Filing taxes, CPA or DIY?

Question

I've been wholesaling since October. Plenty of marketing, but I haven't closed any deals yet, so no income yet just expenses. So how should I file my taxes, CPA or diy (turbo tax, HR Block)?

Basit Siddiqi · Answer

Account ClosedYour tax return may be more complicated in 2018 despite not completing your flip within the 2018 tax year."flipping" is the business of buying a house(inventory) fixing it up and then selling it for a profit(hopefully).Since you are buying and selling inventory. You need to track the cost of the inventory on your tax return which you may be required to do on your 2018 return.You don't know what you don't know.

Bill Hampton · Answer

Account Closed, once you start investing in real estate you should hire a professional accountant. A professional accountant can advise you on certain steps to take during the marketing, buying, rehab, and sale of properties to help with tax planning and preparation. This advice will save you thousands.

Basit Siddiqi · Answer

@Alfred C DunlapI will find it hard to believe that someone in H&R Block will be able to understand the wholesaling business that you are doing.I would instead look for an accountant/CPA who is a frequent contributor to the biggerpocket forums.It doesn't necessarily matter that you did not have any sales or revenue for you to start claiming expenses on your tax return. You do however, need a business(not necessarily an entity) to start taking deductions. This should easy to prove if you were actively trying to get sales.

Account Closed · Answer

@Basit Siddiqi

If I were to hire an accountant, it likely wouldn't be from H&R Block or any other national chain. I would look for a CPA experienced with REI in Maryland. I am sure my tax situation is more complicated in 2018. What I didn't realize is that I may be able to claim expenses before completing the deal, so thank you for pointing that out.

Any advice when looking for a CPA?

Account Closed · Answer

@Alfred C Dunlap, thanks for asking this question. I am in a somewhat similar situation, in that my REI has not yielded any revenue yet. I am completing a flip that will be done early in 2019. This being the case, I wouldn't imagine my taxes are all that more complicated  for 2018 than last for 2017; but then again I didn't own an LLC or take any loans out in 2017, so maybe they will be.

@Bill Hampton if I may ask a follow up question, at what point should an individual consider using a CPA versus doing it themselves? Every persons tax situation is different, but is there some kind of rule of thumb to determine when the extra cost of CPAs are outweighed by the savings of a larger tax return?

Bill Hampton · Answer

@Alfred C Dunlap, don't do it yourself. Work with an accountant that specializes in real estate. You reach out to your local real estate investors association for recommendations. If you're comfortable working with your tax accountant remotely, reach out to one of us here on BP. Many of us work remotely with clients all over the country. Good luck and let me know if I can be of assistance.

Filing taxes, CPA or DIY?

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