New investor: What do I do with tax season approaching?

Question

I purchased a triplex in July. I am a teacher don't make a ton of money. What should I do about tax season coming up? Do I need a CPA? Or should I do taxes myself? I have no clue of what I should do as a newbie. I bought the tax book from BP and its great but I would love to get advice from the BP community. Thanks!

Eamonn McElroy · Answer

@Byron Scott

A good CPA should always be able to add value. That said, depending on your current property's economies of scale a good CPA might not be in the cards right now.

If you're willing to do the research you'll probably be able to DIY your return reasonably correctly with the upper-tier versions of TurboTax, etc. The most important thing will be making sure you place the property in service correctly and appropriately classify yourself regarding the passive activity loss rules (i.e. if you are a full time teacher generally you won't be a "real estate professional"). A good way to check the latter...if the property produces a net tax loss on your schedule E, a Form 8582 should also be generated by the software.

Stay away from "cheap" tax return preparers. They do more harm than good. A material number of my new clients need amended returns because their prior professional wasn't up to snuff. Price is what you pay, value is what you receive. It's not a commodity business.

Best of luck.

Byron Scott · Answer

Its a true rental and I had to rehab one of the units. I had to put around 15k into the property total it was a distressed property. I wanted a CPA because I didn't know how to factor that into my taxes. I will reach out to some cpas thanks for the advice.

Basit Siddiqi · Answer

@Byron ScottI would suggest getting a CPA(biased opinion).If you have a simple return such as just having wages from being a teacher. I would likely say you can likely go ahead and file the tax return yourself. However, when you add complexities to your return such as owning investment properties, this is the time to hire a professional.Do you live in one of the units of the triplex? That is considered "house-hacking' and it does make things a little bit more complicated when filing of the return.

Adam Rasmussen · Answer

As a CPA I am typically inclined to recommend getting a CPA. Especially as a newbie. While things are less complicated you might look into a CPA who is willing to pass off some pointers and maybe down the road you can take it on yourself but I still wouldn't recommend it.

New investor: What do I do with tax season approaching?

New investor: What do I do with tax season approaching?

Most Popular Reply

4 Replies