All Forum Posts by: Mike Wells
Mike Wells has started 1 posts and replied 7 times.
Post: Should I file my own taxes?
- Real Estate Investor
- Louisville, KY
- Posts 7
- Votes 6
Quote from @Jack Gray:
So I've been doing my own taxes in Turbotax for 20 years now (I only own 2 rental properties but both were BRRRs), and I finally got stuck on something and went to a CPA 2 years ago, and he reviewed my past 5 years of returns and pointed out that I had made multiple mistakes (incorrectly categorizing repairs vs capex, calculating basis and therefore depreciation wrong, failing to realize that certain expenses for a home converted to a rental property start being deductible the day the property was placed in service vs actually occupied, the list goes on). We ended up refiling several of those returns and saving thousands.
On the one hand, doing my taxes myself helped me to understand the rules and processes better...on the other hand, you don't know what you don't know, and sometimes those mistakes can cost you a lot of money (in my case, more than hiring a CPA). It's also worth mentioning that it's better to consult the CPA BEFORE you make a major decision (buying, selling, converting to rental, etc), since that's when you still have the opportunity to strategize and structure the transaction in the most tax-advantageous way.
I see people keep referring to tax strategy and buying/selling properties. I understand that how you structure your business could benefit from tax strategy, but how many ways can you buy or sell a property to avoid capitol gains, etc, unless you're doing a 1031 exchange?
Post: Should I file my own taxes?
- Real Estate Investor
- Louisville, KY
- Posts 7
- Votes 6
Quote from @Alecia Loveless:
@David Narvaez My partner used a CPA the past two years and both got the real estate portion of her taxes wrong. She only has interest in 1 property. Fed up she used turbo tax this year and we got stuck on one thing for about 30 minutes but it only took about an hour and a half. She was happy.
Mine are more complicated due to 6 properties and some trusts and other investments and I went to the same accountant I have used for 26 years and I was happy.
Alecia, I also have 6 properties, no trusts, basic stocks, etc. I previously paid $700-$900 to my previous CPA. My new CPA charged me $2,900 this year! I feel like it's double what it should be, but feel that I should just find someone new rather than have someone justify their pricing to me. Is that consistent with what you paid?
Post: Astonished at my tax services bill!
- Real Estate Investor
- Louisville, KY
- Posts 7
- Votes 6
Quote from @Alan F.:
Quote from @Mike Wells:
I have 6 rental properties, all Single Family Homes. I was previously paying a tax professional around $800 to $900 to prepare my tax returns for my 6 properties as well as my personal. I am using a new tax professional on the recommendation of another investor, who has since passed away- he recommended his daughter. I understand that pricing can vary from one tax professional to another, and I honestly expected $1,000 up to $1,600, but I had to scrape my Jaw off of the floor when I opened the email with my invoice to see that it was $3,000!
$3,000 for a personal return (filing single) and 6 properties (no LLC or Corp) does not seem reasonable. I only have experience with my previous tax professional as an investor, so I have nothing else to compare this to. I was with them from the time I had 1 up to all 6 properties. Is this consistent with what I should expect to pay for the returns I had performed? I had zero one-on-one time consulting or tax strategization, only submission of my tax criteria and completion of my returns. This is roughly $500 per door! If I had 100 doors, would I expect a $50,000 bill?
I dont think $3k is expensive for a self-employed return. That could get rather complicated. I dont think our situations are comparable at all.
Post: Astonished at my tax services bill!
- Real Estate Investor
- Louisville, KY
- Posts 7
- Votes 6
Quote from @Scott Mac:
You did not ask for an estimate up front?
Lesson learned.
Good Luck!
Post: Astonished at my tax services bill!
- Real Estate Investor
- Louisville, KY
- Posts 7
- Votes 6
Quote from @Basit Siddiqi:
I agree with @Michael Plaks that the pricing should be discussed prior to the start of the engagement.
My firm does not like the hourly invoice method because I find it can potentially cause anxiety to clients who may not know the final price.
if you were a nice client and paid an hourly fee, maybe there was a lot of time towards 'setting' you up as a client(inputting your properties, prior year carryforwards, depreciation schedule, etc) which won't be a cost for you going forward.
Best of luck.
I was indeed told that there was additional cost initially this year to setting me up as a new client, and next year wouldn't be as significant, probably only $2,500. That's still $1,000 to $1,200 more than I think is reasonable for what I am having done.
When I turned in my taxes, she expressed that she was shocked at how organized my tax prep was. Everything is organized with an index page, separated and typed onto spreadsheets. NO receipts to copy or review because all receipts are consolidated onto a spreadsheet by house with a description for each purchase. I try to be courteous and spend tens of hours into my tax prep before I ever send them off to reduce the time and frustration of the person preparing my returns.
Post: Astonished at my tax services bill!
- Real Estate Investor
- Louisville, KY
- Posts 7
- Votes 6
Quote from @Account Closed:
Quote from @Mike Wells:
I have 6 rental properties, all Single Family Homes. I was previously paying a tax professional around $800 to $900 to prepare my tax returns for my 6 properties as well as my personal. I am using a new tax professional on the recommendation of another investor, who has since passed away- he recommended his daughter. I understand that pricing can vary from one tax professional to another, and I honestly expected $1,000 up to $1,600, but I had to scrape my Jaw off of the floor when I opened the email with my invoice to see that it was $3,000!
$3,000 for a personal return (filing single) and 6 properties (no LLC or Corp) does not seem reasonable. I only have experience with my previous tax professional as an investor, so I have nothing else to compare this to. I was with them from the time I had 1 up to all 6 properties. Is this consistent with what I should expect to pay for the returns I had performed? I had zero one-on-one time consulting or tax strategization, only submission of my tax criteria and completion of my returns. This is roughly $500 per door! If I had 100 doors, would I expect a $50,000 bill?
While we dont charge that much, Its not unreasonable. How much did your tax pro save you? If they saved you 30k, then you made 10x on your investment. Thats pretty good.
Post: Astonished at my tax services bill!
- Real Estate Investor
- Louisville, KY
- Posts 7
- Votes 6
I have 6 rental properties, all Single Family Homes. I was previously paying a tax professional around $800 to $900 to prepare my tax returns for my 6 properties as well as my personal. I am using a new tax professional on the recommendation of another investor, who has since passed away- he recommended his daughter. I understand that pricing can vary from one tax professional to another, and I honestly expected $1,000 up to $1,600, but I had to scrape my Jaw off of the floor when I opened the email with my invoice to see that it was $3,000!
$3,000 for a personal return (filing single) and 6 properties (no LLC or Corp) does not seem reasonable. I only have experience with my previous tax professional as an investor, so I have nothing else to compare this to. I was with them from the time I had 1 up to all 6 properties. Is this consistent with what I should expect to pay for the returns I had performed? I had zero one-on-one time consulting or tax strategization, only submission of my tax criteria and completion of my returns. This is roughly $500 per door! If I had 100 doors, would I expect a $50,000 bill?