What financial planning / tax strategy services do I need and how much should I pay?

Question

I'm 43 and own an ~$850k condo in San Francisco (primary residence, year 3 of a 7/1 ARM @ 3.25% with interest only payments) and own a ~$600k condo in Delaware that I manage as an STR during the peak season and as a 6-month leased property during the off season (purchased in 2020, 2.875% 30-year fixed). I make $200K from W2 and net ~$20k/year from the rental property. I have $320k in cash/stocks and $500k in retirement accounts. My current job doesn't offer a 401k, so I max out my TIRA and put the rest of the amount I can save into brokerage accounts. I had a $300K equity gain in 2021 from the sale of startup equity in a tender offer, and expect another one-time event (~$300k - $1.5M) sometime in the next ~5 years.

I have a CPA I pay $950 to do my taxes, but when I asked about opening a Solo 401k, given that I put significant time into managing my rental property, he said I couldn't do this because of my W2 job. I also recently read about cost segregation for my STR, and from what I've read, it seems like something I need to do, but he failed to mention this idea to me when I asked about tax saving strategies. I also know I need an estate plan. I don't know whether I need to do asset shielding. I don't know what professionals to prioritize engaging and how much I should be paying. I'm guessing I should start with a financial planner, but most of the ones I've spoken to in the past wanted an AUM % fee structure, which made no sense to me. I don't need help managing my stock portfolio or modeling my finances for different goals; I need help with tax strategy, legal advice, etc.

Who do I need to hire and how much should I expect to pay, ball park, for advice / execution? I know it's a broad question, but I'm hoping to get some help getting started.

Fulton Abraham Sanchez · Answer

@Alex Johnson, hi. Smart questions, Alex. Who to hire / ballpark:• Real Estate savvy, Tax strategist/CPA for planning • Cost seg study (condo STR): fee depends on size/firm dependent• Estate plan (revocable trust package)• Hourly attorney (LLC/lease/risk)I would suggest start with a 60–90 min tax planning session to map the 12–24-mo plan, then loop in attorney and (if green-lit) cost seg.

Jason Malabute · Answer

Good tax advice isn’t cheap. Tax preparation and tax strategy are two very different services. There’s really no set ballpark — I’ve seen tax plans range anywhere from around $6,000 to over $1 million depending on complexity and the value of the strategies implemented.

Aaron Zimmerman · Answer

Definitely a loaded question here and will try to unpack.

For cpa, it seems Like you're looking for tax advisory for opportunities to save tax or better your financial position. If you're going the STR route, there's a lot you need to know and a good cpa will guide you. I would say a general range would be $2,500 - $5,000 per year.

On the financial planner side, I'd recommend getting a fee only CFP. That way there's no AUMs and there's no misalignment of incentives.

I would definitely recommend an estate plan and you'd want to connect with an attorney on this.

Basit Siddiqi · Answer

A better question to ask your accountant would have been - How can I open a solo401K.It is possible that if you were not eligible to open up a solo401K, to atleast offer the option to open a SDIRA which could have potentially offered you the same benefits. But yes, he is correct, a solo401K can't be opened by someone with just a W-2 job. There is potentially the opportunity to open a business for you to manage your rentals.Best of luck!

Kerry Baird · Answer

I looked for some time in my local area and could not find what I was looking for, which was estate planning and tax strategy.  I have an operational business with STRs and passive business in another state with LTRs.  Hubby works the W-2 and we have kids to think about in the future.  I ended up really like Mark J Kohler and I recommend you watch a number of his videos, particularly his "trifecta" setup.

We did not have a trust, and set about having a trust implemented, and then we implemented the rest of the tricfecta.  My original goal was to get set up with a self directed IRA, since I don't have a "proper" pension (got out of the military before I hit time in service for pension).

Anyway, I really like the way Mark's team has CPA and legal training in house, so the right hand and the left hand (so to speak) are on the same page.  Please send me a DM if you have questions.

Ashish Acharya · Answer

Hey Alex! You’re in a great spot with lots of options.

From a tax perspective, your STR could qualify as a non-passive business if the average stay is under 7 days and you manage it yourself.

That opens the door for a cost segregation study and big bonus depreciation write-offs often opportunities that many CPAs who don't specialize in real estate miss.

Like others have mentioned above, you can’t do a Solo 401(k) with just W2 income, but if you treat the STR as a business and pay yourself for managing it, that income could qualify, giving you another powerful retirement planning tool.

Next steps: start by finding a tax strategist or CPA who really understands real estate and short-term rentals, and an estate planning attorney to protect what you’re building. Schedule a couple of intro calls and see who feels like the right fit for you and your goals. Once those pieces are in place, you can explore additional strategies like asset protection, 1031 exchanges, and retirement income planning.

You’ve already done the hard part, building the foundation. Now it’s just about having the right team to help you scale and keep more of what you earn as you grow. Happy to connect!

Katie Balatbat · Answer

@Alex Johnson

The answer depends on your goals and priorities.  Tax strategy will be some combo of CPA, financial planner, and estate attorney.  You may need to find a CPA that is more proactive or bills hourly for the help that you are looking for.  Estate planning and/or asset protection would be with an attorney.  CPA would handle tax prep and primary tax strategy and calculations.  Financial planner can charge hourly for planning, and will generally look at a holistic picture of all of your finances to make both short-term and long-term plans based on your goals.  Probably you need all three, but it depends on your priorities and ability to cover costs for all these.  If you need referrals for any such professionals in San Diego, let me know.

*This post does not create an attorney-client or CPA-client relationship.  The information contained in this post is not to be relied upon.  Readers are advised to seek professional advice.

Bradley Buxton · Answer

@Alex Johnson

A good financial planner and money manager can be worth their fees. They have different structures for different services and you can shop around. Try to find one that understands your goals, listens to what you want to do, and will work directly with your CPA for the best outcomes. Many charge a % for the money management and a flat fee for the financial planning. I have a few references that specialize in working with investors in CA and NV. I'll send you a PM.

Alex Johnson · Answer

Thanks, will look him up!

What financial planning / tax strategy services do I need and how much should I pay?

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