How Much Should I Pay for a CPA / Do I Even Need One?

Question

Hello all!

I'm a new investor in my 20's, getting ready to file my first year of owning a Duplex - renting half and living in the other half. My questions surround how to structure my taxes of course. I've always filed myself, very cut and dry profile...single, no kids, no LLC, W2 wage. A 15 minutes on TurboTax type. With the Duplex now, my understanding is I file as though the rental half is a separate property and cut all expenses in half as a write off to my rental income (property tax, insurance, maintenance, improvements, etc...nothing was done specifically to either unit it was full home external work like garage and railing repairs, painting) as well as depreciating the half of the duplex that is a rental after calculating basis.

It all seems very straightforward to me but I know I'd be naive not to have a second set of eyes with a professional given my lack of experience. However I don't want to get taken to the cleaners for hundreds or thousands for someone to essentially say "yep, looks good."

I'm sure everyone will tell me to still get one, but what in your experience is a reasonable price for a client like myself? Also, open to recommendations if I decide to hire someone. I'm in Metro Detroit, Michigan.

Thank you for your time, cheers!

Jana Cain · Answer

@Mason Myers Pricing will vary quite a bit, based on several factors. A firm with employees will likely charge more than a single preparer office (due to overhead, etc). Some pros only work with REI clients with a minium portfolio size. Based on what you've described, in my area a return like yours would probably start at maybe $400 (with a solo preparer) and go up from there with a preparer that has staff (the bigger the office, the higher the cost). A firm whose pricing structure I follow for reference starts their individual return fees at $800.

Being that we're already into February, you may have trouble finding someone to work with for TY2023 as many pros don't take on new clients once the season has officially gotten underway. Unless you're okay with filing an extension.

I will also note that some (many?) preparers don't offer a "review" or "second set of eyes" for a client prepared return. If a new client brings me a return they've prepared (but haven't filed) and wants me to check it for errors, I'm charging them the same as if they brought me nothing. This is because the only way I can check for errors is to start with the same information they started with and enter it myself. Aside from any glaring errors (like data fields that are blank that shouldn't be, or more commonly, depreciation that seems wildly high because the client didn't know that you don't depreciate land), I won't be able to spot missteps without seeing all of the data that went into the return.

I hope this helps!

Kelly O'Keefe · Answer

@Mason Myers

I think some great points have been brought up. Tax professionals can be expensive but pay for themselves in success. That being said I would look into material participation and make sure you are eligible for tax savings based on your W-2 income. If there isn't going to be a significant difference and you feel confident tracking and filing a single property on turbo tax then keep going. You should reach out to a few tax pros from this forum and see what they suggest based on your situation

Account Closed · Answer

Short answer for you would be "around a thousand bucks". Why I would suggest you do it: Hiring a tax professional short cuts many people in building wealth as they often learn strategies from these folks that turn up the heat on their investing strategies. If your serious about becoming a real estate investor, you will need a good tax accountant in your corner. Best of luck on your journey! Please for your own sake start sooner then later here! I cant tell you how many amendments we have had to do for clients who wanted to do it themselves and lost 5 figures + in tax savings

Account Closed · Answer

CPA prices can vary obviously on who you are dealing with and size of the firm. It would be recommended to ask for a consultation and shop around before making a decision.

Michael Plaks · Answer

@Mason Myers

read these two posts:

https://www.biggerpockets.com/forums/51/topics/998718-explai...

https://www.biggerpockets.com/forums/51/topics/1088325-expla...

Nate Meeker · Answer

@Mason Myers - you could expect $750-$1250 to have a good set of eyes on that and some time to explain/advise on any questions or strategies.

Tony Stephan · Answer

My CPA is about $25k for the year he is out of Bloomfield Hills MI but he does all my businesses and my 131 units. Start cheap and then scale up as you need. For my first business my CPA cost $1k lol

Jay Thomas · Answer

It seems tax season has you a bit tangled up, especially with that duplex. No worries, we all need a hand with taxes. Your instinct to be cautious is spot on, and there are some nuances to consider. For instance, instead of a straightforward 50/50 split, think about dividing expenses based on space. You're doing well with depreciating the rental part, but a pro can help nail down the details. Having a rental property means new tax considerations, and consulting a pro who knows real estate is a smart move. The cost might be between $500 to $1,500, but think of it as an investment in securing your tax well-being.

Basit Siddiqi · Answer

The other issue with 'second set of eyes' for someone to look over your work is that the person doing that may be required to 'sign' as a preparer which can then put the firm at more risk.