5 Things To Look For In A Real Estate Tax Advisor

By on October 9, 2017

Tax advisors are one of the most unappreciated players in real estate.

They do their job quietly behind the scenes to make sure you maximize your profits and ensure that your operations don’t run afoul to the law.

The glamor is usually reserved for brokers and financiers. But the significance of what they do should not be underestimated.

And while they are remunerated very well, the money they can help you save more than justifies their compensation.

For small time investors, hiring a dedicated accountant, CPA, or tax advisor can seem unnecessary.

But once you hit the big league, not hiring one can actually hurt your bottom line.

Remember to always interview a few people before signing one up. This is a critical role in your business operations. And you need someone who is suitable instead of signing up the first one you see in the Yellow Pages.

Here are some of the qualities you should look for when looking to hire a tax advisor.

1) Full timer

It might surprise some people that a lot of the most qualified accountants actually prefer to work part-time.

Because they can pretty much fulfill their jobscope anywhere as long as there is a desk and computer, many of them prefer to work from home… and according to their own versions of flexible working hours.

With the high fees that business people are willing to pay for their expertise, freelancers and part-timers are still able to earn a decent salary from committing just 4 hours a day to work.

But as you might expect. As an investor, a part-timer is not good enough.

A freelancer might be good enough for a small trading business. But real estate concerns too much financial details to entrust to a part timer.

When something important comes up which you need his advise, you don’t want to be ignored because he has to attend his swimming classes anyway.

A full time professional is a better choice. An accounting firm that mean business will also be good.

2) Communication

Financial information is one of those topics that can contain a lot of lingo.

The type where nobody outside the industry will understand. And professionals love to use them to confuse or impress clients with how smart they are.

A good advisor should be able to explain and elaborate complex financial terms in a way that you can understand.

Even the most intelligent advisor should be passed on if you cannot understand a word he is saying.

If you find that comprehending what he is exceptionally difficult, he is probably not the person for you.

3) Other interest

A lot of business people have a vested interest in various different businesses.

If the advisor you are interviewing is more of a business person rather than a dedicated accountant, you need to find out what other interest he is vested in.

Because of how intertwined related businesses might be linked together, he might give you advice that would benefit other areas of business which he has a stake in.

Essentially, an objective advisor who is solely interested in giving you sound and professional financial advice is who you want working for you.

I once talked to an accounting service provider about the annual filings. And he threw the idea of putting money into a time-share on the table. After a little probing, it was revealed that he has a vested interest in the sales.

So be careful of hidden agendas.

Promoters of investments like to target accounting firms as promotion partners. This because these firms have connections to the bosses of companies with funds to spend.

4) Fees and charges

Please be reminded that accountants are professionals. So that are going to quote professional fees.

You are not going to find someone charging $7.50 an hour.

There are some common ways in which they charge depending on:

  • Hours needed for the job
  • Number of transactions in back statements
  • How much time left before filing deadline
  • etc

At this point, also find out the qualifications of the advisor. Depending on the type of work you need to be done, you might need people with specific qualifications or licenses like Certified Public Accountant (CPA) or Enrolled Agent (EA).

The best case scenario is that you hire one who charges by the hour.

And please… don’t be a miser.

You are hiring a professional for a professional job.

An experienced advisor with a decade of experience might costs thrice as much as a newbie. But it is all worth it.

5) Experience in real estate transactions

Tax planning is a very wide field with various specific areas.

Like law, a lawyer might have a license to practice law. Yet she choose to focus on international trade or divorce cases.

The same with accountants.

Unless you specifically mention it as a requirement in an advert, there is every possibility that half of the accountants you interview will have little to no experience in real estate transactions.

Even the best advisor from a big time accounting firm will offer little value if he is no expert in real estate financials.

You need to hire one who has experience in real estate. And hopefully with a track record to prove it.

Finally, remember.

If you only realized that a tax advisor might be able to help after a transaction is done, it is already too late.

The value they bring to the table is before anything has taken place.



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