Accounting for real estate: Everything you need to know

people viewing a real estate property

Real estate accounting is a growing and potentially lucrative field that provides exciting opportunities for CPAs and accountants at all levels. Whether you’re taking the first step into your career or a veteran searching for a new challenge, accounting in real estate has plenty to offer. And if you’re already employed as a real estate accountant, you know that the industry is constantly changing — meaning there are always new skills to learn and regulations to master.

According to Deloitte’s most recent “Real estate — accounting and financial reporting update,” the market is experiencing significant disruption. Today’s real estate agents and real estate firms must keep up with new technology and navigate changes to COVID-19­–related accounting and financial reporting requirements.

These factors and others are driving a greater need to acquire and retain talented and capable real estate accountants who can help real estate firms ensure continued financial success. Outside of traditional accounting firms, according to the U.S. Bureau of Labor Statistics, the real estate industry has the fourth highest number of accountants in the U.S., and real estate accountants earn an average annual salary of $82,090.

Opportunities for accountants abound in real estate — but what exactly is accounting for real estate, and how can you prepare for and maximize your success in the field?

In this blog post, we’ll outline the responsibilities of real estate accountants to help you determine if it’s a good fit for your career. Then, to illustrate the importance of the role, we’ll explore the risks of failing to hire a real estate accountant as well as the benefits of properly addressing real estate tax accounting needs. Finally, we’ll share some resources to help you make the most of a career in accounting for real estate.

What is real estate accounting?

Accounting is an important part of every industry, and real estate is no exception. Accounting for real estate investments and firms generally requires:

  • Helping the business manage its money intelligently to expand revenue and shrink costs
  • Evaluating and understanding property income, profits, losses, gains and value
  • Preparing and reviewing quarterly and year-end tax reports, correctly and on time
  • Ensuring compliance with federal, state, and local financial regulations and tax laws
  • Performing financial audits and analyses

Overall, accountants enable real estate agents and real estate firms to make smarter financial decisions by giving them an accurate, high-level view of their business performance.

The risks of not hiring a real estate accountant

As a real estate accountant, your skills will be essential to the continued success and operation of the business. To help demonstrate this, let’s look at the dangers real estate agents and real estate firms can face when they decide not to hire an accountant: 

  • Incurring tax penalties and regulatory fines
  • Overpaying and losing track of costs
  • Missing opportunities to increase revenue and profit margins
  • Failing to prepare for changes to tax codes and regulations
  • Lacking insight into financial performance and market conditions 

While these risks alone make a compelling argument for hiring a real estate accountant, there’s a brighter side to the story. Let’s flip the script and talk about the benefits real estate firms can reap by hiring a professional to properly manage their finances.

The benefits of good real estate accounting

Beyond helping them overcome or mitigate risks, real estate accountants use their expertise to improve business performance and provide a powerful advantage in a highly competitive market. 

By hiring one or more skilled accountants, real estate agents and real estate firms can enjoy:

  • Better cash flow and faster payments from tenants
  • Lower expenses, wider margins and more control over income
  • Improved performance of the overall financial portfolio
  • Greater tax efficiency and discovery of more deductions
  • Support and guidance for internal and external audits

As a real estate accountant, you’ll also give your client or employer the peace of mind that comes with knowing their finances are in good hands. And by hiring you, they can shift any resources they previously dedicated to accounting toward managing their properties and growing their businesses.

Master accounting for real estate with Becker CPE

Whether you are new to the field and want to learn more about accounting in real estate, an active CPA looking to expand your knowledge and earn more CPE credits or a current real estate accountant interested in deepening your expertise, Becker is here for you.

The Becker Real Estate Industry Library is the perfect solution to get you up to speed quickly on the complexities of real estate tax accounting, while earning 18.5 CPE credits after completing each course. Get started or explore more resources today.

Visit the Becker Real Estate Industry Library >

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