In 2021, a real estate firm decided their CPA was too expensive. So, they switched.
Fast forward to 2022 and 2023—things seemed fine… until they weren’t.
They weren’t getting the attention they needed. They weren’t happy.
So, they were looking to switch firms again.
The new prospective CPA reviewed the last couple of years of filings and discovered a massive problem.
Enter Section 163j.
This rule limits interest expense deductions if gross income exceeds certain thresholds.
There’s a way around it—by electing real estate safe harbor and using ADS depreciation.
But guess what? The “cheaper” CPA completely missed it.
no election out!
They deducted all the interest.
They skipped Form 8990.
They took deductions they weren’t even allowed.
Now? The IRS could come knocking. Amending returns might be the only way out.
But here’s the kicker—back in 2021, their “expensive” CPA did follow the rules. He filed correctly.
He knew what he was doing.
The lesson?
A cheaper CPA isn’t always the better deal.
Sometimes, they cost you way more in the long run.
Before switching accountants over price, ask yourself:
➡️ Are they actually saving me money—or setting me up for a mess?
➡️ Will I find out the hard way, years down the line?
What do you think?
Have you seen a situation like this before?
Let’s discuss.
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