Accountant worth it?

Question

[/b]Hello, I'm looking for advice on getting an accountant.  I have always done my own taxes, and last year I had one rent house and decided to use an accountant after reviewing what Turbotax had to offer online.  I essentially did all the leg work adding up income and expenses and presented it to him and all he really did was file it for me....no great advice or anything, and I felt like I could of done it myself for much less $$.  Fast forward to this year, now I have 4 rental homes, 3 aquired this year, so I have a ton of expsense etc to write off.  Long story short, is an Accountant worth it for this number of properties or would I be money ahead using a tax software to prepare my taxes?  All my other income is in the form of W4s and is relative simple.  Also does anyone recommend one software over another?  
Thanks in advance.

Trey

Jon Holdman · Answer

IMHO, absolutely worth it. There's more to it than just filling out the forms. You have to know how to treat the various expenses. For example, you put a new toilet in a house with a tenant its an expense. Put that same new toilet into one of your new purchase before its ready for a tenant and its added to your basis. Knowing how to handle all your expenditures to minimize your taxes is the real value a CPA brings.

You do need a CPA that's knowledgeable about real estate. Not all are.

Trey Leigh · Answer

Those are both the same for me, so its easy, not sure but i would assume 
the state the property is in?

Hendrix P. · Answer

Hey, I just have a follow up question.

Do you look for a CPA in the state that you live in or the State the property is located?

Trey Leigh · Answer

Wow, thanks for the advice everyone.  Looks like I need to start Accountant shopping.  If anyone knows a good one in South Texas please let me know.  Im not sure the one I used last year would be knowledgeable on all these areas ya'll have brought up.  I do have many questions because I have spent a lot of money on rehabbing homes, yardwork, closing fees, and three new roofs that were paid for by insurance, but yet I had a deductible.
Thanks to everyone that replied, I was on the fence but not anymore.  Great advice.

James Vermillion · Answer

Just in case you are still on the fence...yes, it is absolutely worth it.  Accountants are one of those expenses that can absolute give you a nice return on investment both in money and in hassle.  I agree with those that have recommended finding an accountant you can talk to about planning as well, one that can provide some counseling if you need it.

Ann Bellamy · Answer

Definitely worth it.  They know about strategies that you don't even know to ask about.

As others have stated, however, you need to get one who is very familiar with real estate investing, and conceivably also with small business strategies.  Ask about their knowledge of self directed IRA's also, if you are interested in that.

Account Closed · Answer

Trey Leigh I would definitely consider finding an accountant familiar with real estate transactions.  A knowledgeable tax preparer should come back to you with a number of questions regarding your specific situation.

There are numerous deductions that I find get missed.  Most have no idea what cost to expense or might become part of a property's basis  at the time of purchase (items like loan related costs can not be expensed in the current year but also do not become part of the basis.  This just one set of items on the HUD-1 that need to be reviewed.

There are many expenses that are common to rental properties and if I don't see them I will be asking questions.  If you don't have a property manager then what about mileage or how are you collecting the rents, making deposits, etc

If you had to do some rehab work I will have lots of questions.  Repairs is an area that I would be looking quite closely at to be sure there are no items that must be capitalized.  Next year I will have a new question when it comes to improvements.  Tax payers will now be able to dispose of a component of the building when it has been improved.  Example if a have a new roof done on a rental you will be able to dispose of the existing roof assuming you have had a cost segregation done or otherwise can determine the basis of the building component.

A good accountant will save you a lot of money and headaches over time.  Find a good one that understands real estate transactions and takes the time to stay on top of this specialty.

Steven Hamilton II · Answer

Trey Leigh,

Since you just said your income is in the form of "W-4s" I will definitely recommend getting an accountant.

This topic has been discussed many times over. Do a quick search and you can find some lists of questions to ask potential accountants.

If you ever want to verify something an accountant has told you please don't hesitate to ask Charles Perkins or myself here. We are both more than happy to answer questions here for everyone.

-Steven the Tax Guy

Your guide to IRS laws, rules and regulations.

Mark H. · Answer

My wife is a CGA (basically a Canadian CPA), and we've *never* done our own taxes.

We prepare the docs & receipts, keep great records, and hand everything off to a CPA who lives, eats & breathes tax returns.  He's actually cheaper than the McTax stores and has always found us money we didn't expect to get.

Before we started buying rentals, the wife and I made an appointment, sat down & grilled him about strategies, wive's tales and rumors we'd heard about what was and was not deductible & expense able & he never missed a beat.  He didn't even charge us for the consult, though we would have gladly paid whatever he asked.

I think a good CPA that *you* are comfortable chatting with & bouncing ideas off of is a key part of your business, just like a great attorney, or a great plumber.  You need to be able to ask not only "is this legal?", but, "is there a better way?".

Joe Delia · Answer

A good real estate CPA is worth it's weight in gold.

Accountant worth it?

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