Looking for a CPA...

45 Replies

Originally posted by @Caleb Heimsoth :
@Benjamin O'Brien

If you notice on here most people saying that what your cpa charged you last year was normal, are also cpas. That’s not exactly an unbiased opinion.

In my opinion (not a cpa, have no fight in this) you paid way to much. Likely by 2-3k.

I also own rentals in TN (onlt a few less then you) as well as another state and I pay less then 600. So unless the 3800 includes like filing fees or fees to create an llc you paid way way to much.

Less than $600 for a tax return with investment properties in multiple states is an incredible bargain - provided he does a good job.  I would have his work checked by another professional and, if it is confirmed that you get quality work - treat your CPA to a real nice dinner.

I agree with what @Michael Plaks @Nicholas Aiola & @Natalie Kolodij have already said.  RE CPAs for the most part bill by fee and not by hour anymore.  Value is the key... whether you are not getting value or you think you are not is a different story - in which case getting a second opinion couldn't hurt.

@Benjamin O'Brien $3,800 for 14 properties doesn't sound outrageous.... but if you aren't able to speak with him/her frequently on planning matters or general inquiries, etc., the relationship should also reflect the fee.  $1,200 for a 1040 with some complications also doesn't make me blink twice... but again, the relationship is a big proponent on your end to feeling the value.  Up to you.  Happy to give it a glance if you like - we're a boutique RE CPA firm in NorCal.

@Caleb Heimsoth $600 for a return w/multiple rentals?? I would be very concerned about the accuracy of those returns, both from an exposure standpoint as well as missed deductions and planning opportunities.  I know you'll say this is a biased opinion, but I'm speaking as truthfully as I can.

Originally posted by @Matt Ward :

I agree with what @Michael Plaks @Nicholas Aiola & @Natalie Kolodij have already said.  RE CPAs for the most part bill by fee and not by hour anymore.  Value is the key... whether you are not getting value or you think you are not is a different story - in which case getting a second opinion couldn't hurt.

@Benjamin O'Brien $3,800 for 14 properties doesn't sound outrageous.... but if you aren't able to speak with him/her frequently on planning matters or general inquiries, etc., the relationship should also reflect the fee.  $1,200 for a 1040 with some complications also doesn't make me blink twice... but again, the relationship is a big proponent on your end to feeling the value.  Up to you.  Happy to give it a glance if you like - we're a boutique RE CPA firm in NorCal.

@Caleb Heimsoth $600 for a return w/multiple rentals?? I would be very concerned about the accuracy of those returns, both from an exposure standpoint as well as missed deductions and planning opportunities.  I know you'll say this is an unbiased opinion, but I'm speaking as truthfully as I can.

That's what most people say when I tell them this. I haven't been audited yet but if I ever am I will let you know. I read and educate myself about most REI tax deductions enough to know the basics and I'm pretty aggressive I'm deducting (like deducting half my cell phone bill) so I don't think I'm missing any strategies really, but if I am I'm okay with that for the price I pay.

To be fair he even acknowledged I got a good deal so I'm pretty sure it's under market, and that's fine with me. I'm also just as positive that 3800 is above market. They're not a REI specific firm either so that may also explain part of it.

The REI firms I've talked to charge outrageous amounts and that's fine but it's not for me. I know people with far more complicated taxes then me who have done it themselves for 25 years and been fine. This is probably a middle ground between doing it myself and paying a REI professional.

Originally posted by @Caleb Heimsoth :
Originally posted by @Matt Ward:

I agree with what @Michael Plaks @Nicholas Aiola & @Natalie Kolodij have already said.  RE CPAs for the most part bill by fee and not by hour anymore.  Value is the key... whether you are not getting value or you think you are not is a different story - in which case getting a second opinion couldn't hurt.

@Benjamin O'Brien $3,800 for 14 properties doesn't sound outrageous.... but if you aren't able to speak with him/her frequently on planning matters or general inquiries, etc., the relationship should also reflect the fee.  $1,200 for a 1040 with some complications also doesn't make me blink twice... but again, the relationship is a big proponent on your end to feeling the value.  Up to you.  Happy to give it a glance if you like - we're a boutique RE CPA firm in NorCal.

@Caleb Heimsoth $600 for a return w/multiple rentals?? I would be very concerned about the accuracy of those returns, both from an exposure standpoint as well as missed deductions and planning opportunities.  I know you'll say this is an unbiased opinion, but I'm speaking as truthfully as I can.

That's what most people say when I tell them this. I haven't been audited yet but if I ever am I will let you know. I read and educate myself about most REI tax deductions enough to know the basics and I'm pretty aggressive I'm deducting (like deducting half my cell phone bill) so I don't think I'm missing any strategies really, but if I am I'm okay with that for the price I pay.

To be fair he even acknowledged I got a good deal so I'm pretty sure it's under market, and that's fine with me. I'm also just as positive that 3800 is above market. They're not a REI specific firm either so that may also explain part of it.

The REI firms I've talked to charge outrageous amounts and that's fine but it's not for me. I know people with far more complicated taxes then me who have done it themselves for 25 years and been fine. This is probably a middle ground between doing it myself and paying a REI professional.

 Fair enough, well said.  Again back to value, you think you're getting it (which you are).  Whether you are taking advantage of everything, and shielding yourself from everything, is another story... but to your point, you're ok with that.  Most folks who come to us are not ok with that risk given the amount of zeros that are at stake.  Glad you have found a good provider though, stay with him!

Originally posted by @Nicholas Aiola :
Originally posted by @Eric C.:

@David T. Good luck with your search. I've done my fair share of research on CPAs and it's VERY difficult to find one where the pricing could be justified. I'm not sure how anyone can justify a return cost for $1000-$2000 with a W2 + a few rental properties. I would love to have one of "expert REI" CPAs have a look at my return to see if they can add any value. I've already gone through 3 CPAs and found mistakes in all of them. Some more serious than others. I got 2 of them as referrals on BP! I always worry that if I can find a mistake in my return, what other mistakes are there that I'm not aware of.

It’s tough to justify the cost of your CPA if the value is not correctly perceived. A run of the mill tax preparer could prepare the same return for cheaper but it could wind up costing you 5x more in tax liability. The same could be said if you prepare your own returns.

If a real estate savvy CPA saves you $10k in taxes, would you pay $3k for that? Or would you rather pay $500 to the general tax practiotioner who cost you $10k in taxes?

This is a classic FUD statement from CPAs that try to justify their high price for preparation. I would say 90% of people don't fall in a category where these numbers would even be possible. Most people seem to be stuck on the thought that they will get a better "product" by paying more.  Most of the time when someone says my new CPA saved me X, it's usually due to an egregious error from the previous CPA (ie. not taking depreciation).  It's pretty rare that the new CPA has some magic strategy that saves a person thousands of dollars.


My rule is thumb is not to go with the cheapest CPA, but also not to go with the most expensive.  In the end, a return that takes 2-3 hours max (ie. W2 + say 3 rentals with organized documentation + few 1099s) should cost no more than $600 ($200/hr is more than a fair rate).  This assumes that the CPA doesn't spend time "thinking and researching" about how to do certain things.  If I'm paying a professional, I'm assuming they should be able to fill in numbers in a spreadsheet then transfer to Schedule X without much thought.  I've had a CPA tell me they had to spend a few hours figure out how to do a 1031 exchange which boggled my mind.  I specifically asked if they had experience in a 1031 before hiring them.

Originally posted by @Michael Plaks :

@Eric C.

Frankly, I have hard time believing that 2 of my peers from this forum would make material mistakes. Mostly out of professional curiosity, I would like to see what kind of mistakes they were.

Feel free to reach out privately if you want to share this information.


@Michael Plaks:  To clarify, the 2 CPAs I used were referrals from people on this forum, not active contributors as I prefer to work with local CPAs only. 

Originally posted by @Eric C. :

@Michael Plaks:  To clarify, the 2 CPAs I used were referrals from people on this forum, not active contributors as I prefer to work with local CPAs only. 

Well, that preference could be partially to blame for your negative experience, maybe.

REI taxation is very complicated, and there're not many people in my business who understand it well. Which is why I treasure the opportunity to network with my peers on this forum: they really know our craft.

Originally posted by @Michael Plaks :
Originally posted by @Eric C.:

@Michael Plaks:  To clarify, the 2 CPAs I used were referrals from people on this forum, not active contributors as I prefer to work with local CPAs only. 

Well, that preference could be partially to blame for your negative experience, maybe.

REI taxation is very complicated, and there're not many people in my business who understand it well. Which is why I treasure the opportunity to network with my peers on this forum: they really know our craft.

Yes, the CPAs that post on BP generally have a higher level of understanding about REI, but I don't feel a standard scenario REI focused return should be considered complicated. I would have thought the requirements to obtain a CPA license would weed out anyone who couldn't prepare a standard REI focused tax return. By standard, I'm just referring to adding a new rental or completing a 1 property to 2 property 1031 exchange.

Originally posted by @Eric C. :
Originally posted by @Michael Plaks:

Yes, the CPAs that post on BP generally have a higher level of understanding about REI, but I don't feel a standard scenario REI focused return should be considered complicated. I would have thought the requirements to obtain a CPA license would weed out anyone who couldn't prepare a standard REI focused tax return. By standard, I'm just referring to adding a new rental or completing a 1 property to 2 property 1031 exchange.

1031 exchange is anything BUT standard. It is high-end of the tax preparation (and should be charged as such). 

Originally posted by @Eric C. :
Originally posted by @Nicholas Aiola:
Originally posted by @Eric C.:

@David T. Good luck with your search. I've done my fair share of research on CPAs and it's VERY difficult to find one where the pricing could be justified. I'm not sure how anyone can justify a return cost for $1000-$2000 with a W2 + a few rental properties. I would love to have one of "expert REI" CPAs have a look at my return to see if they can add any value. I've already gone through 3 CPAs and found mistakes in all of them. Some more serious than others. I got 2 of them as referrals on BP! I always worry that if I can find a mistake in my return, what other mistakes are there that I'm not aware of.

It’s tough to justify the cost of your CPA if the value is not correctly perceived. A run of the mill tax preparer could prepare the same return for cheaper but it could wind up costing you 5x more in tax liability. The same could be said if you prepare your own returns.

If a real estate savvy CPA saves you $10k in taxes, would you pay $3k for that? Or would you rather pay $500 to the general tax practiotioner who cost you $10k in taxes?

This is a classic FUD statement from CPAs that try to justify their high price for preparation. I would say 90% of people don't fall in a category where these numbers would even be possible. Most people seem to be stuck on the thought that they will get a better "product" by paying more.  Most of the time when someone says my new CPA saved me X, it's usually due to an egregious error from the previous CPA (ie. not taking depreciation).  It's pretty rare that the new CPA has some magic strategy that saves a person thousands of dollars.


My rule is thumb is not to go with the cheapest CPA, but also not to go with the most expensive.  In the end, a return that takes 2-3 hours max (ie. W2 + say 3 rentals with organized documentation + few 1099s) should cost no more than $600 ($200/hr is more than a fair rate).  This assumes that the CPA doesn't spend time "thinking and researching" about how to do certain things.  If I'm paying a professional, I'm assuming they should be able to fill in numbers in a spreadsheet then transfer to Schedule X without much thought.  I've had a CPA tell me they had to spend a few hours figure out how to do a 1031 exchange which boggled my mind.  I specifically asked if they had experience in a 1031 before hiring them.

 I agree that a good rule of thumb is to go with the cheapest or most expensive.  I disagree that a "basic RE tax return with 3 rentals etc." should only take 2-3 hours, and that $200/hr is fair.  Perhaps there is a geographical difference, but that is simply way off the industry standard in my area... and I know for sure because we receive clients who leave other firms/CPA's.  Sometimes we charge more, sometimes less, than the last professional... but not at that rate... not even close.  The reality is, whether you think it's fair or not doesn't matter.  Our other clients see our value and pay us accordingly, thus setting our baseline or barometer.  Then, it would become an inefficient use of our time to do such a return for $600.

Secondly, most of your posts on this subject tend to refer to the fee and service related to a tax return whereas someone sits down in front of all the data and can complete the return from start to finish.  You are not factoring in all of the email/phone questions throughout the year, plus the act of gathering all of the relevant info from the client, working with financial advisors and brokerages if necessary, RE taxpayers may likely have estimates so working on quarterlies, year end tax planning, and not to mention any **new changes in tax law** that may REQUIRE more research.  So many more things too, such as just a simple final year K1 could add a couple hours for a basis calc.

I appreciate your opinion and we may be comparing apples to oranges, but just trying to give you and everyone else perspective on what a full, year round service entails and why pricing a return based on the 3 hours of data entry you are referring to is simply inaccurate.

Originally posted by @Eric C. :
Originally posted by @Nicholas Aiola:
Originally posted by @Eric C.:

@David T. Good luck with your search. I've done my fair share of research on CPAs and it's VERY difficult to find one where the pricing could be justified. I'm not sure how anyone can justify a return cost for $1000-$2000 with a W2 + a few rental properties. I would love to have one of "expert REI" CPAs have a look at my return to see if they can add any value. I've already gone through 3 CPAs and found mistakes in all of them. Some more serious than others. I got 2 of them as referrals on BP! I always worry that if I can find a mistake in my return, what other mistakes are there that I'm not aware of.

It’s tough to justify the cost of your CPA if the value is not correctly perceived. A run of the mill tax preparer could prepare the same return for cheaper but it could wind up costing you 5x more in tax liability. The same could be said if you prepare your own returns.

If a real estate savvy CPA saves you $10k in taxes, would you pay $3k for that? Or would you rather pay $500 to the general tax practiotioner who cost you $10k in taxes?

This is a classic FUD statement from CPAs that try to justify their high price for preparation. I would say 90% of people don't fall in a category where these numbers would even be possible. Most people seem to be stuck on the thought that they will get a better "product" by paying more.  Most of the time when someone says my new CPA saved me X, it's usually due to an egregious error from the previous CPA (ie. not taking depreciation).  It's pretty rare that the new CPA has some magic strategy that saves a person thousands of dollars.


My rule is thumb is not to go with the cheapest CPA, but also not to go with the most expensive.  In the end, a return that takes 2-3 hours max (ie. W2 + say 3 rentals with organized documentation + few 1099s) should cost no more than $600 ($200/hr is more than a fair rate).  This assumes that the CPA doesn't spend time "thinking and researching" about how to do certain things.  If I'm paying a professional, I'm assuming they should be able to fill in numbers in a spreadsheet then transfer to Schedule X without much thought.  I've had a CPA tell me they had to spend a few hours figure out how to do a 1031 exchange which boggled my mind.  I specifically asked if they had experience in a 1031 before hiring them.

If you are only paying $600 for a tax return that has brokerage accounts and rental properties, then you are probably going to a tax-preparer who works on volume (a similar model to H&R Block).  You may have your tax return prepared correctly, but it is unlikely that your tax preparer is doing anything to better position you to minimize taxes in the future.

A few examples: 1) When a client sells a business, I know their personal interests and amount of time that they have available and I help them by coming up with multiple strategies to reduce or defer the income taxes on the sale.  Often one of the strategies does involve real estate.  2) With the change in tax law, at the end of 2017 I worked with my clients by looking at their individual situations to determine how best to take advantage of the changes to minimize their tax liability.  3) I have come up with new business/investing structures for my clients to minimize or defer their income taxes while working with their estate plans.

I agree that paying more does not mean that you are getting more quality of work (you should pay attention to the everything your tax preparer does to evaluate that), but if you are paying less it is an indicator that your tax preparer isn't devoting much time to you.

@Matt Ward I'm just trying to provide a consumer view on this topic.  Problem with most of these types of discussions is that they heavily dominated by Accountants and CPAs who need to just their high fee structure.   Of course if you have a client who e-mails and calls you numerous times during the year and burns hours and hours of your time, they should pay a higher fee.  If they have a K1 and a bunch of 1099s with options trading or anything complex, they should pay more. 

I just think most people on here are overpaying for the services they receive based on the average type of REI return (W2 + few rentals). Most companies who "package deals" and charge a set price are not doing it to benefit the consumer. It's done to gain higher profit for the company. My company does the same thing (not RE related). That's why I think it's always beneficial is break down the services one is getting by hour. It's very easy to understand this metric and do a proper comparison.

@Eric C. while I understand where you are coming from, I respectfully disagree. 

I think it's a hasty generalization to say most people on a forum/community are doing anything, regardless of the topic.  I'm not sure I'd be comfortable saying "most people here" do anything etc. etc.

While I hear your opinion re: hourly, that's not the way the industry is headed, and for the most part it is already mostly fee based.  In fact there are plenty of articles on this subject to the extent that and hourly fee structure is a disservice to the customer.  An experienced CPA who leaves a Big4 to set up a solo shop would either price himself out or be killing clients with fees if he charged his hourly rate to every client.  

Furthermore, you incentive the provider to either work too fast to keep your business because they know you have a ceiling in terms of what you're willing to pay....OR you incentive providers to bake in more hours to "make sure everything is right" because they know they can take advantage of certain clients.  These are just some of the many reasons, the more obvious ones, as to why the industry is going fee based.

If a new client comes to us, we look at the return, consult with them and understand their expectations and what they're looking for, and based on that give a competitive quote.  Competitive is verified again by the local market as a certain percentage of clients switch providers each year and we know previous fees paid.

I'm not even just speaking about solo providers or family firms, I know people at the Big4 as well as regional firms like GT.  The head of individual tax in the Bay Area at GT can't accept any new client for less than $3500 because A) they are fee based for reasons above, and B) we as professionals now are realizing there is a shortage of top tier providers and as clients continue to move toward those fewer and fewer professionals, in our effort to maintain our level quality of service, we need to make sure our time is being accounted for by the value we provide.

Again I hear what you're saying.  I respect your opinion.  I disagree and am just providing reasons why. 

Hello BRers, 

Quick question for ya'll and especially the CPAs. I'm located in Southern California and newly investing in Ohio at the moment. My question is just would you suggest a CPA that knows Ohio and it's REI taxes and laws or should they be more focused on CA tax laws? I've spoke with a CPA located in Ohio but should should they know more about CA tax laws? Just wondering your suggestions and opinions.

Thanks, 

Alex 

Originally posted by @Alex Bacon :

Hello BRers, 

Quick question for ya'll and especially the CPAs. I'm located in Southern California and newly investing in Ohio at the moment. My question is just would you suggest a CPA that knows Ohio and it's REI taxes and laws or should they be more focused on CA tax laws? I've spoke with a CPA located in Ohio but should should they know more about CA tax laws? Just wondering your suggestions and opinions.

Thanks, 

Alex 

 I'm not sure there's a "right answer" here, but if it were me, I'd pick one who knows CA first.  That's your resident state and arguably the most complex when it comes to state tax laws.  Your filing requirements in Ohio may be very minimal compared to CA.  Just an opinion.

Originally posted by @Alex Bacon :

Hello BRers, 

Quick question for ya'll and especially the CPAs. I'm located in Southern California and newly investing in Ohio at the moment. My question is just would you suggest a CPA that knows Ohio and it's REI taxes and laws or should they be more focused on CA tax laws? I've spoke with a CPA located in Ohio but should should they know more about CA tax laws? Just wondering your suggestions and opinions.

Thanks, 

Alex 

I think that is a good question, but in general you would want to focus on the CPAs knowledge of real estate related tax rules at the federal level because even in high tax states like California the federal tax rates dwarf our state rates.  Only once you are comfortable that the person has a solid understanding of the real-estate tax rules at the federal level would I consider their state-specific knowledge.

If looking at their state knowledge, I would start with someone who knows your resident state (CA).  Your resident state will, at a minimum, look at all of your income from all sources, so it is important to go with someone who can help you with that.

Its helpful of course if you can also find someone with experience preparing tax returns for the state you are investing in.  More experience means more likely to catch state-specific issues that other competent CPAs might miss.  However I still say that federal knowledge and resident state knowledge is more important.

Most of us on BP work with clients throughout the country remotely, so you will likely find a number of people who meet these qualifications.  After that, it simply comes down to how comfortable you are with your tax preparer.  This person will come to know your finances very well, so it is important that you are comfortable working with that person.  If you can find someone good locally that you can get to know in person that is ideal, but I wouldn't pass up someone who you meets all of the above requirements and you are more comfortable with just because it means working remotely.

Hi, I live in South Jersey and I'm also interested in finding a good Real Estate CPA. I've contacted a couple and set up meetings, but would like to know if anyone in my area has worked with any good Real Estate accountants. Someone that can help a newbie because some accountant firms are so big that the personal accountant relationship is hard to find.

@Michael Plaks thank you for the mention. As a CPA that active in real estate taxation I have this to add..... price is important to a number of prospective clients; for some it may be the most important. Fee expectations should be discusssed upfront. Your CPA, EA or tax practitioner should share their fee structure whether it be value, project or hourly billing. The fee should never be a surprise. Open communication should set expectations and the prospective client can decide if the value meets or exceeds the cost. The tax preparer should propose a fee that makes the work profitable for them. This is a job/career/business for most of my fellow practitonsrs. It has to make business sense for the preparer to accept an engagement.

Hi @Tramaine Baxter , yes you are very correct about the statement regarding big firms. I come from a background of big firms and they really look at clients from a fee standpoint. Since your a newbie you would want someone to take some extra time and help you understand everything and not charge outrageous hourly fees just to talk to them. 

Feel free to reach out if you would to chat on the specifics your looking for in an accountant.