REI CPA and Legal in Austin?

Question

So I am trying to think ahead here. I will be making my first purchase as hopefully a house hack next summer. I was looking for opinions on whether or not I should find and talk to a rei CPA and lawyer as the new year starts or if I even need to talk to one at all? I have been given advice to go both ways. I'm looking to be as prepared as I can be and do not want the learning curve of running things like a business when it comes time to purchase and rent out.

Melissa Gittens · Answer

@Linda Weygantthis is great advice!

Linda Weygant · Answer

You don't necessarily need to talk to one prior to the purchase, although it certainly wouldn't hurt.  I would definitely talk to one before you file your taxes though.

James Lindsey · Answer

So I am assuming that you would recommend I talk to a CPA before I buy my first house hack? I've always done my taxes via turbo tax and I had a feeling that it wouldn't be enough once I got started.

Linda Weygant · Answer

No, you don't need a CPA in each state.  One really good, very knowledgeable CPA will be able to help you in all states as they will already be familiar with the tax laws in each state you are investing in, or will make themselves familiar with them before offering advice or preparing your tax return.

The only time you might need a CPA in a particular state is if you are audited by the state taxation agency.

James Lindsey · Answer

also if I were investing in multiple states do I need a CPA from each state? How does that work exactly?

Linda Weygant · Answer

House hacking can be pretty complicated from a tax perspective if you've never owned a property before and a competent CPA can pay for themselves by making sure it's all done right the first time.

For example, in a triplex (where all units are of equal size), you've got 2/3 of pretty much all of your property expenses that you'll write off on a Schedule E.  This includes depreciation calculations.

Of the 1/3 of expenses that are left, only some are then deductible, but are then reported on your Schedule A.  Throw in a home office and you've got some pretty fun math to do spread out over 3 or possibly 4 different schedules that has to be done exactly correctly and, (trust me on this - I used to work for TurboTax), most self-service tax software programs are simply not equipped to handle this easily and you must answer the interview questions exactly perfectly in order to get this right.

David Thompson · Answer

James,

Although getting expert inputs never hurts you have to balance that with what are your true needs for an attorney and CPA to purchase a duplex that you will live in?  If this is a planned straight up purchase a good realtor should be able to get you into it.  If you are simply wanting to get a relationship started and build a professional team, then that is different.  I'm sure those following the Austin alerts that have experience with these types of professionals could recommend someone for your team locally.