Different CPAs for investments in different states?

Question

Hi All. Thank you everyone for engaging on my posts as I ramp up towards my first deal!

My next question is a simple one: through circumstance, we will almost certainly have real estate holdings in two states (Georgia and likely Pennsylvania). Is it advisable to have different CPAs in each state, or should one take care of our entire national portfolio?

I understand that state tax and regulatory conditions can vary quite a bit. Do the advantages of state-specific expertise offset the added complexity of having multiple CPAs?

I understand that state tax and regulatory conditions can vary quite a bit.  Do the advantages of state-specific expertise offset the added complexity of having multiple CPAs?

Diyan Yap · Answer

One person is highly recommended

Ben Trageser · Answer

@Matthew Samson

It typically makes sense to have one accountant handling everything. They will allow you to see the bigger picture overall. Typically it doesn’t matter where the accountant is located as they know a majority of the state rules. For example, I’m located in NJ but have clients all over the US and outside the country.

Ashish Acharya · Answer

@Matthew Samson It's generally more efficient to use one CPA for your entire portfolio, as they can manage multi-state filings and streamline your tax strategy. While state-specific expertise can be helpful, most CPAs are familiar with different state tax laws.

Only consider a second CPA if your current one lacks knowledge in a specific state like Georgia or Pennsylvania.This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

Basit Siddiqi · Answer

The most important is having a CPA understanding the tax laws on where you are a resident of.That will have the most implications.

Bill Hampton · Answer

@Matthew Samson

Another vote for one accountant. Saves time and money and reduces the potential foe errors.

Good luck.

Jason Malabute · Answer

It’s generally advisable to have one go-to CPA contact who can handle your tax planning, tax compliance, and accounting as a real estate investor. Having a single CPA allows for consistency in tax strategies and communication.

However, there are times when it’s beneficial to get a second opinion. If you feel your CPA may not be fully up to date on certain aspects of your particular tax situation, especially with multi-state holdings, consulting another professional can offer fresh insights or alternative strategies.

Cory Vitale · Answer

@Matthew Samson I'll jump on the one CPA bandwagon and provide some additional context to hopefully add some more value to your process. Most CPAs have the research skills and experience to sort out state-specific issues.

The vast majority of states also leverage figures on a federal return as a starting point to define taxable income, making adjustments to those figures to arrive at the portions of income that are taxable for state tax purposes.

Notably, Pennsylvania is one of the five states that has a specific definition which doesn't rely on figures found on federal returns. As a remote CPA, I believe that clients' expectations can be exceeded regardless of their location.

However, an initial glance suggests that a Pennsylvania CPA may have processes in place to address quirky Pennsylvania calculations and the federal tax prep experience to more easily research unfamiliar Georgia issues. The reverse may be a little less ideal.

That said, above all else, I would prioritize experience far more when making your selection than the physical location of your tax professional. Good Luck!

Kory Reynolds · Answer

Another vote for all the same firm - I have never actually seen a client divide up work based on CPAs in different states for different projects.  Sounds like a great way to be very disjointed!

I do have a handful of clients that have ended up using multiple CPAs just due to who their partners were on different deals, and even in those cases they almost always end up consolidating to a single CPA - taxes are enough of a headache without dealing with 3 different professionals who each only have a slice of the whole picture.

If you are going to regularly be investing across the country, it doesn't hurt to work with a firm that has State and Local Tax (often referred to as "SALT") internal resources, though typically this does come from larger firms with larger fees.  In that scenario even though the given professional might have a heavy amount of experience in a handful of jurisdictions, they have someone on their team that they can pull in for areas they aren't familiar with. That is the situation I am in - while I work with investors nationwide, I am most heavily focused in New England, but our firm has a SALT team that I can pull in to help on the other states I don't regularly see.

Sean Graham · Answer

I'd recommend one CPA for all of that. Cost segregation work can often be separate though.

Matthew Samson · Answer

Thanks Ben and Diyan. That's really helpful!

Different CPAs for investments in different states?

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