Home / Features / ON THE LEVEL: Who ya gonna call? Myth-buster real estate accountant Rob Phillips

ON THE LEVEL: Who ya gonna call? Myth-buster real estate accountant Rob Phillips

Photo by Tony Brown

Photo by Tony Brown

CHARLOTTE – If the first thing you think of when you think “accountant” is “Louis Tully,” you have not met Rob Phillips, CPA.

At 6’5”, this basketball-playing, savvy and slyly funny numbers-cruncher is definitely not the nerdy guy down the hall from Sigourney Weaver who mutates into Vinz Clortho, the Keymaster, in “Ghostbusters.”

What really got On the Level’s attention is when we were told that one of Phillips’ specialties is working with developers, builders and real estate professionals. What with the N.C. Legislature tinkering with tax laws, we thought: Bingo.

We were not disappointed.

At 33, he’s a “managing member” (“Just say, ‘partner,’” Phillips quipped) of Scharf Pera & Co. Certified Public Accountants; married to a “sales support coordinator” (“Just say she works from home in sales”); and just moved into a bigger house in Matthews to accommodate the newest member of the family, Rachel Ann, 9 months.

He explains the rest better than we can. So forget the pocket-protector jokes, and meet a real accountant.

This is a first for On the Level; never done an accountant before. We do all kinds of different industries in your field: developers, contractors and real estate. It was a tough go there for a while, for the past five or seven years, but it’s getting better. It seems like everyone who is able to adapt is starting to thrive again.

There were an awful lot of foreclosures. We don’t get involved in the actual foreclosure process – that’s more of a legal thing. But we do some wrapping up, like doing the final tax returns. They’re not the best paying customers.

Ha. What are the biggest changes in tax law that people in real estate need to look out for? The biggest changes are in the North Carolina taxation laws, and these have to do with all kinds of businesses. There were some big federal changes last year; but this year it is the state.

Thanks to the always predictable and civil N.C. General Assembly. Ha. The corporate tax rate is going down from 6.9 percent to 6 percent. If the state meets its revenue targets, it could go to 3 percent in the next few years. For individuals, and investors in particular, S corporations, LLC’s and partnerships – companies that are taxed only at the shareholder level – those rates are going down from 7¾ percent to 5.8 percent, and might go down to 5.75 percent next year.

So: Good for business. Yes, but most of these things tend to be revenue-neutral, so if you’re a small business, there was a $50,000 deduction for being a small business – and that’s gone away. So there’s a lower rate, but you’re basically losing (any savings) there.

What did our solons, in their wisdom, do with the home-mortgage deduction? The standard deduction increased to $7,500 – $15,000 if you’re married and filing jointly. But if you itemize, the deduction is now capped at $20,000 for mortgage interest and property taxes.

So this could impact luxury homebuilders who do mansions because the actual cost of the houses to the buyers will be higher? Yeah, $20,000 a year in interest and taxes is not a small house. It’s probably not that big an issue – yet. But if the interest rates go up over the next five or 10 years, this could make tax bills go up – on top of paying the higher interest.

What else does your company do for developers, builders and real estate folks? Certainly a lot more than taxes; audits and financial statements, for example.

Why would they need that? For increased investor confidence.

So as bank financing for development and building has dried up, investors have come in, and they want to see what they’re getting into? What I would have expected was banks requiring to see audited financial statements, but we’re not seeing much of that. That might be because the banks are not lending the money. They got burned a bit, so they’re a little gun shy.

Who else needs audited financials? The North Carolina Licensing Board for General Contractors requires a balance sheet audit as part of their process for intermediate and unlimited licensing. I think you have to have $150,000 equity, to make sure your company is legitimate. Here’s one thing I wish you could put in: If a contractor is seeking out a license, we would prefer they seek us out sooner rather than later. Usually they’re not used to doing audits, so there’s work that needs to be done before meeting with them – what we call the PBC list.

The what? The “provided by client” list. If they contact us sooner, it lets them know what to expect and makes the audit process much smoother and more efficient.

How else could our readers benefit from your services? On top of tax returns, there is tax planning, and that goes on throughout the year. Anytime anything is changing about a business, we need to know about it, to make adjustments. We like to do a summer checkup, see if we need to adjust any of their tax payments, or take advantage of tax laws to reduce their tax bills, such as purchasing new equipment, and tax credits that may be available to them. We also have business-valuation services for businesses wanting to set value for adding a new partner, selling or, certainly, if gifting to a family member or someone else.

You’re from southeast Ohio? Yeah, I was actually born in Johnstown, Pa., and spent a little time in and around Pittsburgh. But I was brought up in St. Clairsville, Ohio, about an hour southwest of Pittsburgh and an hour and a half east of Columbus, Ohio.

St. Clairsville. What’s the population? About 6,500. But it’s the seat of Belmont County!

You say that with a measure of pride. I don’t know why.

Ha. What brought you to the South? I went to Wake Forest.

Nice school. But why Wake Forest? Plenty of nice schools in Ohio and Pa. In high school I went to a golf camp there given by Jerry Haas.

I presume he was the Wake golf coach. Still is.

His name sounds familiar. He’s (former PGA Tour player) Jay Haas’ brother.

Ahh. Anyway. . . I enjoyed golf camp, and we looked at a lot of schools in the Southeast, and the Northeast, but I chose Wake Forest because I really liked the golf camp. It’s a very good school in accounting, in the top 1 or 2 in CPA exam pass rate.

Did you always dream of being an accountant? Ha. No, but I always had a head for math. Actually, people think we do a lot of math, accountants, but we don’t. It’s a lot more dealing with people, gathering information, problem solving. There’s really not that much math.

That’s why God created Texas Instruments. Ha. And Excel’s great.

Anyway, why not a career in physics or algebra or something? In my sophomore year, the accounting scandal hit – Enron, Arthur Andersen. And there were all these new regulations for accountants. It was much more complicated, so more were needed. And as a professor of mine said, accountants were an older population, and there was a need for younger accountants.

A career opportunity. Why Charlotte? Big need for accountants? One of the neat things about accounting is that they do accounting internships, and I did one here and was lucky enough that they offered me a position. Charlotte’s a great city with plenty to do. We enjoy going to concerts, the Broadway musicals, a few Bobcats games. I guess I can’t say Bobcats anymore. I can’t get used to Hornets – I wasn’t here back then. But it’s a great town. We just bought a house in Matthews, and we couldn’t be happier.


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