All,

If I take out a HELOC under an LLC. Meaning the LLC would own the HELOC. How would one deduct interest on their taxes? this wouuld be a single member LLC. Can I just use the EIN on my own personal tax return and decduct this? Or does the HELOC have to be owned by an individual in order to get the tax deduction?

Thanks

OB

A single member LLC is a flow through entity. It doesn't file a tax return of its own. Any profit or loss flows through to the owner.

The interest is a deductible expense. So, it would affect the profit/loss situation of the LLC. The net would then come to you.

As far as exactly how this goes on the forms, no idea. Get a good CPA.

I do my taxes myself and don't plan on hiring and spending money on a CPA.

OB

Well, plan on some serious study, then. Real estate investing taxes are quite complex with lots of ins and outs. Good tax advice and proper structuring of your entities and investments can make a significant difference in your bottom line.

Trying to cut corners and skimp on not hiring a good CPA may cost you more than it saves you. Particularly if you plan on having multiple properties, I highly recommend a competant and experienced RE CPA. They may actually increase your bottom line rather than reduce it as Jon said.

Ohio, I need to add my two cents to your post and I agree 100% with Jon and Nationwide's posts. I have the worlds best accountant who just happens to be a former IRS agent. That man has saved me thousands upon thousands of dollars over the years. Although I'm very savvy at working the numbers on a good deal, I'm clueless when it comes to doing the real estate/business taxes.
I understand when you're first getting started you don't always have the resources to pay for necessities. However, when you're in real estate, you have to be resourceful when it comes to money. It doesn't cost as much as you might think so do rethink your position on passing on hiring a CPA.
As for your original question about the HELOC in the name of an LLC, you may be hard pressed to find a bank that will let you put it in the name of the LLC unless it's a hard money lender.
Good luck!

Dear Revinv,
I'm just like you, pretty comfortable with the deal analysis, due diligence, etc. part, but in the dark re: taxes. I've always used a good EA, but she's not much help when I have questions or need input on strategic tax planning vis-a-vis my properties, so I need your guy!
Any advice on how to find such a savvy CPA, intimately familiar w/ REI'ing, in my local (SF Bay) area?

Not sure about CPA in Oakland, but I have been with my CPA for over 12 years and he is very well versed in RE investments. He purchases RE investments personally as well so he practices what he preaches. I would be happy to give you his contact info if you choose - email me directly.
He is in So Cal but with technology of today (phone/fax/email/etc), it should not be a problem.

Thanks, Nationwide.
I know that email/fax, etc. has largely broken down geographical barriers, but (call me old fashioned), I'd still like to be able to shake his or her hand & speak face-to-face when necessary. So, I'll keep looking locally. I do, however, appreciate your offer for the referral.
BTW, check out my post in the "Deals..." forum: "14.3% Cap Rate, 43% Cash-on-Cash SFR in Jackson, MS"

I hear you. I too like to meet face to face with the pros on my team. In fact, I do fly out and meet them when I am able to arrange enough items of business to accomplish to make the trip worth the money "cost effective".

As for your deal, I looked at it. Can you send me all the figures so I know how you arrived at the cash flow figure? What about the subsidised monthly payment for two years? Is that how the property cash flows or is that extra "gravy" for 2 years?

Originally posted by "OhioBuckeye":
I do my taxes myself and don't plan on hiring and spending money on a CPA.

OB

Maybe it can be entered on schedule E.

I think it is best to use a CPA the first year or two and see what is involved tax wise. Generally, on a small scale, it would be a self-employed type business and entered on a schedule C, but I'm not an accountant and will use one, when I do finally get started.

Originally posted by "maat55":
I think it is best to use a CPA the first year or two and see what is involved tax wise.

RE tax laws are some of the most complicated. Why go at it alone regardless of how many years you have done it. As your business grows, so does the tax complications and thus a RE CPA should always be on your team, year 1, year 2, year 20 and so on. As I have said before, trying to reduce expenses by not using a CPA may indeed increase your expenses/tax exposure rather than reduce it.