DIY or hire help for taxes?

Question

I have 2 people that I sometimes partner with on real estate deals.

I use a CPA because I have a number of rentals and a few LLCs. I understand the value my CPA provides for me in my situation.

However, when should my other 2 partners hire help for taxes?  I also don't know how to price financial services for them.

1.  He is a full-time W-2 healthcare worker that makes about 72k yr.  No children or wife. Ownes his own house and 2 rentals that is in an LLC.

2.  He is married with joint income of about 148k. W2 and 1099 income, 2 kids, renting, and 1 rental.

At what point does it make sense to hire tax help and how much should that expect to pay?

Michael Plaks · Answer

@Jonathan Small

Hmm, shouldn't your partners worry about their taxes and not you?

That said, what is not clear is whether your CPA prepares a partnership tax return for the deals where you guys partner up. I assume he does, and with this partnership tax return he issues Forms K1 to you and your partners. K1s show your share of income or losses from the partnership, and you include it on your respective personal tax returns.

Now, to your partners. W2s, personal homes and K1s are usually straightforward and can be DIY-ed by most computer-savvy and financially-savvy people. The remaining potential issue is their rental properties. It also can be DIY-ed, and many people do. However, chances of making a mistake or overlooking an opportunity to save are higher when it comes to rentals.

The dilemma is whether it's worth paying a professional in this case. Nobody can answer this question. Sometimes, we tax professionals can save you a lot of money or save you from a major problem. And sometimes, we are not materially improving what you could have done  yourself.

This post can be informational:https://www.biggerpockets.com/forums/51/topics/1088325-expla...as well as this discussion:https://www.biggerpockets.com/forums/51/topics/1225072-do-i-...

A lot more of similar older threads can be found on this very forum.

Basit Siddiqi · Answer

You may want to make an introduction between your CPA to those 2 colleagues.The CPA can go over their services and pricing to your colleagues.I partner with many people on real estate deals - It never gets to a discussion on whether they do their own tax return or hire a professional.If a partner mentions he will provide capital - does he provide the capital on a timely manner.If a partner mentions he will find deals - does he find many deals and provide an analysisIf a partner mentions he will manage a property - does he manage the property well(find tenants, collect rent, communicate with contractors, etc)

Jonathan Small · Answer

@Michael Plaks My partners won't be partners very long if they are in a financial mess 😆. Not to mention they are part of my network. When my network is strong so am I.  It seems they have crossed into CPA territory and no longer need do it themselves.

Jonathan Small · Answer

@Aaron Zimmerman Good point about structure set up and determining cost bases. This could have long-term repercussions if done wrong in year one.

Michael Plaks · Answer

Same as asking how much for a rehab project. Prices vary a lot from firm to firm, and you can never compare it apples-to-apples. Here is why:https://www.biggerpockets.com/forums/51/topics/998718-explai...

Jonathan Small · Answer

@Ashish Acharya what ball park number coet would you put on each rental they add to a portfolio?  For example if one partner added a long-term rental in one party completed a rehab and flip, please properties we need to be filed. What add cost should they expect?

Ashish Acharya · Answer

@Jonathan Small For Partner 1 ($72K W-2 income, 2 rentals in an LLC), hiring a CPA is advisable due to the complexities of managing rental property deductions, depreciation schedules, and LLC compliance. A CPA can ensure proper filing of rental income on Schedule E and help identify tax-saving strategies, such as optimizing deductions for maintenance, repairs, and travel. Estimated costs range from $500–$1,000 annually, depending on the complexity of their LLC and rental activity.

For Partner 2 ($148K joint income, W-2, 1099 income, 1 rental, 2 kids), a CPA is strongly recommended. Managing self-employment income requires tracking eligible deductions like business expenses, home office use, and retirement contributions. Additionally, a CPA can maximize child tax credits, rental property depreciation, and ensure compliance with reporting requirements for their 1099 income. Costs for a CPA may range from $800–$1,500 annually, reflecting the added complexity of self-employment and rental property filings.

While DIY tax filing can work for simple W-2 income, rental properties, LLCs, and self-employment income introduce complexities that make a CPA valuable. A CPA ensures compliance with IRS rules, maximizes deductions, and avoids costly mistakes, especially for higher-income earners with multiple income streams. Both partners should consult a CPA to evaluate potential savings and optimize their tax strategy.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

Bill Hampton · Answer

@Jonathan Small

I agree with the previous posts. If your friends have a rental they should hire a tax professional.

A good real estate accountant can save them thousands of dollars by leveraging entity selection and formation, tax deductions, cost segregations, bonus depreciation and tax planning.

I recommend that they find a tax accountant who specializes in real estate taxation, business taxation, financial planning and tax planning.

I would also recommend that they look for a accountant willing to work with them throughout the year, who can help them strategize and who is responsive when they want to know the consequences of the financial decisions they are making throughout the year.

Good luck.

Aaron Zimmerman · Answer

I think anytime someone has one rental, they should get professional help. There's a lot that people mess up. Entity structuring, basis calculation (i.e. breakout between building and land), deductible expenses, etc. I've seen some horrendously self-prepared returns. Better to get it done right and treat your rental properties as a business.

DIY or hire help for taxes?

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