Should I use CPA for small real estate portfolio

Tax, SDIRAs & Cost Segregation
7yFollow

Should I use CPA for small real estate portfolio

Zach Becker
Rental Property Investor · Indianapolis, IN · Member since 2018 · 7 posts · 6 votes

I live in Pennsylvania and have recently bought two duplexes out of state.  My wife usually does our taxes as she majored in accounting (is not an accountant).  However, now that the taxes will be a little more complicated with the added real estate investments I have a couple questions regarding upcoming tax season:

1. Is it worth paying for a CPA to do our taxes instead of my wife since she is not an expert regarding the real estate aspect?  I just don't know realistically what the benefits would be on a relatively small portfolio or if my wife could manage it until it grows larger.

2.  If I do utilize a CPA I am assuming I need to use one in my state of residence, correct?  Does anyone have any recommendations for CPAs in Pennsylvania, specifically near Cranberry Twp, PA?

Thank you for your advice/feedback!

0Reply
54 views

Most Popular Reply

Matt Ward
Specialist · San Francisco Bay Area · Member since 2018 · 221 posts · 160 votes
7y
@Zach Becker I’d recommend using a professional but they don’t need to be in your state. However they should be familiar with both your state and the state that your properties are in. There are several on BP that you could speak with. @Michael Plaks @Natalie Kolodij @Brandon Hall @Nicholas Aiola @Jana Cain
3Reply
See this reply in the discussion

16 Replies

Jump to latestLatest
  • Eric Nurmi
    Specialist · IL · Member since 2018 · 47 posts · 42 votes
    7y
    @Zach Becker I recommend using a CPA especially if they will help with your tax strategy. For an out of state CPA, the benefit I see is if there are specific tax laws regarding your property. But, It may not be necessary. How do you currently hold title on your instate and out of state properties? There are things I’m working on that drastically reduce taxes as well as liability on my business and real estate. If you want to know more, let me know. Also, I have friends who live in PA and would be a good resource for professional CPA services there if you go that route.
    1Reply
  • Zach Becker
    OP
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 7 posts · 6 votes
    7y

    My primary residence in PA is in my wife and I's name.  Both duplexes are currently in my name, but will be moving to LLCs.  I didn't know if I needed a CPA in PA or Indianapolis where my investment properties are located.

    0Reply
  • Stanley Bronstein
    Attorney, CPA, Broker & Author · Scottsdale, AZ · Member since 2018 · 532 posts · 488 votes
    7y

    @Zach Becker The main thing is whether or not your CPA can file Indiana state tax returns for you.  These days, the computer software makes it fairly easy for CPAs to do that, even if they're located in another state (such as your home state of Pennsylvania).  When you go to hire a CPA, just ask them if they can handle it or not.

    1Reply
  • Matt Ward
    Specialist · San Francisco Bay Area · Member since 2018 · 221 posts · 160 votes
    7y
    @Zach Becker I’d recommend using a professional but they don’t need to be in your state. However they should be familiar with both your state and the state that your properties are in. There are several on BP that you could speak with. @Michael Plaks @Natalie Kolodij @Brandon Hall @Nicholas Aiola @Jana Cain
    3Reply
  • Mary M.
    Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    7y

    Use a CPA. They will pay for themselves in no time.  I am lucky in that I have an amazing one who does no break the bank :)

    0Reply
  • Patrick LiskaPro Member
    Investor · Verona, NJ · Member since 2014 · 1k+ posts · 832 votes
    7y

    The good news for you is that Indiana is a Reciprocal state with Pennsylvania ( use form WH-47), which means you do not have to file separate tax returns for each state. you may have to file for the income made in that state to them but you do not have to report income from PA to them. it does get complicated - Nj and PA are reciprocal states and my properties are in PA and my CPA is here in NJ. i suggest you hire a CPA, tell your wife it is not that you do not trust her, you just want to relieve her burden of doing the now complicated taxes.

    0Reply
  • Michael PlaksPro Member
    Tax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
    7y

    @Zach Becker

    An an UNlicensed marriage counselor, I recommend that you wait until your wife suggests that you need to look for professional help.

    Only half-joking.

    0Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    7y
    @Zach Becker. LLCs don’t really chNge anything tax wise. I would use a cpa. I live in one state, own property in two others and use a cpa in yet another state. It works for me, I don’t think the cpa being in another state is an issue. No tax advice given
    0Reply
  • Michelle St. Claire
    Rental Property Investor · Brisbane, Australia · Member since 2018 · 38 posts · 21 votes
    7y
    @Mary Mitchell Do you mind sharing who you use? I’m in the hunt for one that’s good and affordable as I’m starting out. Thanks.
    0Reply
  • David H.
    Madisonville, LA · Member since 2018 · 125 posts · 71 votes
    7y
    It depends on your wife's knowledge or interest in learning the tax laws. I only have a few properties and wouldnt because I like to learn the rules and do it myself as I feel I can squeeze more out than the CPA will. Todays software makes it pretty easy to do a good job until things get really complicated
    0Reply
  • Daniel HymanBusiness Member
    CPA · Milwaukee, WI · Member since 2016 · 2k+ posts · 1k+ votes
    7y

    For DIY's with smaller portfolios, often the biggest pain point and most time consuming aspect of the preparation is the calculation of the property basis. The property basis will determine your depreciation expense - one of the most important tax advantages of a buy and hold investor. Miscalculating it can lead to an over or understatement of deprecation - neither of which are a good thing. 

    My Online Accountant572 Reviews
    WebsiteView Page
    2Reply
  • Zach Becker
    OP
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 7 posts · 6 votes
    7y

    Thank you everyone for their input.  It looks like I will be looking for a CPA!

    0Reply
  • Mary M.
    Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    7y

    @Michelle St. Claire  i use Jessica Bonin in Eugene Oregon. She also can do CA returns and has done them for me. She is great!

    http://jessicabonin.com/

    1Reply
  • Michelle St. Claire
    Rental Property Investor · Brisbane, Australia · Member since 2018 · 38 posts · 21 votes
    7y
    @Mary Mitchell Thanks! I’ll check her out and let her know where the referral came from.
    1Reply
  • Ron Fletcher
    Leclaire, IA · Member since 2016 · 161 posts · 130 votes
    7y
    @Zach Becker It sounds like you intend to grow your business over time. If so, use a CPA now. It’s part of putting your team/system in place now so when things get more complicated you are ready.
    1Reply
  • Ahad AliPro Member
    CPA/Investor · Bronx, NY · Member since 2018 · 236 posts · 45 votes
    7y

    Obviously going to tell you that you need to use a CPA, have your wife learn the complexities that will go into your tax filings now that you own real estate, after a few years you might not need to hire a CPA anymore but for now, you need the help/advice. Many CPAs, such as myself, work remotely as well so doesn't necessarily have to be in your state.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free