Initial CPA Consultation

3 Replies

Hi BP!

I am a new REI and am in the process of scheduling an initial CPA consultation. I have an LLC, silent partner, one home and am ready to get rolling on more purchases but want to take as many preparation steps as possible when it comes to finances and taking advantages of tax breaks.

What are the main things I should discuss with my CPA when just starting out?

Thanks for the

Hey @Lexie Greenheck , your sitution should be straight forward for most CPAs out there.  I would ask them if they have experience in real estate investing as well as your specific niche.  Beyond that, I would ask them how they can help you with tax strategies.  Not necessarily specific examples but if that is something they can help you with in general.  In my experience, CPAs will fill in the boxes and it is up to you to ask questions on how to best take advantage of tax incentives.  Having a CPA that will make sure you are taking advantage of everything you can is huge. 

Hi Lexie,

[1] Cost for every service you will want/need. Tax, bookkeeping, sorting receipts from a shoe box into a usable backup system, phone calls with questions, etc...

[2] When will tax return be done--before due date or after due date.

[3] Are there blackout times when question calls cannot be made.

[4] Will you need to buy (pay for monthly) any software.

Good Luck!

There are actually a lot of variables with your situation: 

Your LLC- Single member, multi member, how's it taxed

Your partner- Are they listed on the LLC, operating agreement with them, ect

1 house- is this a primary, rental, both, flip, how was it bought- what's it's purpose? 

If you are going to be focused on REI- find a REI specializd tax pro. I always suggest finding someone tax wise who caters to your biggest tax need. If you own a 3 million dollar trucking company and just wanna buy a couple rentals...likely a trucking industry focused CPA would be your go-to.

Questions to vet if they really know REI :

Q1- If 199A applies to rentals, and what if it doesn't meet the safe harbor?

Q2=If short term rental income is passive or active and when it goes on C vs. E ? 

Q1 Answer - If a rental is a trade or business per IRC 162 it qualifies 

Q2 Answer- 

STR is passive on E if over 7 day average rental stay and no substantial service

STR is non passive on E if less than 7 days average rental stay and no substantial services.

STR Is non passive on C w/ self employment tax if less than 7 days average and substantial services are provided

If they tell you something differently than those answers Keep looking.