Attorney vs CPA - difference?

Question

Hey guys,

Sorry for my ignorance, but after reading a bit, I still don't understand what a real estate attorney does compared to a "real estate investing-focused" CPA.

Can someone shed some light on the differences and whether or not someone needs both or just one or the other?

Siye Baker · Answer

Although I still have not found an accountant(waiting for tax season to end to schedule a sit down), I have found my 2 RE attorneys. I will use them for the following functions:

Attorney A: leases,

Attorney B: contracts to buy properties(subject to, closings), advice on upcoming ventures, and the legal implications

Accountant: in addition to doing taxes, offers creative options before I commit to deals, so that I can know the tax implications before I commit to a transaction.

Hope this helps

Sebastian

Siye Baker · Answer

correct, an accountant would be able to advise you on your business structure and how to claim max deductions. You can file the paperwork for LLC yourself(at least in FL) and it is incredibly simple and $135 or so.

Good example:

Say you decide that an LLC is most appealing. You can:

1) call your accountant to make sure that there is not a better vehicle for your business structure.

2) file paperwork yourself (if you can in your state)

3) make sure your attorney knows you have an LLC the next time you meet with him.

You may find that you get flexible taxing strategies with your new LLC, but you might not be able to file your own evictions on your rentals. In FL, the LLC is treated as a separate entity, so you are not longer able to file your own evictions, as you would be practicing law without a license. So now the cost for your evictions process just went up significantly. Always good to know where you stand, so that you are prepared. A standard eviction under your sole proprietorship that would only cost a few hundred- may cost a couple thousand with an LLC (paying for legal representation).

And you are correct, you can have a title company do the standard closing... so long as you have an attorney that you can contact to help you clear up any questions you might having regarding the wording. Make sure whomever you are asking for advice is not depending of the deal being made. An attorney will bill you the same amount for his legal advice, regardless of you getting the property (generally speaking). It's a lot easier to change the meaning of a contract Before you sign it ;)

Sebastian

Brent Watson · Answer

Thanks @Sebastian Baker

When I'm getting started setting up entities, would I be talking to my attorney or my CPA? My thought is CPA since you want to structure your business to take advantage of the tax reduction benefits.

And regarding contracts, isn't there a cheaper way than doing those with an attorney? Like a realtor or title company that is investor friendly?

Siye Baker · Answer

also- you will definitely need both, unless you can find an attorney that is also an investor and is very savvy with tax laws. But keep in mind the fees will be higher for an attorney typically. An accountant could not give you legal advice, while an RE attorney can advise you on the tax implications.

attorneys for keeping you out of trouble(way more laws out there than you will ever know even exist)

accountants for you taking maximum allowable deductions

Attorney vs CPA - difference?

Most Popular Reply