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Do own tax returns or get accountant?

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  • Do own tax returns or get accountant?

    Hi,
    I'm trying to decide whether to get an accountant to do my tax returns or do it myself.
    I have just one rental property, which I purchased in August.
    It is just cashflow positive - after a few repairs to the property, lawyers fees, etc deducted. For my psychological benefit I'd like to keep it that way.
    If I pay an accountant to do the accounts it will definitely be in the red.
    I value an accountants' knowledge and experience, but I would also like to learn how to do it myself.

    What do you think?

    Cheers,
    C

  • #2
    My opinion and my opinion only. Yes you can do your own accounts and tax return yourself.

    However I prefer to use and happily pay an accountant. My reasons are an accountant should be more up to date with tax law and allowable deductions.

    But even more importantly, an accountant gives you credibility with IRD. They are much less likely to ask questions and create problems if an accountant prepares your return. In the long term it is a kind of cheap insurance.

    Comment


    • #3
      I'm always going to suggest using an accountant.

      The government and IRD are constantly trying to simplify tax, but in the last few years this has meant a lot of changes which are different for a non professional to keep up with.

      Make sure you use a chartered accountant (required to do professional training every year, to keep up to date) and that they specialise in property. Lots of general accountants or CA's don't understand property and what you are trying to achieve.

      By being in the property industry, a property accountant will know all the tips and tricks.

      There are two options

      - A review of your work, suggest items that you could claim, items that you have overclaimed on, and possible better ways of doing things around $200 + GST
      - Financial statements and tax returns - depends on entity, number of properties etc $750 + GST to $2,000 plus.

      Ross
      Book a free chat here
      Ross Barnett - Property Accountant

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      • #4
        Lots of property investors do their own, and it does give a greater understanding of your investment/s. You need to be well organised and educated, starting with detailed reading of the IRD booklets Rental Income and Depreciation.

        Maybe do your own this year and have the review suggested by Ross. Next year you might be fine to go it alone.

        There are some fish hooks re repairs in the first year or so after purchase (whether to expense or capitalise). Do you have a chattels valuation from a specialist firm like Valuit? Almost certainly worth it.

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        • #5
          you've got till the 7th July to do it yourself - or longer if you have an accountant (handy since I am a month or 2 away from egtting my stuff into the accountant - a bit busy at the mo).

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          • #6
            You need assistance either way when following Rosco’s advice. If you have the time to read the IRD releases and use an IRD business adviser for meeting IRD requirements – go for it. But don’t be ignorant!

            If you are serious you need that type of understanding of your business anyway but get the paperwork and documentation right (You will get the audit, not your accountant, and you sign a disclaimer with your accountant whatever he/she does for you). Sure at the beginning you need some assistance.

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            • #7
              Used to do it myself but now use an accountant.
              Drop shoe box of receipts off - they use bank link to load transactions - pay some money - easy peasy.
              Registered tax accountant - so very conservative & all above board - might even survive an audit.

              Who wants to spend days filling in tedious tax forms?
              The three most harmful addictions are heroin, carbohydrates and a monthly salary - Fred Wilson.

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              • #8
                I'm too lazy to do it myself, so I bought a lot more properties to justify using an accounant ;-)

                Anyways, unless you know what you are doing, get a property accountant to do it for you.

                Comment


                • #9
                  This has been covered before and I suppose will be covered again next year around this time.
                  I started doing my own return and had a CA friend to help with some of the detail (oddities). The CA went overseas so I got an accountant.
                  Doing it myself while it was small was a good thing for me - I understand it all now (even if I can't track all the changes) so I can query the accountant from a position of some knowledge. After all, as has been said, it is still my arse on the line even if the accountant does it. I like to have some informed understanding of what is being done in my name.

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                  • #10
                    If you have one property without complicated structures like Trust, you can easily do it yourself.
                    I have an LTC with one property and a rental under my own name which will become PPOR come next year. Both properties have carefully structured spreadsheet and I enter the expenses etc. as I go throughout the year.

                    I started doing my own after the accountant (who was recommended on this forum) depreciated the land instead of building. Since then for each tax year I would keep on own book and got the accountant to check the tax return for around $100. Both accountants were very impressed with my spreadsheet.

                    This year I've moved town and I seriously thought about getting an accountant but it was cold and wet when I wanted to do it so I sat down in front of the computer and did it myself, which took me one evening. Got my tax return in 1-2 weeks, no problems.

                    I like doing accounting myself as I know exactly how much my expenses are, and I am more careful with my record keeping.

                    Also I found IRD business advisors very helpful when I went to see them.

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                    • #11
                      You can ring IRD and explain that you didn't have time to find an accountant due to family circumstances etc. They were pretty lenient about giving me extensions.

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                      • #12
                        Originally posted by sjkpark View Post
                        Got my tax return in 1-2 weeks, no problems.
                        Doesn't mean it was right!
                        I got a refund in my personal return (LAQC) before the company (LAQC) was processed once. The check the maths - not that it is right.

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                        • #13
                          I've got a mate who is a CA who did her own property accounts. Even for her, she needed to consult with IRD and accountants specialised in property for the first year.

                          If you are good with numbers and build great relationship with your accountants, you don't need to do your accounts yourself to understand how well your investment is going.

                          I have put up a thread earlier this year for recommendation of accountants. If you choose to go down this road, welcome to PM me I can let you know who I would recommend and who to avoid if you live in Auckland.

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                          • #14
                            It only costs something like $800 per residential property per year, if you can't afford that them you are running on very tight margins and you shouldn't be in the property investing game.
                            Profiting from Property, not People

                            Want free help on taking your portfolio to the next level?

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                            • #15
                              Originally posted by DaveW View Post
                              It only costs something like $800 per residential property per year, if you can't afford that them you are running on very tight margins and you shouldn't be in the property investing game.
                              One of the problems is that a lot of things only cost $x but all the x's add up

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