By Jason Watson, CPA

Posted Thursday, April 25, 2024

WCG CPAs & Advisors is thrilled to partner with BiggerPockets. Located in Denver, Colorado, BiggerPockets is the premier online resource for real estate investing and strategy. They started in 2004 primarily as an education resource for real estate investors, and have grown to have over 2,000,000 members who collaborate, share stories and help each other.

BiggerPockets coined the BRRRR strategy by taking the original Buy, Rehab, Rent and Refinance and added the 4th R for Repeat. Love it! As Mae West says, “Too much of a good thing can be wonderful.” Let’s not forget another quote where she says, “You only live once, but if you do it right, once is enough.” We digress… but not too far off.

To help with creating a good thing and living life right, BiggerPockets has several podcasts aimed at different audiences, live webinars with Q&A sessions and a massive library of self-help videos and materials. They also have calculators and software recommendations to assist real estate investors in making sound decisions, sure, but also to efficiently and effectively operate their rental properties.

How does WCG fit into all this?

Recently BiggerPockets expanded its preferred vendors network by adding tax and financial services to the original core of real estate agents and lenders. All the pieces a real estate investor needs to be successful. WCG is a real estate forward CPA firm, and not just boring taxes but rather boring taxes filled with tax strategies and real-life consultation. It is one thing to say, “we know taxes” but it is a whole different thing to say, “we know taxes and we are landlords and investors too.”

Specifically, how does WCG CPAs & Advisors assist real estate investors-

Tax Planning

Tax planning is the first component and covers a myriad of real estate investing activities. How will this cost segregation report help me? When I sell this rental property, what will my taxes be? If I convert this property into a short-term rental (STR), what are the implications? If I buy that STR with a big cost seg, how will my taxes look? Do I increase my tax obligation today (pay more in taxes) to have more access to capital (keep in mind you primary objective is to build wealth… saving taxes is a close second, but it is second).

Tax Return Preparation

Tax return preparation is the compliance component. This includes proper rental property setup (many people forget to add acquisition costs and loan costs to depreciation schedules), correct handling of LTR to STR conversations, bonus depreciation, other accelerated depreciation with startup expenses such as furniture, and overall revenue and expense recognition. Let’s not forget the appropriate way to deduct travel expenses and how to protect yourself with personal use days.

Tax Strategy

Tax strategy is the final component, and probably the most fun because it involves thinking, discussion and vision. How can I claim real estate professional designation with W-2 income? What are the risks? How is a 721 exchange better or worse than a 1031 exchange? Do I put my rental properties into LLCs with a holding company? Should that holding company be a partnership with a tidy K-1 issuance to keep the nitty gritty rental activities off my 1040 tax return (and be safely contained on Form 8825 of the 1065 tax return)? There are tons of other rental tax strategies to consider!

Therefore, WCG partnering with BiggerPockets makes an insane amount of sense by pairing a CPA firm with strong real estate proficiency with real estate investors who have ambition and vision, mixed with questions. While both organizations are from Colorado, we both serve real estate minded people in all 50 states. For WCG specifically, over 80% of our clients are outside Colorado (and why not since 40% of the U.S. population lives within 100 miles of an ocean, right?).

Investor Patrol is a wonderful tax service for those who don’t need all the business advisory bells and whistles, but desire pro-active tax planning and scenario-based decision making assistance from an experienced tax consultant. Have a quick tax question? Need to know the depreciation rules as you furnish that new short-term rental? Want to kick around Real Estate Professional designation? Wondering what your April tax bill is going to be in August?

Investor Patrol is like ski patrol… you might not use it, but you sleep better knowing you have it. We offer three typical versions aptly labeled Houses, Hotels and Monopoly. However, each of these can be customized to fit your unique needs.

Investor Patrol is specifically designed to give you the freedom to call, text or email us without the worry of being nickeled and dimed like other outdated CPA firms. And! We also provide a tax planning event (usually around May, June and July) where we gather up your financial records like paystubs, rental activities, stock sales, etc. and we create a mock tax return projecting your annual income and eventual tax obligations. We are not big on surprises… bad news in August is palatable, yet bad news on April 15 is unacceptable.

Jason Watson, CPA is a Senior Partner of WCG Inc., a business consultation and tax preparation CPA firm located in Colorado Springs, and is the author of Taxpayer’s Comprehensive Guide on LLC’s and S Corps which is available online and from mostly average retailers.