I would assume a professional property management company handles the bookkeeping throughout the year. I only own commercial properties, but our property managers track income and expenses, perform bank reconciliations, and then provide monthly reports. I use those year end reports to prepare the tax return. (I'm a CPA).
The time intensive portion should be handled as part of your management fee; then I would feel it was money well spent to let the CPA do the return. The bulk of the time (for bookkeeping) shouldn't be billed at the CPA rate.
This makes a lot of sense and I will keep it in mind.
Accounting for just two self-managed duplexes last year was a pain, but it was self-inflicted and we learned enough to avoid a repeat.
Our upcoming purchases will be managed by their existing PM company, including bookkeeping. Anything else we buy will be covered similarly from day 1, and I am pushing to move at least one current property over to a PM as well.
What is a reasonable CPA rate for the part of this that they would actually be doing? And how much time are we talking? Currently we just have a 1065, a 4562, an 8825, and 3 K-1s, but by the time I hand it off I picture 10-15 properties, over $1M in LLC assets, partners' basis accounting, etc.
Assuming all property is eventually under a PM, and I'm FIREd 2,000 miles away, what would they need from me to run everything?
The rate depends on your location and what kind of firm you go with. In my area, many are trying to move away from an hourly rate and bill a flat fee. I used to work for a top 15 firm and we wouldn't touch anything for under $1,000; typical 1065 without any issues would probably be $1,200. I recently heard from a client that a medium-sized firm in our town (think 10 CPAs) charged a minimum $750 for business returns. As a reaction to that, you can find sole proprietors, two-man shops, or even Enrolled Agents who are willing to do it for less and/or charge a lower hourly rate. In my area for the 2 duplex return, maybe $500? Once you get into the 10-15 range I think you are hard pressed to stay under $1,000. But if you can buy 10-15 properties and only yield $1M in assets, you are in a lower cost of living than I am.
Also, if you are buying/selling, 1031 exchange, admitting new partners, have partners withdrawing, tax credits, property in multiple states etc you are looking at more time and money, but that's specialty knowledge that some tax preparers can't provide.
Assuming your PM can perform accurate bookkeeping (which is a big assumption, I've found), you need to provide a balance sheet and income statement at year end to your CPA. They will want supporting documents - bank rec, closing documents for purchase or sale, loan balance verification; most of which would be available in the report provided by the PM.
