Thinking of becoming an LLC

[y26]

I currently own a single family home and i'm looking to purchase a multi family to rent out. Spoke to someone who suggested putting the multi family under a business to take advantages of the tax breaks and other quirks. He is filing paperwork to become an LLC. Does anyone here have experience with this. Please chime in with your info,

Thanks

 

[nisnutz]

Me and a buddy have a paint company thats an LLC.We write off everything, Trucks,Cell phones,Equiptment you name it.

 

[azgn]

the ONLY reason to create an LLC for business purposes is if you have some business related liability issues (or multiple owners)......there are no "tax advantages" to an LLC over a sole proprietor structure...all items flow to your personal 1040 anyhow.....an LLC will complicate your life since a separate tax return is required and a complete set of double entry books is needed

this is particularly true with rental property, since there is no SE tax issue (all income/expenses is reported on Schedule E of your 1040)

 

[y26]

Thanks for the information,

Under a sole proprietor structure how would that work with my spouse? As a sole proprietor there is no difference between personal and business right?

 

[azgn]

dunno if I understand your question.......

a "sole proprietor" business reports income and expenses on Schedule C of your personal tax return

as mentioned, rental property is generally not considered a business activity (unless that is your main business) it is considered a passive activity and income and expenses are reported on Schedule E......also on your personal tax return

 

[TexasT]

Liability Issues

You need to seek out a competent attorney to get some advice from as it applies to your situation. There are much bigger liabilities owning multifamily as opposed to single family. Check out richdad.com as this organization is into building wealth. good luck.

Rich

 

[Big Stu]

Originally posted by azgn
dunno if I understand your question.......

a "sole proprietor" business reports income and expenses on Schedule C of your personal tax return

as mentioned, rental property is generally not considered a business activity (unless that is your main business) it is considered a passive activity and income and expenses are reported on Schedule E......also on your personal tax return

Are you an accountant? You speak in that which I do not understand, just like my wife who is a cpa. You ever going to get up here and hang out or what?

 

[BOOSTEDGNs]

its true about write off anything under the sun but you also pay taxes quarterly I also worked for someone as well.
make sure you get a good tax attorney not cpa and pay his outrageous fee it will be worth it longterm

my partner has her own co and lets put it this way she pays $50 for her cpa and paid her taxes for this quarter which was about 12k me my taxes were $***** and I paid $550 and paid $***
just my advice to pass along

Alan

 

[BOOSTEDGNs]

my father used to own several multi-family houses that he rented out and my brother inlaw I know for sure is an LLC and pro landlord here in NYC let me ask them both and post when I get their thoughts as to either or

Alan

 

[Big Stu]

I am going to do it for my hvac work here in the next couple of years. Might as well make all the money. It's my understanding, because I looked into it, that you have to be insured($4k-$10k yearly) and bonded. The quarterly tax thing is no big deal.

 

[GNX Guy]

AZGN is correct, makes no difference as far as expenses goes, everything is entered on Schedule E. Been doing it that way for all by apartment buildings for 14 years now. LLC may be good for multiple owners or for liability issues. Not a good idea to put it on Schedule C as favorable capital gains rates may be lost.

Might want to get an extra 1 or 2 million supplimental liability policy BEFORE you buy a rental property as many insurance companies won't sell you one afterwards.

BTW, I only allow myself to do my taxes. Keep good records and all receipts, very easy to do your own taxes.


Joe

Originally posted by azgn
the ONLY reason to create an LLC for business purposes is if you have some business related liability issues (or multiple owners)......there are no "tax advantages" to an LLC over a sole proprietor structure...all items flow to your personal 1040 anyhow.....an LLC will complicate your life since a separate tax return is required and a complete set of double entry books is needed

this is particularly true with rental property, since there is no SE tax issue (all income/expenses is reported on Schedule E of your 1040)

 

[Big Stu]

Originally posted by GNX Guy
AZGN is correct, makes no difference as far as expenses goes, everything is entered on Schedule E. Been doing it that way for all by apartment buildings for 14 years now. LLC may be good for multiple owners or for liability issues. Not a good idea to put it on Schedule C as favorable capital gains rates may be lost.

Might want to get an extra 1 or 2 million supplimental liability policy BEFORE you buy a rental property as many insurance companies won't sell you one afterwards.

BTW, I only allow myself to do my taxes. Keep good records and all receipts, very easy to do your own taxes.


Joe

Also remember if you put it on a schedule c you are subject to self employment taxes which kick your ass.

 

[y26]

Wow thatnks for all the input. I think i'm going to take the advice and speak to an attorney and get mor info. If there is anymore let me know.

Thanks