When is an accountant worth it?

As a property investor, one of the first questions you might ask is whether hiring an accountant is necessary or if you can manage your taxes on your own. While doing your own taxes could save you money, the financial side of property investing—especially taxes—can get complicated. So, when is it truly worth paying for an accountant's expertise?

The Advantages of Hiring an Accountant

1. Time and Stress Savings

   
   

   Managing taxes for investment properties is far from straightforward. An accountant handles the details, ensuring your tax returns are filed accurately and on time. This can be a significant time-saver, especially if you own multiple properties or have a busy schedule. An accountant helps you avoid the headache of navigating complex tax rules yourself.

2. Maximizing Tax Deductions

   
   

   Property investors can claim various tax deductions—like depreciation, maintenance costs, and mortgage interest—however, many of these deductions are easy to overlook. A property accountant is familiar with all the available opportunities and will ensure you're claiming everything you're entitled to, ultimately reducing your tax liability.

3. Expert Guidance on Ownership Structures

   
   

   If your properties are held in a complex structure, such as a trust, company, or joint venture, managing the tax implications can be tricky. An accountant provides expert advice on how best to structure your ownership to minimize tax and ensure compliance with regulations. They can also guide you through issues like GST and the bright-line test (capital gains tax rules).

When You Might Not Need an Accountant

1. Simple Portfolios

   
   

   If you own a single property or a few properties in your own name, and you're familiar with basic tax rules, you may feel comfortable managing your taxes yourself. Especially if your portfolio is small and uncomplicated, filing your own returns could save you money.

2. Experience with Tax or Accounting

   
   

   If you have a background in tax or accounting, or you’re comfortable using accounting software, you might find it easy to handle your own filings. Experienced DIY investors with a clear understanding of the relevant tax rules may be able to manage their taxes without the need for professional help.

The Cost of Hiring an Accountant

Typically, accountants charge between $1,200 and $1,500+GST annually for basic services, such as filing tax returns and offering general advice. While this is an added expense, many investors find that the tax savings they receive from professional guidance more than justify the cost. Additionally, an accountant can provide peace of mind, knowing your taxes are handled correctly and efficiently.

For more complex portfolios, such as those involving multiple properties or structures like trusts or companies, the cost may rise, but so too will the potential benefits.

When Does It Make Sense to Hire an Accountant?

Here are some scenarios where hiring an accountant is likely worth the investment:

• First-Time Property Investors: If you’re new to property investing or have never filed taxes for rental income, an accountant can help you navigate the process and avoid costly mistakes.

• Growing Portfolios: As your portfolio expands, keeping track of the tax implications for each property can become overwhelming. An accountant can help ensure all properties are accounted for, maximizing deductions and minimizing errors.

• Complex Ownership Structures: If your properties are held in a trust, company, or partnership, an accountant’s specialized knowledge ensures you remain compliant and maximize tax efficiencies.

When Can You Go Without an Accountant?

If you’re an experienced investor with a small and straightforward portfolio, you may feel confident handling your own taxes. If you’ve filed property-related tax returns before and are comfortable with the process, DIY could work, at least for the short term.

However, even experienced investors should reassess their need for professional help as their portfolio grows or as tax laws change.

Conclusion

The decision of whether to hire an accountant comes down to the complexity of your portfolio and your comfort level with managing taxes. If you’re new to property investing, have a growing portfolio, or are using complex ownership structures, an accountant can offer significant value—saving you time, money, and reducing the risk of costly mistakes.

Ultimately, the right choice depends on your unique situation. If you’re confident in your tax knowledge and your portfolio is simple, you might be able to handle it yourself. But as your investments evolve, so might your need for professional advice.