregation studies to accelerate deductions and improve cash flow. We work with engineers and appraisers to identify assets that can be depreciated over shorter lifespans, allowing for larger deductions earlier.
No, we’re not out to game the system. We’re using the rules as they’re written to help you run a more tax-efficient business.
Confidence Navigating 1031 Exchanges
When it’s time to sell a property, a 1031 exchange can keep your equity working instead of losing a big piece of it to taxes.
But it only works if the details are handled correctly.
We help you plan and manage the process so you stay compliant with IRS requirements, and work directly with your qualified intermediary to ensure you replace both the equity and the debt component of the relinquished property.
We also help you structure the deal to avoid “boot”—cash or non-like-kind property that can create an unwanted tax bill.
Bookkeeping Built for Real Estate
Real estate accounting is its own kind of beast. Beyond tracking income and expenses like most small businesses, it requires understanding depreciation schedules, capital improvements, and cash flow across multiple properties.
Our team of real estate accountants designs bookkeeping systems specifically for real estate operations, whether you’re managing rentals, partnerships, or construction projects.
And if something’s out of place (like old books, missed entries, or incomplete ledgers) we’ll help you clean it up and establish a clear, sustainable process.
You’ll always know where your business stands financially.
Why Real Estate Business Owners and Investors Choose Montgomery Accounting PC
We explain the “why” behind the numbers so you can make informed choices.
We use reliable cloud tools and QuickBooks (we’re certified ProAdvisors) so everything stays organized and accessible.
Our clients are agents, landlords, flippers, and investors across Greater Houston. What they have in common is the need for a partner who understands both the tax code and the day-to-day of running a real estate business.
Want to make your next deal with full financial confidence?
When you partner with Montgomery Accounting, PC, you get a team of professional real estate accountants on your side who understand the business side of real estate.
Let’s talk about your properties and goals, and how we can keep your finances in shape for the long term.
FAQs
What’s the biggest tax mistake real estate investors make?
The most common one is setting up the wrong entity—or not adjusting it as the business grows. A close second is not documenting participation hours properly for REPS, which can cost you valuable deductions.
What’s the difference between a repair and a capital improvement?
Repairs keep a property in working order and can be deducted immediately. Capital improvements (like a new roof or major renovation) must be depreciated over time. Misclassifying these can trigger IRS issues or missed deductions.
Can I still do a 1031 exchange if my property was once a personal residence?
Sometimes. A property converted from a personal home to an investment may qualify for partial deferral, depending on how long you’ve rented it and used it. Each situation is unique, so we can help you map out what’s possible.
How can I use the "paper losses" generated by my real estate portfolio?
If you qualify for REPS, these paper losses (primarily from depreciation and interest) can be used to offset all sources of income, including W-2 wages, business profits, or investment income. If you do not qualify, those losses are typically suspended and can only offset passive income, but may be released upon sale of the property.
What is "boot" in a 1031 Exchange, and how do I avoid paying tax on it?
Boot is non-like-kind property received in a 1031 exchange, often in the form of excess cash received, a reduction in mortgage liability that is not offset by new debt, or non-real estate assets. Receiving boot triggers an immediate taxable event. We can guide you on replacing debt and equity to avoid or minimize taxable boot.
Let Us Help:
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Click here to schedule a time to meet with us. We will NOT make dealing with a tax professional as painful as it’s been in the past!