@April Conaway I recommend that you speak to an CPA. The little money you will spend on consulting them will easily be made up by the money they save you by having your LLC setup correctly. Possibly even try to find a CPA on BP whose from your area who may be able to assist you.
I would set up the LLC at the beginning the bank only care if you guarantee both you and your father can add your signatures it's much cleaner this way if you buy it as an individual technically you can't transfer it to the LLC the bank would see that as fraud
when you set up the LLC also apply for S status that way income or losses pass through from the corporation to the member individuals look at the back of a Schedule e
S Corp pass through profits and losses and do not have to pay any tax themselves only the members through their schedule e
Itemization is on the personal side. The deductions mentioned in your post are business related and, as such, potentially deductible whether or not you personally itemize.
It’s definitely recommended to find a quality CPA who can advise you based on your individual circumstances. Taxes are not a “one size fits all” type of area.
Best of luck!!
Itemization is limited and does not reflect the true nature of your partnership while the LLC limits your liability, allows all expenses to be deductible, and allows for members to have a varied interest (you can decide by the number of shares. It also allows for easy transfer of you legacy to future family members by gifting tax free shares (they just have to be under the limit that is taxable). Plus you can designate some shares controlling or not. For all these reasons I think holding property in an LLC is better. The only time its not is when you convert you personal home (held as an individual) because if you have held it long enough the capitol gain exemption is too good of a benefit to miss, so own your own home that way. Then convert to a LLC when you turn it into an investment property, by moving out and selling to your LLC for county appraisal.
You and your father will be responsible for preparing a partnership return(Form 1065). This form will list information such as the partnerships rental income less expenses(mortgage interest, taxes, depreciation etc).
The partnership will be responsible for issuing a K-1 to its members(You and your dad).
Since you and your dad are 50/50 partners - you will each recieve a k-1 with 50% of the partnerships rental income/(loss).
You and your dad will then report that information on your individual tax return.
The above is just the compliance side - You and your dad may want to speak with a tax adviser to see if there are strategies involved to lower your tax burden.
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