Accounting services for real estate industry is complex, real estate normally consist of investment in land, building and other similar immovable assets. Real estate sector normally is involved into buying, selling or renting these assets.
Residential Real Estate
Residential Real estate normally contains family or residential buildings and lands which are generally occupied for non-business purposes. This sector can be further divided on the basis on how the residential apartments or houses are connected to one another. Size of the apartment or house can be defined in square feet generally. In United States of America, these measurements include living space excluding garage and other non-living spaces.
Other description is based on the number of rooms. Single roomed apartments are known as studio apartment whereas 2 or 3 bedroom apartments are the most common ones.
Generally residential real estate growth and construction solemnly depends on the disposable income of an individual. In better economic circumstances, individuals are more likely to invest or replace their living houses. In worse circumstances, individuals avoid investing and leasing into residential real estate. As there is a generally perception that the value of investment is expected to go down in economic crunch.
Economic circumstances of USA are improving with respect to 2008 economic crisis. It is expected that ones the consumer confidence will improve more and more residential consumers will look into an option of leasing or buying their home. As real estate and construction significantly impacts the economic stimuli to the economy. This would overall have an very positive impact on the entire US economy.
Commercial Real Estate
Commercial real estate pertains to the land, building and other similar immoveable assets which are being used for value appreciation or business purpose. This is a double edged weapon, as it is directly stimulated with the better economy and it stimulates the economy by capacity improvement.
Industrial real estate also comes under the label of commercial real estate, it comprises of factories which are involved in processing or manufacturing. Significant investment in industrial real estate particular creates a favorable circumstance for job creation and value addition into an economy. Industrial real estate is often a large project, mere construction can great a visible demand in the economy.
Taxation on Real Estate:
As US being the most sophisticated taxation economy, various taxes are levied on the real estate. Property tax is levied by the local state government rather than the federal government. It generally has 4 classes with various assessment ratios and tax rates. Once the class of the property is determined, assessment ratio and tax rate are used to tax calculate the tax payable on the property.
Capital gain tax is another aspect which is related to real estate. Capital gains are calculated based on the capital appreciation of an asset from the timing of buying to selling. Various withholding arrangements are kept in place to ensure that capital gain taxes are properly charged.
Rental income tax is charged on the rental income earned in a given tax year.
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