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Real estate remains a highly lucrative investment, with the average house price rising almost 5% in the previous year. Investors and real estate firms alike enjoy this growth, however, right around the corner lies the one thing no one likes, Tax season. It can be highly stressful for real estate investment firms like yours, who might be missing the proper tools and prep work, which concludes in stress, and lots of it. One effective way around it involves a proactive approach that accounts for all the facts and figures ahead of the hectic crunch time.

Yet, as an investment manager in a real estate firm, you might omit crucial steps in the calculations derived from fragmented data and multiple excel sheets, resulting in problematic and costly inconsistencies, and mistakes.

The good news is that there is a more effective alternative to manual documentation – achieved through the power of data automation in your real estate Capital Relationship management software (CRM). With scheduled data automation, you will never need to worry about missing out on filing Schedule K1s and 1065 reports and optimizing tax refunds for your investors.

Automate reports with real estate investor reporting software

There are various steps to consider for a comprehensive and smooth-sailing tax process, such as preparing and submitting reports on time, considering tax savings and benefits, and distributing them to every investor, to every entity, and every investment separately. Data automation helps you fill in the personal credentials, financials, and investment documentation needed for your tax filings while avoiding inaccuracies or omissions. Imagine generating and distributing Schedule K1s and 1065 reports with a click of a button. For you, for your investors, for any investor class, with as many variations needed.

Anticipate data barriers

Anticipating and resolving data fragmentation provides a seamless tax season to help you optimize your tax returns and receive your refunds earlier. Data automation ensures that you can acquire all the relevant details you need for investors’ documents and deductions for proper filing. It also identifies and provides the specific information required for each type of tax report. According to the IRS, the error rate for e-filed returns is 1% compared to 21% for paper documentation.

Using an automated platform like Agora will keep tax forms accounted for and sorted in proper order, avoiding mistakes that could compromise tax deduction eligibility and can even result in paying penalties.

Data integrity with a unified source

Software automation provides real estate investors with a reliable reference point that includes the W-2 that reports the amount of taxes paid in a year, along with deductions, credits, interest rates, and the dividend of income.

Additionally, there are other points of data that shape your investor’s tax processes, such as state and local taxes. These location-specific taxes differ vastly in amount (western and southern states usually have the lowest rates), and investment firms should always take these values into close consideration.

A robust and automated real estate CRM accounts for all of these necessary details, available from a single trusted source. As such, you will never need to cycle between excel sheets and applications in search of the information you need for your tax report submissions.

How data automation optimizes tax season reporting

Data automation provides your real estate firm with the most updated information needed to drive effective tax strategies for your investors. It keeps your data reliable and aggregated to a single source, which means no more hopping between email apps, excel sheets, notes and your CPA.

For instance, data automation can help assess the criteria for cost segregation studies (a strategic process involving tax advisors and engineers, which maximizes depreciation deductions and minimize the tax burden for your investors).

While cost segregation can benefit investors by writing off property-related costs faster b, investors need to fulfill one of the following rules:

  • Qualify as a professional real estate agent
  • Have a total AGI (adjusted gross income) lower than $150,000
  • Be selling a property

Data automation ultimately provides a very clear financial snapshot of all the investors and entities. It expedites reviews on the requirements and depreciation deduction in tax strategies such as cost segregation to provide real estate investments with the best outcome without guesswork.

Identifying the best practices for tax season

A proactive approach is the most efficient manner of handling the complex processes and heartaches during tax season. Implementing a real estate Capital relationship management software (CRM) enables your real estate firm to efficiently check against investor criteria for tax reductions and refunds, avoiding unfavorable scenarios. Some of the essential steps in a proactive tax preparation approach include:

  • Organizing and compiling documents in advance – gathering as much relevant information as possible from investors that can help files taxes with utmost efficiency.
  • Familiarizing with tax deductions and regulations – identifying the terms and conditions for a tax deduction and complying with the latest regulatory changes.
  • Keeping previous financial records (ideally within the last three years) – applying the best practices in record documentation toward proving previous deductions and income.
  • Understanding deadlines and possible penalties – working with a realistic tax submission deadline and identifying the consequences of defaulting on these agreements.

Equipping your real estate firm with reliable data empowers them, and provides greater control over investor tax management through access to secure and confidential information with ultimate efficiency.

 The significance of data automation in real estate investments

At Agora, we dedicate ourselves to building an investment management platform that helps you build portfolios through the excellence of data integrity and automation. We streamline the entire investment operation, including generating Schudle K1s and 1065 reports in a click of a button, so your investor relations manager can provide optimized outcomes for every investor, without exception.

Our tax document center offers an intuitive channel where you can manage, organize, and personalize investor documents for each tax process. Through the power of secure cloud technology, we provide accessible file management from a single source of truth to help you complete your investors’ tax returns in no time.

By using Agora, you can provide your investors with transparency and accuracy that helps reduce the burden of taxes and win their trust, accelerating the growth of your portfolios.

Book a demo with us to discover how you can automate your tax season reporting with Agora today!

Modified Date & Time : 30 May 2024, 01:09 pm


Shepsi is Agora’s Head of the Financial Products department, leading the Agora Payments, tax, and financial services globally. As a former CEO and co-founder of a tech company, Shepsi has extensive experience building various complex products and services from inception to market.


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