Looking for a CPA with Tax Planning expertise

[Joanna Highet]

Looking to change CPA's to someone with more of a real estate background that can provide tax planning advice and strategies. We have a high W2 income to offset, started a LLC in property management and will close on our 3rd rental in a few weeks. Planning to add 1-2 properties per year. Current CPA and bookkeeper provide little guidance and do not appear to have the vision or knowledge we are looking for. Would love any recommendations. Thanks!

[Michael Plaks]

Quote from @Joanna Highet:

Looking to change CPA's to someone with more of a real estate background that can provide tax planning advice and strategies. We have a high W2 income to offset, started a LLC in property management and will close on our 3rd rental in a few weeks. Planning to add 1-2 properties per year. Current CPA and bookkeeper provide little guidance and do not appear to have the vision or knowledge we are looking for. Would love any recommendations. Thanks!

This forum is the best place to find who you are looking for. There are over 20 of us, and we all work remotely and nationwide.

Find a few questions on this forum that seem to be relevant to you. Look who answered these questions and how. Next to the name, you can see whether this person is a tax professional: a CPA, an EA (Enrolled Agent), a tax strategist and so on, it all means a tax professional. You can probably get a general feeling whether you like this person's technical competence and personality. If you come across the same person on multiple threads, and you consistently like them, send a PM.

Please keep in mind that we're prohibited from offering our services to you, both publicly and privately - unless YOU initiate the conversation from your end.

[Bill Hampton]

@Joanna Highet

Bigger Pockets is a great place to find a real estate accountant. 

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

I recommend finding an accountant who specializes in real estate taxation, business taxation, financial planning and tax planning.

You may want to consider working with your accountant remotely to expand your options.

I would also recommend looking for a accountant willing to work with you throughout the year. You want an accountant who can help you strategize and who is responsive when you want to know the consequences of the financial decisions you are making throughout the year.

Good luck. 

[Sean O'Keefe]

Quote from @Joanna Highet:

Looking to change CPA's to someone with more of a real estate background that can provide tax planning advice and strategies. We have a high W2 income to offset, started a LLC in property management and will close on our 3rd rental in a few weeks. Planning to add 1-2 properties per year. Current CPA and bookkeeper provide little guidance and do not appear to have the vision or knowledge we are looking for. Would love any recommendations. Thanks!

20+ tax pros providing feedback in this forum. I’d reach out to one thats commented on topics relevant to your situation.

[Simon W.]

Quote from @Joanna Highet:

Looking to change CPA's to someone with more of a real estate background that can provide tax planning advice and strategies. We have a high W2 income to offset, started a LLC in property management and will close on our 3rd rental in a few weeks. Planning to add 1-2 properties per year. Current CPA and bookkeeper provide little guidance and do not appear to have the vision or knowledge we are looking for. Would love any recommendations. Thanks!

Not all bookkeepers are real estate savvy. Michael Plaks method of finding someone here is the best way.
Although I can do prepare and know enough tax information but I personally do not tell my clients that just because it isn't my specialty. I know enough how the financial should be for CPAs to file tax returns. I know enough lol

Everyone's skillset is a bit different here in BP, one is probably catered more towards a niche that someone is looking for. 

Good luck with your search.

[Gregory Wilson]

I recommend that the CPA you consult for strategy is not your tax preparer. Circular 230 removed any aggressive strategies from tax preparers. Just read it and you will see that a person preparing a return for money has more to lose in a dispute with IRS than you do. Hence, they no longer give independent advice. Keep your current tax preparer and consult with a different CPA or an attorney.

[Basit Siddiqi]

Is the property management company that you set up used to manage your own rentals or the rentals of others?

[Michael Plaks]

Quote from @Gregory Wilson:

I recommend that the CPA you consult for strategy is not your tax preparer. Circular 230 removed any aggressive strategies from tax preparers. Just read it and you will see that a person preparing a return for money has more to lose in a dispute with IRS than you do. Hence, they no longer give independent advice. Keep your current tax preparer and consult with a different CPA or an attorney.

This is largely incorrect.

Circular 230 does regulate tax preparation and tax advisory provided by licensed tax professionals: CPAs, EAs and attorneys. We are indeed required to follow due diligence standards and so on. And yes, we have very heavy penalties for breaking the rules.

That said, nothing in Circular 230 or elsewhere prohibits aggressive tax strategies which do not violate the tax law. All quality tax strategists do exactly that: explore tax strategies that are legal. 

Example: the so-called STR loophole is legal and is recommended by all of us tax professionals, as long as the rules are followed of course. On the other hand, switching passive losses to nonpassive by routing it through a partnership LLC and checking the wrong boxes is not an "aggressive tax strategy" but a reckless violation of the rules. No respectable tax professional will endorse it.

Finally, Circular 230 is nothing new. It exists for over 100 years, naturally with multiple revisions along the way.

[Aaron Zimmerman]

There are a lot of real estate CPAs here. My recommendation is to interview a few and see who you jive with. 

As for your vision, with tax calls, I’d recommend discussing these with your cpa and they should be able to develop an actionable plan for you to follow. 

[Joanna Highet]

Thank you, Everyone! 

All comments have been helpful and very much appreciated - I will take the advice of browsing prior posts and reaching out directly to people to get a feel for style and compatibility.  I do have one additional question for the CPA's out there - do you have a bookkeeping team that you refer out to?  Is this the exception or the norm?  My current CPA does this and the teamwork aspect of things is a nice feature.  I'd prefer this be the case when we hand things over so I'm not the go-between.  

[Michael Plaks]

Quote from @Joanna Highet:

 I do have one additional question for the CPA's out there - do you have a bookkeeping team that you refer out to?  Is this the exception or the norm?  My current CPA does this and the teamwork aspect of things is a nice feature.  I'd prefer this be the case when we hand things over so I'm not the go-between.  

The answer will be different for everyone. Some CPAs offer in-house bookkeeping, some refer it out, and some don't get involved in bookkeeping at all.

[Max Emory]

Hey @Joanna Highet, happy to DM you my REI bookkeeping firm's short list of REI-savvy tax pros we recommend. I'll shoot it over.

[Joanna Highet]

Quote from @Basit Siddiqi:

Is the property management company that you set up used to manage your own rentals or the rentals of others?

 Hi Basit, it is set up to manage our own rentals.

[Joanna Highet]

Quote from @Max Emory:

Hey @Joanna Highet, happy to DM you my REI bookkeeping firm's short list of REI-savvy tax pros we recommend. I'll shoot it over.

 That would be wonderful - thanks.

[Basit Siddiqi]

Quote from @Joanna Highet:

Quote from @Basit Siddiqi:

Is the property management company that you set up used to manage your own rentals or the rentals of others?

 Hi Basit, it is set up to manage our own rentals.

Maging your own rentals can get tricky.

What are you trying to achieve by having an entity that manges your own rentals?
You may potentially be turning income that is not subject to self-employment taxes to self-employment taxes.

[Joanna Highet]

Quote from @Basit Siddiqi:

Quote from @Joanna Highet:

Quote from @Basit Siddiqi:

Is the property management company that you set up used to manage your own rentals or the rentals of others?

 Hi Basit, it is set up to manage our own rentals.

Maging your own rentals can get tricky.

What are you trying to achieve by having an entity that manges your own rentals?
You may potentially be turning income that is not subject to self-employment taxes to self-employment taxes.

The LLC was created for our rental properties - I just happen to manage them. Our CPA recommended it be a property management company so losses could offset our W2 income. I quit my W2 job this year to do real estate full time and qualify for REPS so that is new for 2024. These types of questions are exactly what I don't have answers to, don't have time to research, and why I just want/need someone who can best advise me and my husband on what we should do with respect to our personal and business goals. Will DM you. Thx!

[Gregory Wilson]

As long as the management company is a "break even" operation meaning that you only charge your own rental properties the amount of the management company expenses there won't be self employment taxes. And, importantly, suits by tenants are against the captive management company that has no assets other than the current month's income and the tools and vehicles needed to manage the rental properties. This is important because it is pretty easy to get an uninsured claim (I can give horrible examples (like the handyman nailing the upper windows shut to keep people from tossing stuff out the window, or sending him to pick up some stuff from the hardware store in his wife's uninsured car, or any circumstance of punitive damages which are not insurable) and which claim if brought against the entity owning the real estate would cost you your equity. Tenant's sue the company that is the landlord on the lease. That should be the management entity.

[Sean Graham]

Quote from @Joanna Highet:

Quote from @Basit Siddiqi:

Quote from @Joanna Highet:

Quote from @Basit Siddiqi:

Is the property management company that you set up used to manage your own rentals or the rentals of others?

 Hi Basit, it is set up to manage our own rentals.

Maging your own rentals can get tricky.

What are you trying to achieve by having an entity that manges your own rentals?
You may potentially be turning income that is not subject to self-employment taxes to self-employment taxes.

The LLC was created for our rental properties - I just happen to manage them. Our CPA recommended it be a property management company so losses could offset our W2 income. I quit my W2 job this year to do real estate full time and qualify for REPS so that is new for 2024. These types of questions are exactly what I don't have answers to, don't have time to research, and why I just want/need someone who can best advise me and my husband on what we should do with respect to our personal and business goals. Will DM you. Thx!

 @Joanna Highet congrats on meeting REPS for 2024! That's a big deal. As everyone mentioned, there are plenty of good CPAs on here that will work remote and know real estate. Many have bookkeeping options. I respect your ambition! 

[Jake Baker]

@Joanna Highet

Regarding bookkeeping, most companies are not worth the money, so vet them carefully. However, if you partner with the right one, they will be instrumental to your real estate growth. Your bookkeeper needs to specialize in Real Estate or thoroughly understand the industry because it is very balance sheet-heavy. I recommend staying away from companies that outsource bookkeeping overseas. Many firms will offer bookkeeping, but they outsource overseas and mark up the price. Most of the time, quality is sacrificed due to lackluster systems. 

My recommendation: Find a US-based bookkeeper who specializes in real estate and doesn't have too much on their plate.

[Gregory Wilson]

I'd like to suggest that you DIY this bookkeeping task. At least until you get 25 doors. It would not be challenging for a high school student (if we could ever get one of them to put their phone down). Moreover, you will learn more about your properties and your vendors.

With 3 rental properties, unless there are a lot of doors, you will have 100 checks per year. You might still be able to buy a nonsubscription, licensed and unused version of Quickbooks on Ebay, but even with the subscription it will only cost $1500 per year and you will be in control of not only the payments but also the check writing. It is beyond simple. And, at the end of the year you can email a backup file of QB to your tax preparer and he will give you the journal entries to post his corrections and depreciation.

A bookkeeper will charge $300 to $600 per month to write 10 checks and make a couple of deposits and complete a rental income spreadsheet or checklist to keep track of rental payments. And, you will have to make every decision anyway and also worry about her accuracy and honesty.