Hutto Texas · Member since 2022 · 4 posts · 1 vote
Hello everyone,
I bought my first rental last year in November (2022) but after rehabbing it myself, I did not have a tenant until January of this year (2023) so I did not make any profit to show on taxes. Would there be any benefit to hire a CPA or accountant to help with last year's taxes or should I continue to use turbo tax this year like I have the previously. Thanks in advance!
This doesn't answer your question, but I am right there with you. By the way, my undergrad is in accounting and I have been a banker/lender in addition to a personal investor for 32 years. That being said, I can't find an accountant that I've enjoyed working with. I'm on my third accountant in 4 years. My first I had worked with for a long, long time, but he started forgetting to file things and I was getting letters from the IRS. I would give them to him and he would ignore them. Upon a recommendation, I tried someone else. They milked the bill. For example, I got a call out of the blue from the CPA to see how I was doing. A couple of weeks later I got a bill for the call. He had to go. This past accountant, also from a recommendation, is a "mill" that isn't much better than Turbo-Tax. I sent over an IRS letter that we received on his work and got a "that's not my job" email back. I'm seriously considering going back to doing it myself. I don't have the time nor the expertise, but it can't be worse than what we've had in the last few years. It doesn't answer your questions, but I'm just piling on.
I bought my first rental last year in November (2022) but after rehabbing it myself, I did not have a tenant until January of this year (2023) so I did not make any profit to show on taxes. Would there be any benefit to hire a CPA or accountant to help with last year's taxes or should I continue to use turbo tax this year like I have the previously. Thanks in advance!
There is a lot packed into your question. I would for sure meet with a CPA familiar with real estate investing (not all CPAs understand the nuances ) and have a long list of questions prepared for them and take a lot of notes. Then, dependinig on your set of circumstances and goals, you'd have a much better understanding if you need a CPA to refile for you or prepare you taxes for the future. You have a lot more at stake than the $200 you'd pay for an hour of a CPAs time and expertise.
This doesn't answer your question, but I am right there with you. By the way, my undergrad is in accounting and I have been a banker/lender in addition to a personal investor for 32 years. That being said, I can't find an accountant that I've enjoyed working with. I'm on my third accountant in 4 years. My first I had worked with for a long, long time, but he started forgetting to file things and I was getting letters from the IRS. I would give them to him and he would ignore them. Upon a recommendation, I tried someone else. They milked the bill. For example, I got a call out of the blue from the CPA to see how I was doing. A couple of weeks later I got a bill for the call. He had to go. This past accountant, also from a recommendation, is a "mill" that isn't much better than Turbo-Tax. I sent over an IRS letter that we received on his work and got a "that's not my job" email back. I'm seriously considering going back to doing it myself. I don't have the time nor the expertise, but it can't be worse than what we've had in the last few years. It doesn't answer your questions, but I'm just piling on.
I bought my first rental last year in November (2022) but after rehabbing it myself, I did not have a tenant until January of this year (2023) so I did not make any profit to show on taxes. Would there be any benefit to hire a CPA or accountant to help with last year's taxes or should I continue to use turbo tax this year like I have the previously. Thanks in advance!
1st rental? Costs incurred prior to it being put in service (rented out) go to your cost basis.
Simple to tally everything up and just add it to your purchase price essentially. When turbo tax asks how much you paid, give the total. For land value, I check the county assessor website. I usually use the ratio of land to improvements and apply that to the actual PP.
Rental expenses only offset rental income anyway, so you're not really losing by not having a bunch of 'expenses'. But see a tax pro and verify. I am not one. A good one will give you a solid foundation going forward.
I file my own taxes and use turbotax. As a small time landlord as long as you are organized and can keep proper records filing your taxes on your own is pretty simple and turbotax walks you through step by step. If you have trouble with the organization aspect good luck with an accountant because they are going to need records to help you file. Once you use turbotax keep using it since it saves all your info from the previous year to save time. For a SFH your schedule E really is not that complicated. They do have premium features where you can talk to a live person so if you aren't feeling confident you can have them look it over for you if you would like.
Was the rental property available for rent in 2022? If so, you want to work with a tax professional for 2022. If not, prepare your 2022 on your own and find a great tax professional to help you with your Schedule E starting with 2023. Hit me up with any questions.