All Forum Posts by: Jason Malabute

If you only want to work with an Enrolled Agent (EA) and not a CPA, Michael Plaks is actually a great person to talk to. He’s been one of the top contributors in the EA and tax strategy discussions on BiggerPockets for years and has a strong reputation for working with real estate investors.

What matters most is finding someone who truly specializes in real estate tax strategy, not just general business returns. When you talk to a potential CPA, ask about their experience with real estate clients, how they handle cost segregation, depreciation recapture, and PTET, and see if they can clearly explain how these strategies apply to your situation. You’ll know right away if they understand your world.

To answer your question, yes, you definitely could — but I’d encourage you to look at it from a value perspective rather than just the price. If a CPA charges $3,000 but helps you unlock far greater tax savings or structure your strategy more efficiently, then the question shouldn’t be “why is it more expensive,” but “what kind of return am I getting for that investment?”

It really depends on the lender. Each one has different underwriting criteria and risk tolerances. Generally, they’ll look at your entire financial picture — not just whether you financed the roof. That means they’ll review your credit score, income, how leveraged you are across all your properties, your previous year’s tax returns, and your current-year financial statements to see whether your rental portfolio or business is actually profitable.

They’ll also consider your debt-to-income ratio, how much cash reserves you have, and whether the property itself is generating positive cash flow. So yes, the roof loan could factor in, but it’s just one piece of the puzzle. Ultimately, what matters most is whether you look strong overall financially when you apply for your next loan.

This strategy makes sense overall from a tax standpoint. Even with a small amount of self-employment income, you can still open a Solo 401(k), make limited contributions, and roll over a traditional IRA if the plan allows it. A Roth conversion inside the Solo 401(k) also works — you'll pay regular income tax on the conversion, but future gains grow tax-free, and the IRS doesn't apply UBIT to Solo 401(k) accounts. As for the condo, an LLC isn't required as long as you avoid prohibited transactions, like personal use, though having one can help keep things cleaner.

Why does the CPA have to be local? What’s more important is that they have experience working with real estate investors and a proven track record in tax and accounting for your specific type of investments (long-term rentals, short-term rentals, syndications, etc.) .

Reviews can definitely be helpful, but I’d still recommend having a one-on-one call first before committing. Use that time to ask questions, see how they communicate, and find out whether their approach aligns with your goals and style. A short conversation can tell you a lot more than a Google review ever will.

I completely agree with what Josh is saying here.

He makes a great point that it’s difficult to see how this type of transaction could ever qualify for preferential long-term capital gains treatment. Even if the property or contract were technically held for over a year, it would still likely be taxed at ordinary income rates because the nature and intent of the activity look a lot like dealer activity (i.e., flipping or developing with the intent to sell).

As Josh explains, the IRS and courts tend to focus heavily on intent and the taxpayer’s ordinary course of business. If the taxpayer’s intent was to sell for profit rather than to hold as an investment, it generally falls under ordinary income treatment. Section 1.1234-1(d) makes it clear that gains or losses from options or contracts connected to a dealer’s trade or business are treated as ordinary income, not capital.

So I agree with Josh’s interpretation — even if the option or contract was held long enough to meet the “long-term” threshold, the underlying facts suggest it would still be taxed at ordinary rates because it’s more like inventory than a capital asset.

Even though transferring a mortgaged property into an LLC can technically trigger the due-on-sale clause, in practice most lenders don’t call the loan due as long as you continue making payments on time. That said, it’s not something to assume—they can enforce it. The safest approach is to speak with your lender first, explain what you’re trying to do, and see how they handle these situations. Many investors make the transfer without issue, but always best to know your lender’s position before moving forward.

I’m really glad you shared this, Janet. As a CPA who works with real estate investors, I see so much bad advice floating around online—especially on social media—about “easy” credits and quick refunds. Unfortunately, a lot of people don’t realize that following that kind of advice can end up costing them huge penalties down the road. It’s always better to double-check with a qualified professional before making tax decisions.

I’d recommend using a combination of Asana and QuickBooks.

• Asana (or a similar project/task manager) is great for keeping track of to-dos, setting reminders for things like utility account setups, tracking who you spoke with, and following up on tasks. You can create projects for each property or LLC and keep all notes, deadlines, and completed tasks organized in one place.
• QuickBooks Online is the go-to for financial recordkeeping. It lets you categorize income/expenses, track payments for mortgages, taxes, insurance, and repairs, and generate reports for year-end tax filing. You can even connect your bank accounts so transactions are automatically downloaded and categorized.

Between the two, you’ll have both your operations (tasks/notes) and finances (transactions/records) well covered, which makes managing a new property and LLC a lot smoother.