Do you have a real estate focused cpa on your team?

Question

Hi everyone! I have a question that I would love to hear everyone’s experience on.

I know that real estate investing has it’s own advantages in terms of tax write offs like depreciation and expenses, ect. I was just pre qualified and will be buying my first multi family relatively soon.

I am starting to meet and fill in the members of my real estate investing team, and was wondering how much of an impact your cpa makes on your teams. The tax code is pretty complicated and you definitely need someone in your best interest to decipher it and make sure you can utilize all of the advantages that you can and give advice as necessary.

I would certainly interview CPA’s that specialize in real estate/ wealth building, and make sure that they have rentals of their own to show personal experience and a knowledge of what to look for.

Starting with one property under 4 units, is an expensive cpa worth it, or is that something you seek as you scale?

Thank you so much for the help,

Kyle

John Warren · Answer

@Kyle Curtin I have a great accounting firm now that I am over 50 units, but I am not sure that you need one just yet... You are not doing a cost segregation study on that new buildings under 4 units unless it is worth a lot more than most of these deals are. You need to be able to figure out your initial basis and make sure you are taking depreciation, but honestly one building doesn't make enough cash flow to afford a real accountant. Just my 2 cents here, and I am sure others will disagree.

Basit Siddiqi · Answer

@Kyle CurtinIn my opinion, taxes can be done by yourself if all you have is a W-2 job and a couple of interest/dividend brokerage accounts. However, I think you should be working with a CPA once you get into real estate.There are a couple of unique real estate tax law concepts that the typical accountant may not be familiar withDepreciation, Bonus depreciation, cost segregation analysis, 1031 exchange, qualified opportunity zone, real estate professional status. Hopefully findng a real estate focused CPA is only marginally more expensive than a regular CPA.If you are talking about your team, I would focus on others first like an agent, contractor, property management company.

Christopher Parsons · Answer

@Kyle Curtin I go through Mark Kohler's firm for both tax and legal. Mark has great free content on YouTube and talks about things your CPA should know/should be doing, whether you go through his firm or not. I'd at least check out his videos so you get an idea of questions you should be asking a CPA prior to working with them.

Andrew Kiel · Answer

Get a great accountant, as @Cara Powers and @Basit Siddiqi state. Bonus depreciation alone was worth a staggering amount of money to myself and my partners last year. @Basit Siddiqi gives you some great questions to ask of any potential accountant - interview them, ask for referrals from other real estate investors, etc. A great accountant is well worth it, but make sure you find a great one.

Simon W. · Answer

Yes, you should have a CPA focused on real estate taxes AND you should have a real estate accountant to do your books that can work well with a RE CPA.

Cara Powers · Answer

You do need a real estate tax specialist on your team, either a CPA or an Enrolled Agent. Ideally, that person would do more than just your yearly taxes; they’d help you strategize and be available to answer questions all year. However, you don’t necessarily need someone expensive. Expensive and good aren’t actually synonymous.

Kyle Curtin · Answer

@Cara Powers

Thank you so much Cara, that really means a lot. The “expensive isn’t a synonym of good” really hit me different and I really like that phrase! Thank you for the great advice!

Account Closed · Answer

@Kyle Curtin I have been trying to reach them but their number is always busy. do you have a contact? interested in potentially using them as well. Thanks.

John Warren · Answer

@Kyle Curtin no problem. I do believe having a great CPA firm makes sense at some point, but that point is not always at the beginning. I think once you start to get a few buildings it makes sense to worry more about things.

Kyle Curtin · Answer

@Andrew Kiel

Thank you so much Andrew, it really means a lot and I greatly appreciate the advice!

Do you have a real estate focused cpa on your team?

Do you have a real estate focused cpa on your team?

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