What can a good CPA accountant do for a NNN property owner?

When it comes to investing NNN triple-net lease properties, understanding the impact of responsible accounting is key. Careful accounting and keeping current on changes in tax laws with the assistance of a good CPA and a great NNN broker are the best ways to maximize NNN property investment returns.  Here are some things that the best NNN CPAs keep in the forefront:

FASB guidelines: Leasing agreements fell into one of two categories under FASB accounting standard, ASC 840: operating or capital leases. Presently, standard ASC 842 classifies a lease as either a financial or an operational lease. Both forms of leases result in future lease payments; these being recorded as lease liability and a lease asset being recorded as a right-of-use (ROU) asset on the balance sheet. For revenue recognition and tax purposes, it is critical to for accountants to use FASB 842 advantageously for triple net lease lessors.

Automation: To automate daily property lease accounting management tasks many NNN investors employ property management software which will interface with the CPA’s specialized accounting system. This is vitally helpful especially if an investor manages multiple NNN investment properties. Plus, accountants and accounting software vigilantly identify opportunities to flag tax-deductible expenses from earned or investment income.

Tax efficiency: Vetting journal entries daily will help NNN investors avoid egregious mistakes and failed transactions, such as overpayments or not meeting liabilities and expenses. Maintaining tax-efficient accounting records that reflect depreciation and any cost-segregation studies is yet another important aspect of great bookkeeping.  Furthermore, maintaining separate accounts for income/expense and refundable security deposits is another best accounting practice for top-notch NNN investors.

Proper Banking: An outstanding CPA will always recommend having emergency money on hand. Despite accurate bookkeeping and outstanding records, triple net lease investor always encounters unforeseen contingencies or costs. Another important accounting aspect is not commingling personal and NNN property funds and bank accounts so that IRS and accounting rules are not violated.

Using Cash or Accruals basis: Regardless of whether the money has been deposited in the investor’s bank account or is still en route, accountants record revenue and costs in either of two ways – as accruals, or on a cash basis. For instance, a landlord’s accountant will record $50,000 as a current liability and $10,000 as income if a tenant pays $60,000 in advance for six months of base rent, . On the other hand, accounting on a cash basis recognizes income or expenses as soon as money exchanges hands. For instance, if a monthly base rent of $15,000 is paid in full, $15,000 will be recorded as revenue or income and credited immediately to the investor’s income statement.

Call Robert Gamzeh and the Triple Net Investment group team today to get ahead with recommendations for optimal lease calculations required to make excellent buy or sell or 1031 exchange triple net lease decisions. Tried and tested over many decades, you can be assured of the best guidance and recommendations to expert CPAs in today’s complicated NNN property market.

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