Real Estate Investor · Louisville, KY · Member since 2014 · 7 posts · 6 votes
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?
The amount of refund is a completely meaningless number. All it shows is how much you overpaid from your paychecks throughout the year. It tells you nothing about how efficient your taxes are.
Analogy: grocery store. What you get back as a change from the cashier does not tell you if your $5 purchase was a good price. Your "refund" depends solely on what bill you handed the cashier earlier. You give her $10 - your "refund" is $5. You give her $100 - you "refund" is $95, yay!!! You give her $5 - you get nothing back, at all. While your $5 out of pocket cost remains exactly the same.
All this bitching goes nowhere. Definitely shop it around for diligence purposes, find someone you can communicate with, get an idea of pricing for what you have and where you are going. Then, lock in someone you trust. Mine's a multiplier of what you pay, and I pay more than that on a monthly basis to navigate all my taxes. I wouldn't divert if someone charged me half of what my guy did, cause he's a real one. He deserves it and the knowledge is simply nothing short of amazing. He's saved me probably 40-50x what I've paid him.
I have seen CPAs charge extra if the bookkeeping is messy. If they have to go through and segregate the revenue and expenses of each they will generally charge more.
When dealing with service providers, you can easily be shocked if you did not discuss pricing upfront, and even if you did you could easily be shocked - LOL.
What you needed was a letter of engagement spelling out the fees that will or may be incurred - in detail. I learned this the hard way years ago.
100% All tax pro's should have an engagement letter IMHO with a tight range of pricing. If you do value billing and not hourly like a lot of firms do, having a final price based on similar jobs with some give just in case it ends up being more is the way to go.