In this edition of the HSA Team Member Spotlight, we talk with Jason Klein, the company’s chief financial officer. Jason joined HSA Commercial last year from McGladrey, LLP where he was a tax partner in the national real estate group.
HSA: How would you define your role here at HSA Commercial?
Klein: I have the responsibility for overseeing the accounting department, implementation of internal controls, and I sign off on financial statements. I work with corporate leadership and HSA’s various division heads to assist with planning and implementation of financial transactions. Finally, I am responsible for tax compliance and planning for HSA’s investment properties.
Because of my background in public accounting as a tax professional, I have been able to step in and provide tax services directly to the company. We still rely heavily on our public accounting firm, however I have the benefit of being here in the office, where I can dialogue directly with HSA principals and investors to identify opportunities for tax savings.
In my time since joining HSA, I have brought a significant portion of our tax compliance work in-house, transitioned K1 delivery to an electronic format, and assisted with planning for a large number of transactions which include property sales and acquisitions, 1031 exchanges, and cost segregations. The result has been a better corporate bottom line and an improvement to investor returns.
HSA: How important is it to stay “up-to-speed” on tax rules and regulations?
Klein: It’s absolutely critical, especially right now. Most business people are aware of the fact that the country is headed toward a so-called “fiscal cliff” at the end of 2012. If there is no further action by Congress and the President, we will see an increase to tax rates on ordinary income, dividends, and capital gains. There will be a medicare tax assessment on all sources of income for taxpayers with income over $250,000. Many important tax benefits, such as bonus depreciation, would go away.
With the November presidential and congressional election at hand, it’s difficult to anticipate future tax rates which makes planning very challenging.
HSA: How do you deal with that level of uncertainty?
Klein: The conventional wisdom among tax accountants, especially in real estate, has always been “defer, defer, defer”. Now, accountants are recognizing they have to weigh the burdens and benefits of timing certain transactions due to the potential for an increase in tax rates next year. “Should we pay less tax now, or defer, but possibly pay more?”
As with most things in real estate, the best answer comes from a comprehensive examination of the situation. Each property has its own circumstances to consider. Since there is no certainty in the tax law, it’s best to examine all of the economic possibilities to determine the best way to maximize investor returns. Sometimes, the overall economic factors outweigh what is best for taxes.
Jason Klein has developed an expertise in real estate tax accounting over a 18 year career which includes extensive experience in tax planning, compliance, and IRC 1031 exchanges for real estate professionals. Jason Klein is responsible for managing HSA Commercial’s corporate and real property financial statements, implementing internal controls, and managing the company’s accounting staff. Jason is also responsible for budgeting, tax compliance and planning, and partnership administration.