All Forum Posts by: Jason Malabute

it’s worth paying a CPA. The $1,000 fee is reasonable — it’ll cost you far more if you make mistakes, miss deductions, or get audited later on.

TurboTax can handle simple rental properties, but it’s better to start with a CPA from the beginning. That way, your books, depreciation, and deductions are set up correctly from the start — saving you from bigger issues or missed tax savings later on.

@Julian Buick — this is one of those situations where TurboTax just won’t cut it. Once you’re dealing with flips and partnerships, there are too many details a software program can’t handle.

You’ll need a CPA to look at things like:

• Whether this should’ve been reported as a partnership with K-1s,
• How your profit was classified (interest vs. profit split), and
• How your partner is reporting their share.

Those factors all change how the income should be taxed — so it’s best to have a pro handle it.

Hey Pete,

I totally get the temptation to just use TurboTax—especially when you’re starting out and only have one rental. But here’s the thing: TurboTax is great for basic W-2 income and simple deductions, not for optimizing real estate tax strategy.

When you own even one rental, you’re no longer a “simple return.” You’ve got depreciation, passive loss limits, basis tracking, expense allocations, and potentially cost segregation opportunities. TurboTax will walk you through forms, but it won’t tell you what you’re missing or how to legally minimize taxes.

Three to six months of reserves is generally a good rule of thumb. Once you start getting into larger multifamily or commercial loans, lenders often require you to keep a certain amount of reserves on hand

You should hire a tax professional to create a strategic tax plan. That’s the best way to see what moves make sense for the rest of 2025 and into 2026. A good plan will show how to structure things like your wife’s business, potential rentals, and depreciation so everything works together to reduce your overall tax burden while transitioning away from W-2 income.

You’ll want to remember that depreciation catch-up (via Form 3115 and a §481(a) adjustment) can only be taken when the tax return is filed on time or when the property is sold. If the prior years weren’t filed properly or timely, you can’t just “catch up” the depreciation retroactively outside those events.

DIY cost segregations might seem like an easy way to save money, but they often miss key engineering and tax details the IRS looks for. If the report gets questioned, you could lose those deductions and end up with a bigger problem later. Paying a professional gives you peace of mind that it’s done right and defensible if ever audited.

You don’t necessarily need to find someone local. What’s more important is that your CPA has deep experience working with real estate investors — especially those who own both long-term and short-term rentals — and understands strategies like cost segregation, depreciation, and short-term rental material participation rules.  Make sure they are familiar with your state''s tax law. 

Most CPAs who specialize in this niche work virtually anyway, so I’d recommend focusing on finding someone who can proactively help you plan year round and minimize taxes year over year rather than just file returns. 

If you only want to work with an Enrolled Agent (EA) and not a CPA, Michael Plaks is actually a great person to talk to. He’s been one of the top contributors in the EA and tax strategy discussions on BiggerPockets for years and has a strong reputation for working with real estate investors.